New Zealand Tax Agency Issues Technical Decision Clarifying GST Output Tax Deductions, Shortfall Penalties

The New Zealand Inland Revenue Feb. 28 issued Technical Decision Summary No. 25/03, clarifying GST output tax deductions for indemnity payments made under a deed and shortfall penalties. The taxpayer, a company with both residential and commercial leases, made a payment to a tenant under a deed for failing to make building alterations by a specified date. The taxpayer sought clarification on the GST output tax deduction for the payment made under the deed and the application of a shortfall penalty. The Tax Counsel Office (TCO) found that: 1) the taxpayer wasn’t entitled to claim a deduction from output tax ...