The first of April 2021 marked ten years since the compulsory zero-rating (CZR) GST rules for land transactions were introduced in New Zealand. CZR is now better understood by the market, but there have been some challenges along the way.
CZR fundamentally shifted the GST risk on transactions involving land (and buildings) from the Inland Revenue to the parties involved. The biggest failing that the authors regularly see in relation to CZR is the lack of attention by the parties to properly execute contracts and information requirements. This has resulted in cash costs, time delays, failed deals, or a combination.
In this article, 10 years on from the introduction of CZR, the authors focus on the main lessons learnt. They also cover the key ‘watch outs’ for vendors, purchasers and all parties involved in property transactions.