11 Zero-rating of goods

(1)

A supply of goods that is chargeable with tax under section 8 must be charged at the rate of 0% in the following situations:

(a)

the supplier has entered the goods for export under the Customs and Excise Act 1996 and the goods have been exported by the supplier; or

(b)

the goods have been deemed to be entered for export under the Customs and Excise Act 1996 and the goods have been exported by the supplier; or

(c)

the supplier has satisfied the Commissioner that the goods have been exported by the supplier to a place outside New Zealand; or

(d)

subject to subsection (4), the supplier will enter the goods for export under the Customs and Excise Act 1996 in the course of, or as a condition of, making the supply, and will export the goods; or

(e)

subject to subsection (4), the goods will be deemed to be entered for export under the Customs and Excise Act 1996 and will be exported by the supplier in the course of, or as a condition of, making the supply; or

(eb)

subject to subsection (4), the goods supplied—

(i)

are supplied to a recipient who is a non-resident; and

(ii)

have been entered for export under the Customs and Excise Act 1996 by the supplier or will be entered for export by the supplier in the course of or as a condition of making the supply; and

(iii)

are exported by the recipient; and

(iv)

are not intended by the recipient for later importation into New Zealand for use other than in making taxable supplies or exempt supplies, with the absence of such an intention being confirmed by the recipient in a document retained by the supplier; and

(v)

are not used or altered by the recipient before being exported, except to the extent necessary to prepare the goods for export; and

(vi)

leave New Zealand under an arrangement agreed by the supplier and the recipient at or before the time of the supply; and

(vii)

do not leave New Zealand in the possession of a passenger or crew member of an aircraft or ship; or

(f)

goods that would otherwise have been exported are destroyed, die or cease to exist in circumstances beyond the control of both the supplier and the recipient; or

(g)

subject to subsection (6), the goods are supplied by a supplier who is licensed under section 12 of the Customs and Excise Act 1996, if—

(i)

the supplier has been licensed by the chief executive of the New Zealand Customs Service to operate a sealed bag system; and

(ii)

the goods are supplied in accordance with the sealed bag system; and

(iii)

the goods are entered, or are deemed to be entered, for export under the Customs and Excise Act 1996; or

(h)

the goods and services are supplied—

(i)

by a supplier who is licensed under section 12 of the Customs and Excise Act 1996; and

(ii)

within an area licensed under section 12 of the Customs and Excise Act 1996 as a customs controlled area for the processing of persons arriving in or departing from New Zealand; and

(iii)

to either—

(A)

an inbound air traveller; or

(B)

an outbound air traveller who picks up the goods upon returning to New Zealand; or

(i)

subject to subsection (7), the supply of a boat or an aircraft by way of sale to a recipient who exports the boat or aircraft under its own power to a place outside New Zealand; or

(j)

the goods are not situated in New Zealand at the time of supply and—

(i)

the goods are not situated in New Zealand at the time of delivery to the recipient:

(ii)

the recipient pays tax under section 12 on the importation of the goods into New Zealand; or

(k)

the goods have been supplied in the course of repairing, renovating, modifying or treating goods to which paragraph (i) or section 11A(1)(h) or (i) applies and the goods supplied—

(i)

are wrought into, affixed to, attached to or otherwise form part of those other goods; or

(ii)

are consumable goods that become unusable or worthless as a direct result of being used in the repair, renovation, modification or treatment process; or

(ka)

the goods are supplied for use on, or the use of, a pleasure craft, being a temporary import within the meaning of section 116 of the Customs and Excise Act 1996, that cause or enable the craft to sail, or that ensure the safety of passengers and crew on the craft; or

(l)

the goods supplied are consumable stores intended for use on—

(i)

an aircraft on a flight, or going, to a destination outside New Zealand; or

(ii)

a fishing ship outside, or going outside, New Zealand fisheries waters; or

(iib)

a ship, other than a pleasure craft, carrying consumable stores to a foreign-going ship or to a fishing ship that meets the requirements in subparagraph (ii); or

(iii)

a foreign-going ship; or

(iv)

a pleasure craft that is a temporary import within the meaning of section 116 of the Customs and Excise Act 1996 going to a destination outside New Zealand fisheries waters; or

(m)

the supply to a registered person of a taxable activity, or part of a taxable activity, that is a going concern at the time of the supply, if—

(i)

the supplier and the recipient agree that the supply is the supply of a going concern, and their agreement is recorded in a document; and

(ii)

the supplier and the recipient intend that the supply is of a taxable activity, or part of a taxable activity, that is capable of being carried on as a going concern by the recipient; or

(mb)

the supply wholly or partly consists of land, being a supply—

(i)

made by a registered person to another registered person who acquires the goods with the intention of using them for making taxable supplies; and

(ii)

that is not a supply of land intended to be used as a principal place of residence of the recipient of the supply or a person associated with them under section 2A(1)(c); or

(n)

the supply of new fine metal, being the first supply of the new fine metal after its refining, by the refiner to a dealer in fine metal, for the purpose of supplying the fine metal for use as an investment item; or

(o)

the goods are supplied to or by the Crown as consideration for a supply—

(i)

for which there is no payment of a price; and

(ii)

that is chargeable at the rate of 0% under section 11A(1)(s) or (t); or

(p)

the goods are—

(i)

jigs, patterns, templates, dies, punches, and similar machine tools to be used in New Zealand solely to manufacture goods that will be for export from New Zealand; and

(ii)

supplied to a recipient who is a non-resident, and not a registered person.

(2)

For the purpose of subsection (1)(n), if a person is both a refiner of and a dealer in fine metal, the new fine metal is treated as having been supplied to the dealer at a time immediately before the making of an exempt supply of the new fine metal.

(3)

Subsection (1)(a) to (1)(l) do not apply to a supply of goods by a registered person if—

(a)

the registered person, or another person associated with the registered person, has deducted, under section 20(3), input tax as defined in section 3A(1)(c) in respect of the goods; or

(b)

the goods have been or will be reimported into New Zealand by the supplier.

(3B)

Subsection (3)(a) does not apply to a supply of goods if the recipient gives the registered person at or before the time of the supply an undertaking, and records the undertaking in a document, that neither the recipient nor an associated person will cause the goods to be reimported into New Zealand in a condition that is substantially the same as the condition the goods were in when the supply was charged with tax under subsection (1)(a) to (1)(l).

(3C)

Despite subsection (3B), a registered person is treated as having supplied goods in the course or furtherance of a taxable activity and must be charged with tax at the rate specified in section 8 if—

(a)

the supply of the goods by the registered person was charged with tax under subsection (1)(a) to (l); and

(b)

the goods are imported into New Zealand; and

(c)

the goods are reacquired by the registered person in substantially the same condition as the condition the goods were in when the supply was charged with tax under subsection (1)(a) to (l); and

(d)

the registered person deducted under section 20(3) input tax as defined in section 3A(1)(c) in relation to the original supply of the goods under subsection (1)(a) to (l).

(3D)

Subsection (3C)—

(a)

applies at the time the goods are reacquired by the registered person:

(b)

does not apply if tax is paid under section 12 on the importation of the goods into New Zealand.

(4)

If subsection (1)(d), (e), or (eb) applies and the person required to export the goods does not do so within 28 days beginning on the day of the time of supply or a longer period that the Commissioner has allowed under subsection (5), the supply of the goods must be charged with tax at the rate specified in section 8 despite subsection (1)(d), (e), and (eb) but subject to subsection (1)(a), (1)(b) and subsection (5).

(5)

The Commissioner may extend the 28-day period before a supply of goods is charged with tax at the rate specified in section 8 if the Commissioner has determined, after the supplier has applied, that—

(a)

circumstances beyond the control of the supplier and the recipient have prevented, or will prevent, the export of the goods within 28 days beginning on the day of the time of supply; or

(b)

due to the nature of the supply, it is not practicable for the supplier to export the goods, or a class of the goods, within 28 days beginning on the day of the time of supply.

(6)

If subsection (1)(g) applies and the goods cannot be evidenced, as specified by the chief executive of the New Zealand Customs Service in accordance with the sealed bag system, as being exported within 28 days beginning on the day of the time of supply, despite subsection (1)(g), the supply must be charged with tax at the rate specified in section 8.

(7)

Subsection (1)(i) applies to the supply of a boat or an aircraft, if—

(a)

the boat or aircraft is exported within 60 days beginning on the date on which the recipient or the recipient’s agent takes physical possession of it, or within a longer period as the Commissioner may allow under subsection (8); and

(b)

the vendor or the purchaser provides the Commissioner with such documentation and undertakings as the Commissioner may require in relation to—

(i)

records of the sale of the supply; and

(ii)

limitations on dealings in and the uses to which the boat or aircraft will be put before export; and

(iii)

the proposed and actual date of export.

(8)

The Commissioner may extend the 60-day period if the Commissioner is satisfied, upon the written application of the supplier, that the export of the boat or aircraft within the period is or has been prevented by circumstances that are beyond the control of the supplier and the recipient or that relate to supplies to which subsection (1)(k) or section 11A(1)(ib) applies.

(8B)

Whether a supply of goods is zero-rated under subsection (1)(mb) is determined at the time of settlement of the transaction relating to the supply.

(8C)

Despite subsections (1)(mb) and (8B), a supplier may choose to apply the provisions of this Act applying before the changes made by the Taxation (GST and Remedial Matters) Act 2010 if they enter into a binding agreement before 1 April 2011 for which the time of supply is on or after that date.

(8D)

For the purposes of the zero-rating of land rules,—

(a)

a supply that is an assignment or surrender of an interest in land is a supply under subsection (1)(mb) if it meets the requirements set out in that subsection and paragraph (b) does not apply:

(ab)

a supply that is a surrender of a right to a payment under an agreement for the supply of an interest in land is a supply under subsection (1)(mb) if the supply of the interest in land meets the requirements set out in that subsection:

(b)

a supply of an interest in land that meets the requirements of subsection (1)(mb), and is made under an agreement providing for periodic payments for supplies of the interest in land, is not a supply under that subsection for the purposes of a payment for the supply paid or payable under the agreement if—

(i)

each amount payable under the agreement that is not a regular payment is anticipated, when the agreement is entered, to be 25% or less of the consideration specified in the agreement (the term consideration) for all supplies of the interest in land during the period referred to in subparagraph (iv); and

(ii)

the payment, if not a regular payment, is 25% or less of the term consideration; and

(iii)

each amount that is paid or payable before the payment, and is not a regular payment, is 25% or less of the term consideration; and

(iv)

the term consideration is treated as being the amount of consideration calculated under the agreement for supplies anticipated to be made during a period that is the longer of 1 year and the shortest possible fixed term of the agreement:

(c)

a supply by a person who is the lessee under a lease agreement is a supply under subsection (1)(mb), despite paragraph (b), if—

(i)

the supply is to a person who is not the lessor supplying an interest in land under the lease agreement to the lessee; and

(ii)

the supply is made under an arrangement that involves the lessee’s surrender of the interest in land to the lessor and the supply by the lessor of the interest in land under another lease agreement to a person other than the lessee; and

(iii)

the supplies of the interest in land under the lease agreements meet the requirements set out in subsection (1)(mb):

(d)

a registered person who is a non-profit body that is resident in New Zealand and acquires goods is treated, to the extent to which the person acquires the goods with an intention of using them other than for making exempt supplies, as acquiring the goods with the intention of using them for making taxable supplies.

(9)

For the purpose of this section—

aircraft has the meaning set out in section 2 of the Civil Aviation Act 1990

consumable stores means—

(a)

goods that passengers and crew on board an aircraft or a ship have available to consume; and

(b)

goods necessary to operate or maintain an aircraft or a ship, including fuel and lubricants but excluding spare parts and equipment

fishing ship has the meaning set out in section 2 of the Maritime Transport Act 1994

foreign-going ship means a ship on a voyage, or going, to a destination outside New Zealand, other than a pleasure craft or a fishing ship

New Zealand fisheries waters has the meaning set out in section 2 of the Fisheries Act 1996

pleasure craft has the meaning set out in section 2 of the Maritime Transport Act 1994

sealed bag system means a system under which a supplier—

(a)

is licensed to operate an export warehouse; and

(b)

may, with the authorisation of the chief executive of the New Zealand Customs Service, and subject to any conditions that the chief executive may specify, supply goods in a sealed bag to individuals intending to travel overseas within 5 days beginning on the day of the time of supply; and

(c)

must provide evidence that the goods have been exported from New Zealand within 5 days beginning on the day of the time of supply, and if conditions have been specified by the chief executive of the New Zealand Customs Service, in accordance with those conditions

ship has the meaning set out in section 2 of the Maritime Transport Act 1994.

Section 11: substituted, on 10 October 2000 (applying on and after 10 October 2000), by section 90(1) of the Taxation (GST and Miscellaneous Provisions) Act 2000 (2000 No 39).

Section 11(1)(eb): inserted (with effect on 17 May 2007), on 19 December 2007, by section 273(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 11(1)(f): amended, on 27 March 2001 (applying on and after 10 October 2000), by section 63(1) of the Taxation (Beneficiary Income of Minors, Services-Related Payments and Remedial Matters) Act 2001 (2001 No 4).

Section 11(1)(j): substituted, on 3 April 2006 (applying for supplies made on or after 19 May 2005), by section 288(1) of the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 (2006 No 3).

Section 11(1)(k): amended, on 30 March 2017, by section 352(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section 11(1)(ka): inserted, on 24 October 2001 (applying on and after 24 October 2001), by section 240(1) of the Taxation (Taxpayer Assessment and Miscellaneous Provisions) Act 2001 (2001 No 85).

Section 11(1)(l): substituted, on 24 October 2001 (applying on and after 24 October 2001), by section 240(2) of the Taxation (Taxpayer Assessment and Miscellaneous Provisions) Act 2001 (2001 No 85).

Section 11(1)(l): amended (with effect on 24 October 2001), on 19 December 2007, by section 273(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 11(1)(l)(i): substituted (with effect on 24 October 2001), on 19 December 2007, by section 273(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 11(1)(l)(ii): substituted (with effect on 24 October 2001), on 19 December 2007, by section 273(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 11(1)(l)(iib): inserted (with effect on 24 October 2001), on 19 December 2007, by section 273(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 11(1)(m)(i): replaced, on 2 June 2016, by section 185(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).

Section 11(1)(mb): inserted, on 1 April 2011 (applying to supplies made on or after 1 April 2011), by section 10(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 11(1)(n): amended, on 1 January 2009 (applying to supplies made on or after 1 January 2009), by section 79(1) of the Climate Change Response (Emissions Trading) Amendment Act 2008 (2008 No 85).

Section 11(1)(o): substituted (with effect on 1 July 2010), on 21 December 2010, by section 10(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 11(1)(o)(ii): amended, on 1 April 2014, by section 125 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).

Section 11(1)(p): inserted, on 1 April 2014, by section 125 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).

Section 11(1)(p)(ii): amended, on 30 June 2014, by section 188(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section 11(3B): inserted, on 6 October 2009, by section 709 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section 11(3B): amended, on 2 June 2016, by section 185(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).

Section 11(3C): inserted, on 6 October 2009, by section 709 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section 11(3D): inserted, on 6 October 2009, by section 709 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section 11(4): amended (with effect on 17 May 2007), on 19 December 2007, by section 273(3)(a) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 11(4): amended (with effect on 17 May 2007), on 19 December 2007, by section 273(3)(b) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 11(5): amended, on 2 June 2016, by section 185(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).

Section 11(8): replaced, on 30 March 2017, by section 352(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section 11(8B): inserted, on 1 April 2011 (applying to supplies made on or after 1 April 2011), by section 10(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 11(8C): inserted, on 1 April 2011 (applying to supplies made on or after 1 April 2011), by section 10(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 11(8C): amended (with effect on 1 April 2011), on 29 August 2011 (applying to supplies made on or after 1 April 2011), by section 238(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).

Section 11(8D): replaced (with effect on 30 June 2014), on 30 March 2017, by section 352(5) (and see section 352(8)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section 11(8D)(ab): inserted (with effect on 1 April 2011), on 30 March 2017, by section 352(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section 11(8D)(b): replaced (with effect on 1 April 2011), on 30 March 2017, by section 352(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section 11(8D)(c)(iii): amended, on 30 March 2017, by section 352(6) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section 11(8D)(d): inserted, on 30 March 2017, by section 352(7) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section 11(9) consumable stores: inserted, on 24 October 2001 (applying on and after 24 October 2001), by section 240(3) of the Taxation (Taxpayer Assessment and Miscellaneous Provisions) Act 2001 (2001 No 85).

Section 11(9) consumable stores paragraph (a): amended (with effect on 24 October 2001), on 19 December 2007, by section 273(4) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 11(9) foreign-going ship: substituted (with effect on 24 October 2001), on 19 December 2007, by section 273(5) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section 11(9) pleasure craft: inserted, on 24 October 2001 (applying on and after 24 October 2001), by section 240(5) of the Taxation (Taxpayer Assessment and Miscellaneous Provisions) Act 2001 (2001 No 85).

Section 11(9) ship: added, on 24 October 2001 (applying on and after 24 October 2001), by section 240(6) of the Taxation (Taxpayer Assessment and Miscellaneous Provisions) Act 2001 (2001 No 85).