• Computer cashbook software: Many computer software developers will not provide updates for older versions of electronic cashbooks to enable them to deal with the increase in GST rates.
• Electronic retail systems: Retail businesses tend to use electronic systems such as cash registers to record the sales transactions and most of those devices produce a tax invoice for the customer. Those systems will have to be reprogrammed to reflect the GST increase.
• Contracts: Where a contract is entered into and the time of supply is after October 2010 but before December 31, 2010, the consideration in the contract may increase. This may catch out many taxpayers who are unaware of the technicalities.
• Insurance contracts: Many businesses pay insurance monthly. Whether the monthly payment will increase after October 1 will depend on the actual contract.
• Leases: As with insurance contracts, this will depend on the actual contract and how the consideration is worded.
• Electricity and gas: If you pay on an estimated or fixed price agreement, check if you will be invoiced a "wash-up" amount in October.
• Alternative balance dates: All businesses will be required to file a GST return for the period ended September 30, 2010, irrespective of when they would normally file them. As many businesses have alternative balance dates, this will create additional compliance for them.
• Transitional adjustments: As many businesses return GST on a cash basis, the GST return for September 30 will most likely require additional information such as the debtors and creditors at this time. This will involve additional work for businesses.
• Stock on hand: Many businesses selling to the public may want to reduce stock levels. As such, many businesses will sell as much stock as they can before October 1 when their margins are better.
• Price points: A business that is a price maker may be able to increase the cost of GST and consumers will still buy the products. For price takers, the GST cost will have to be absorbed. Many businesses will see this as a chance to increase the price of their goods and services, resulting in the cost of many goods and services increasing by more than the GST amount.
• Lay-bys: Technically, it appears that businesses will be able to increase the cost on a lay-by after October 1. However, this is not likely to be well received by the consumer and it is not anticipated that lay-bys will be increased.
• Annual accounts: As the GST change is occurring part-way through the financial year, the completion of the annual accounts for the 2011 income year will be more complex. There are also several issues that will arise in relation to some specific businesses.
• Tourism operators will need advice on how to deal with holidays quoted or paid for now, but taken after October 1. Where a hotel has taken a deposit for accommodation which occurs after October 1, depending on the contract, it may not be able to recover the additional GST which they will be required to return.
• As the change is to occur at midnight on September 30, businesses open 24 hours or open at this time (bars and restaurants) will technically have to charge GST at 15% from midnight. For many businesses, rather than effecting the change at midnight, they will elect to bear the additional cost of the GST increase until the next day when their systems can be updated and prices can be changed.
Some businesses may raise prices early to increase the margin on sales before midnight.
The GST advisory panel had been established to advise the Government and businesses of issues and common concerns.
Although that might mean the IRD could address matters promptly, it was unlikely to create any certainty for taxpayers struggling with the implementation of change.
