New IRDNZ GST tax invoicing rules – what’s changing, what’s not

This article was current at the time of publication.

New Zealand’s Inland Revenue Department (IRD) is “modernising” its tax invoice rules to take account of changes in business practices and technology. 

Notably, however, it has left the door open for further submissions on the issue.

The new rules, taking effect from 1 April 2023, introduce “taxable supply information” (TSI) as an alternative to traditional tax invoices.

The intention is to give organisations greater flexibility in the form and type of TSI they provide customers and suppliers.

The current requirement to “issue and hold” a single physical document – such as tax invoice, credit or debit note – to be able to claim an input tax deduction will no longer apply, although the familiar tax invoice will remain valid.

Ensure accounts payable is up to speed

As Deloitte warns, this does not mean organisations can simply ignore the new rules, as some suppliers will change to the new TSI format.

As such, accounts payable systems will need to operate under them.

CPA Australia New Zealand President, Angus Ogilvie FCPA, attributes the change – at least in part – to the increasing movement of business transactions from an invoice to subscription basis, with an increasing number of suppliers based offshore.

Regardless, most businesses are unlikely to have to make drastic changes to comply.

“For them, the issue is more about what software suppliers are going to do to accommodate the changes,” Ogilvie says.

He maintains that although they’re not especially controversial, the changes will make GST administration more flexible. 

Indeed, adopting e-invoicing in tandem with new information requirements could be highly efficient, he adds.

“You can just pop an e-invoice into Xero, as there’s no separate attachment you have to store.”

The change in the minimum transaction value requiring TSI verification from NZ$50 to NZ$200 is also likely to be “a big timesaver”, Ogilvie says.

One potentially thorny issue with TSI is a difference in the date of supply from the date shown on traditional invoices, because it might differ from the date on other TSI documentation.

Streamlining the system

During its consultation process, the IRD emphasised joint work by the New Zealand and Australian Governments to facilitate e-invoicing so that small-to-medium businesses could use data exchange in place of traditional invoices.

With e-invoicing, businesses will no longer have to scan, post, email, or manually enter PDF or paper invoices. Instead, supplier and buyer systems will “speak” directly to one another, enabling faster delivery, processing, and invoice payments, which in turn will help to save time and money.

For those taking advantage of the new TSI format, the information required to be supplied or kept depends on the value and type of supply.

As well as tax invoices, TSI will include information held in other forms, such as supplier agreements, contracts, and bank statements.

A moveable feast

The IRD’s online resources include a tool describing what records need to be kept for different values and types.

There are also details on changes to buyer-created invoices, GST groups, shared invoices, and corrections to supply information.

Deloitte describes changes to GST tax invoicing as “a moveable feast” and recommends businesses keep track of any changes before the new rules come into effect.

It plans further submissions aimed at improving the practicality of some changes. 

The IRD says it will provide more guidance, noting that “remedial changes are also underway and are expected to be enacted before 1 April 2023”.