New Zealand Tax Agency Seeks Comments on GST Treatment of Deposits in Cancelled Land Sale Agreements

The New Zealand Inland Revenue March 3 opened a consultation on Exposure Draft No. PUB00485, regarding GST treatment of deposits retained by the seller in cancelled land sale agreements. The proposed guidance explains that: 1) GST doesn’t apply to the deposit because the seller makes no supply of land or any other supply in return for the deposit; 2) if the seller has paid GST output tax or the buyer has claimed a GST input tax credit before the agreement was cancelled, any amounts must be reversed in the period when the agreement is cancelled; 3) when a land sale ...