Modernising Goods and Services Tax in New Zealand: An easier way to keep GST records

Do you struggle with the process of keeping Goods and Services Tax (GST) receipts for clients? Get ready for your life to become a whole lot easier, as the Inland Revenue Department (IRD) is modernising record keeping for GST!

What’s the latest?

The New Zealand Government is changing up rules around GST tax invoices. Why? To make life easier for accountants, bookkeepers, tax agents and specialists who offer invoicing and accounting services to clients! And to keep up with technology (such as e-invoicing) as new advancements are made, of course.

Some changes have already come into effect (on 30 March 2022), whilst others are on the way to changing on 1 April 2023. The new rules are aimed at modernising GST rules over invoicing and record keeping, to support electronic systems as a result of New Zealand adopting the Pan European Public Procurement Online (Peppol) framework.

What is the Pan European Public Procurement Online (Peppol) framework?

Simply put, the Peppol framework allows businesses to exchange documents between financial systems in a standardised format. Overseen by MBIE, New Zealand became a Peppol Authority in October of 2019. This framework is used by 32+ countries globally and is designed to simplify the transfer of information - such as purchase orders and invoices - between systems. 

Some of the benefits of this framework include:

• Improved cost efficiency 
• Increased security of information (which is crucial, given the recent string of cyber security attacks and the need to mitigate the risk of confidential client data breaches)
• Reduced processing errors

There’s now a need for all accountants (and those who process invoices and offer accounting services) to understand what’s changing.

What are the changes?

We can collectively breathe a sigh of relief; there won’t be any changes to GST calculations. 

The changes only apply to the rules relating to invoicing and record keeping.

Here are some of the little changes that will be coming into effect from 1 April 2023:

• The current term “tax invoice” will be replaced by the term “taxable supply information”
• The current term “debit note/credit note” will be replaced by the term “supply correction information”
• The current term “buyer-created tax invoice” will be replaced by the term “buyer-created taxable supply information”

In addition to some terminology changes, the following will come into effect from 1 April 2023:

• You’ll no longer need to keep 1 physical document containing the supply information (such as a credit or debit note, or a tax invoice) - instead, your accounting system or transaction records can contain the necessary information to process GST returns for clients
• Taxable supply information can be provided between a buyer’s and seller’s software, such as through Peppol e-invoicing
• The taxable supply information that needs to be kept will be based on the value and type of supply - the IRD has provided a tool to help with these record keeping requirements

What does this mean for you?

If you’re a payroll specialist or are currently only offering payroll services to clients, there’s no action needed.

However, if you’re a tax agent, accountant, bookkeeper or specialist who offers invoicing and accounting services, it’s important that you’re aware of the upcoming changes. The rules will offer you increased flexibility, as most invoicing practices or currently-compliant systems will also comply with the new changes.

In order to prepare for the GST changes, you should:

• Review any of your clients’ recent tax invoices that may be affected
• Review and update any GST documentation that you provide to clients, to ensure compliance with the new terminology (this will also instill confidence in your clients that you’re on the ball!)
• Ensure your team are aware of the legislation changes and are prepared for any queries ahead of 1 April 2023
• Review your current system capabilities

• Can they send and receive non-standardised taxable supply information?
• Are they ahead of the changes and prepared for future e-invoicing support?

Although the changes are relatively minor, think about the long-term benefits for yourself and your clients. It’s estimated that e-invoicing will help to save businesses an estimated NZD$34 billion in transaction costs in its first 10 years of operation.

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Take advantage of the time savings and benefits to your business, by opting for software with e-invoicing capabilities such as Zoho Books or Xero. The best part? Both solutions integrate seamlessly with KeyPay for end-to-end payroll, accounting and workforce management across platforms.

Interested in finding out how you can combine payroll into your existing tech stack for all your accounting services? Book a demo of KeyPay to learn more.

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Disclaimer: The information in this article is current as at 26 September 2022, and has been prepared by KEYPAY LIMITED PARTNERSHIP (NZBN 9429048779524) and its related bodies corporate (KeyPay). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. KeyPay does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this article.