GST and consumable stores supplied to departing aircraft and commercial ships

2007 amendments clarify the circumstances when the supply of consumable stores to departing aircraft and commercial ships may be zero-rated.

Section 11(1)(l) of the Goods and Services Tax Act 1985

Changes have been made to clarify the circumstances when the supply of consumable stores to departing aircraft and commercial ships may be zero-rated.

Background

Section 11(1)(l) of the Goods and Services Tax Act 1985 governs when the supply of consumable stores may be zero-rated. The changes to section 11(1)(l) clarify when consumable stores provided to aircraft and commercial ships are considered to be exported from New Zealand and treated as zero-rated supplies.

The term "consumable stores" is defined in section 11(9) and includes goods such as fuel and lubricants and other goods that are available to be consumed by passengers or crew on board an aircraft or ship. "Consumable stores" does not include spare parts.

The changes are intended to zero-rate supplies of consumable stores in the following circumstances:

  • consumable stores provided to aircraft or commercial ships that are in transit in New Zealand as part of an international flight or voyage - for example, an aircraft or ship that travels from Christchurch to Auckland en-route to Singapore; and
  • consumable stores provided to commercial ships that do not necessarily travel to countries outside New Zealand but carry consumable stores to other commercial ships that are leaving New Zealand or fishing ships operating outside New Zealand fisheries waters. For example, motherships used to support fishing fleets operating outside New Zealand fisheries waters.

The changes also deal with the situation when consumable stores are contractually supplied to a non-resident broker but the goods are physically delivered directly to the operator of the aircraft or commercial ship that is departing New Zealand. The changes ensure that the contract for the supply of consumable stores with the non-resident broker does not preclude the supply from being zero-rated.

Key features

The application of section 11(1)(l) has been amended by removing the requirement that the consumable stores must be for use outside New Zealand. Instead, the section requires that the consumable stores are intended for use on an aircraft or commercial ship that is going to a destination outside New Zealand.

In addition, new section 11(1)(l)(iib) allows the supply of consumable stores to ships, other than pleasure craft, which are in turn used to provide consumable stores to "foreign-going ships" or "fishing ships" to be zero-rated.

Consequential changes have also been made to the definitions of "consumable stores" and "foreign-going ship" in section 11(9).

Application date

The changes apply to consumable stores supplied on and after 24 October 2001, the date that section 11(1)(l) was last substantially amended.