We’ve had a number of nominations to our GST wall of Shame for electricity companies charging the new rate of GST on bills for power used in September and invoiced in early October.
This has to be unfair – right?
It certainly seems unfair to us, but we think that about the GST rise in general. And in this case, it’s the government’s new GST rules that are to blame. It’s not the fault of the electricity companies.
IRD rules say the new rate of 15% GST must apply to all invoices issued from October 1. Although your electricity was supplied to you in September, the law says the date of supply is the date of the invoice.
However, IRD have issued some special rules which mean an electricity supplier can choose to bill customers at 12.5% GST for September as long as they follow the guidelines below:
Paying your power, gas or telephone bill
Kaye gets an invoice for her electricity bill for power used in the period up to 30 September. The new legislation allows a utility supplier, such as an electricity, gas or telephone supplier, to charge GST 12.5% for electricity used in the period up until 30 September. If the supplier chooses this option they need to ensure that:
the invoice was dated on or before 30 September 2010, and
the invoice was issued by 11 October 2010, and
payment for the supply would need to be due no later than 60 days from the invoice date.
If they don't opt to do that and issue an invoice to Kaye dated 15 October, then Kaye is liable to pay the 15% GST rate. The supplier must also account for GST at 15%.
If Kaye received an invoice dated 28 September and payment was due on 25 October, then GST would be at 12.5%.
- Inland Revenue - www.ird.govt.nz
- GST Wall of Shame - the list of price increases submitted by our readers
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