GST Invoice Changes – what you need to know before April 1st 2023

magnifying glass over an invoice

April 1st is not far away so this month you’ll want to ensure you’re on top of the GST invoicing changes.  Here’s what you need to know and think about:

  • ‘Taxable supply information’ is effectively replacing Tax invoices.

The information required is dependent on the value of the transaction (see table below)

  • Your accounts payable processes. Do your systems or staff automatically reject invoices which don’t have the words ‘tax invoice’ on them? If so, review this as your suppliers (and customers) may update their systems for the new rules. You may receive invoices after 1 April 2023 which don’t have these words on the invoice. The same will apply for credit notes, debit notes and buyer-created tax invoices.
  • Your information management systems. Review your systems to ensure supplier and customer databases can handle the taxable supply information requirements, especially recipient information (e.g. physical address and NZBN options).
  • Reviewing arrangements with suppliers and customers where buyer-created invoicing is more appropriate. Where you are entering into new buyer-created taxable supply information arrangements, you will need to retain the correct records (including copies of the agreements).
  • The time of supply rules. Certain transactions will have a different time of supply to the date the invoice is created. From 1 April 2023, the time of supply must be included in taxable supply information.
  • Training your staff on the new rules, including what is required to support GST input tax deductions. As well as a refresher on GST, it will also give you the opportunity to review supplier/customer arrangements and ensure all business/trade terms are current and comply with the new rules.
  • Progressing towards e-invoicing if you haven’t already. These new GST invoicing rules have been introduced to cater for technology and business processes. More efficient invoicing processes could benefit your business.

 

In Summary:

  • Most businesses may continue to use their existing methods of issuing a tax invoice from 1 April 2023. However, it is worth noting what information you must hold when you receive the taxable supply information as the recipient. 
  • There will no longer be a requirement to keep receipts under $200.
  • Inland Revenue has already approved, with immediate effect, the removal of the requirement to obtain approval to issue buyer-created tax invoices.  The supplier and recipient will only need to agree that the recipient will issue the invoice (or taxable supply information from 1 April 2023) and have a record of why this has been done. 
  • The terminology for buyer-created invoices will be “buyer created taxable supply information”
  • If your business is GST registered, you must retain and hold records of the taxable supply information and supply correction information regardless of whether you are the supplier or the recipient of the goods and services. This is a very different concept, as traditionally, businesses that receive the supply must hold a valid tax invoice to make a GST deduction claim on their GST returns. 

You can keep up to date with these changes from the IR website: https://www.ird.govt.nz/gst/tax-invoices-for-gst/rules-for-tax-invoices-are-changing-on-1-april-2023 or let us know if you have any questions.

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