May Suppliers Lock In a 12.5% GST Rate by Early Invoicing?
Some suppliers may see opportunities to reduce their output GST, by manipulating their usual invoicing arrangements, so as to bring forward the supply of some sales to before 1 October. However, the IRD has sounded the following warning: “Reliance on the normal time of supply rules may allow businesses to bring forward invoicing so they can take advantage of the old lower GST rate. In excessive cases the general anti-avoidance provision in the GST Act may be applicable if it is clearly evident that businesses are restructuring their business practices to bring forward a material number of transactions.” Accordingly, such manipulation should be approached cautiously. On the other hand, in our view there should be no objection to taking advantage of an ability to pay “up-front”, rather than in instalments throughout the year, in order to lock in the 12.5% GST rate. For example, in many cases local authorities give their ratepayers the option to pay the whole year’s rates early in one lum
