On Apr. 7, NZ Tax issued proposal on unincorporated joint ventures.
NZ Tax issued discussion documentGoods and services tax (GST) and unincorporated joint ventures (JVs), which outlines proposed reforms to GST policy settings for JVs.
Background
The GST rules treat an unincorporated body including joint venture as a separate person for GST purposes; unincorporated bodies are required to register for GST if they supply/expect to supply goods or services worth over NZD 60k in one year.
When an unincorporated body (including joint venture) is not registered for GST, one is not allowed to register individually for the body’s activities, claim input tax deductions.
This applies even when goods or services are directly used for making taxable supplies by GST-registered members of the joint venture in their separate taxable activities.
The joint venture has to register instead of members which increase compliance costs.
Highlights of Discussion Document
The discussion document outlines the policy considerations and seven proposals.
A policy justification for requiring an unincorporated body to register for GST, instead of its members, is to minimize overall compliance and administration costs.
NZ Tax said this means that in many cases, only one GST registration is required.
The proposals include defining joint ventures to exclude partnership, the default flow-through treatment, optional registration of joint venture, special rule for joint venture.
If these proposals are progressed, they would require legislative changes and could be included in a NZ GVT taxation bill to be introduced in the second half of 2025.
Submissions are invited on the appropriate application date for the proposed changes.
