2009 changes have to the Goods and Services Tax Act 1985 clarify the GST treatment of facilitation services provided by inbound tour operators (ITOs).

Section 8(2) of the Goods and Services Tax Act 1985

Changes have been made to the Goods and Services Tax Act 1985 to clarify the GST treatment of facilitation services provided by inbound tour operators (ITOs).


ITOs are in the business of packaging and selling New Zealand tourist services for overseas visitors. The supply of these packages incorporates, but does not generally separate out, a "facilitation fee" component for an ITO's services in arranging the package.

There has been some uncertainty about the correct GST treatment of the facilitation service component of tour packages. The purpose of the amendment is to clarify this uncertainty.

Key features

New section 8(2B) provides that, to the extent to which a supply of services consists of the facilitation of inbound tour operations (facilitation services), the supply is taxed at the standard rate of GST. This section has a retrospective effect from 1 July 2007.

To ease the transition to the rules for some ITOs, new section 8(2C) introduces a transitional period from 1 July 2007 to 30 June 2008. During this period, the supply of facilitation services should be taxed at the rate of 0%. The consideration for the supply must be quantified on the basis of the person's gross margin attributable to the facilitation of inbound tour operations, or by other means that the Commissioner is able to verify.

New section 8(2D) provides that the amount of consideration charged by a person for facilitation services during the transitional period must be calculated for each of the person's taxable periods that fall within the transitional period. For any days in the person's taxable period that fall outside the transitional period, the consideration must be apportioned on a pro rata basis.

New section 8(2D) states that if a registered person has paid GST in respect of a supply of facilitation services at the standard rate during the transitional period, the person is entitled to a refund of the amount of tax paid. The application for the refund must be made in writing by 7 June 2010.

New section 8(2F) clarifies the meaning of "facilitation services". Facilitation services are the services that a registered person provides in packaging one or more domestic tourism products and services in New Zealand and selling them outside New Zealand to a non-resident person. The tourism products and services may include accommodation, meals, transport, and other activities.

Application date

The amendments apply from 1 July 2007.