GST and bloodstock destined for export

Introduction

This statement amends Inland Revenue's previous policy on zero-rating of Goods and Services Tax (GST) and export of bloodstock contained in Tax Information Bulletin Vol.11 No.7 (August 1999). This statement sets out the policy in relation to bloodstock destined for export that will not be exported within 28 days of the time of supply.

Background

Under section 11(5)(b) of the Goods and Service Tax Act 1985 the Commissioner may extend the period of time that goods sold for export may remain in New Zealand. This may be when, due to the nature of the supply, it is not practicable for the supplier to export the goods, or a class of goods, within 28 days beginning on the day of the time of supply.

The previous policy set out the maximum extension period of 12 months available for all age bloodstock to all destinations.

Policy

The Commissioner has a discretion to extend the 28-day period before the supply of goods is charged with GST where, due to the nature of the supply, it is not practicable for the supplier to export the goods within 28 days of the time of supply.

Pursuant to this statement, on written request the Commissioner may grant an extension of time to a maximum of 24 months from the time of supply. The extension is available for bloodstock of all ages to all destinations.

The bloodstock cannot be used for commercial activities while in New Zealand prior to export. This includes a thoroughbred yearling as defined in TIB Vol.4 No.6 (January 1993) contesting a race for prize money under the New Zealand Rules of Racing or being used for breeding.

If the animal is still in New Zealand at the expiration of the 24 month period, GST becomes payable regardless of whether the animal is subsequently exported. An application for an extension must be made in writing accompanied by a copy of the contract of supply directed to your local Inland Revenue office.

This policy does not extend to zero-rate goods and services supplied in respect of bloodstock during the period of extension - eg. agistment or veterinarian services. GST is payable on those goods and services consumed in New Zealand.

Bloodstock exported by the supplier

For goods to be zero-rated when supplied the -

• supplier will enter the goods for export, pursuant to the Customs and Excise Act 1996, in the course of, or as a condition of making the supply and will export the goods;
• goods will be deemed to be entered for export, pursuant to the Customs and Excise Act 1996, and exported by the supplier in the course of, or as a condition of, making the supply.

By contrast, if a horse is sold in New Zealand and exported by the purchaser, it is the purchaser and not the supplier who is the exporter. As a result this supply could not be zero-rated.

Liability where zero-rated bloodstock is on-sold or not exported

If the bloodstock for export is on-sold by the purchaser to another party (regardless of whether the other party is in New Zealand or overseas) or not exported then the original supply could not be zero-rated. The original supplier would be liable for the GST that would have been chargeable if GST had been levied at the applicable rate (currently 12.5%).

If an animal dies within the period of extension, from circumstances beyond the control of both the supplier and the recipient, then the supply will be zero-rated.

Application date of policy

The policy contained in this statement will be effective from the 1st of April 2007.