25 Credit and debit notes

(1)

This section shall apply where, in relation to the supply of goods and services by any registered person,—

(a)

that supply of goods and services has been cancelled; or

(aa)

the nature of that supply of goods and services has been fundamentally varied or altered; or

(aab)

section 8(4) was incorrectly applied to the treatment of the supply, so that the services were treated as having been supplied in New Zealand when they should have been treated as being supplied outside New Zealand, for a supply—

(i)

made by a non-resident supplier of services to which section 8(3)(c) applies; and

(ii)

for which no election was subsequently made under section 24(5B); or

(ab)

section 11(1)(mb) was incorrectly applied to the treatment of the supply, so that the supply was either zero-rated when it should not have been, or not zero-rated when it should have been; or

(abb)

section 11A(1)(x) was incorrectly applied to the treatment of the supply, so that the supply was not zero-rated when it should have been, and the supplier did not subsequently make an election under section 24(5B); or

(b)

the previously agreed consideration for that supply of goods and services has been altered, whether due to the offer of a discount or otherwise; or

(c)

the goods and services or part of those goods and services supplied have been returned to the supplier,—

and the supplier has—

(d)

provided a tax invoice in relation to that supply and as a result of any 1 or more of the above events, the amount shown thereon as tax charged on that supply is incorrect; or

(e)

furnished a return in relation to the taxable period for which output tax on that supply is attributable and, as a result of any 1 or more of the above events, has accounted for an incorrect amount of output tax on that supply.

(2)

Where a supplier has accounted for an incorrect amount of output tax as specified in subsection (1)(e), that supplier shall make an adjustment in calculating the tax payable by that supplier in the return for the taxable period during which it has become apparent that the output tax is incorrect, and if—

(a)

the output tax properly charged in relation to that supply exceeds the output tax actually accounted for by the supplier, the amount of that excess shall be deemed to be tax charged on a taxable supply made by that supplier and be attributable to the taxable period in which the adjustment is to be made, and not attributable to any prior taxable period:

(b)

the output tax actually accounted for exceeds the output tax properly charged in relation to that supply, that supplier shall make a deduction under section 20(3) of the amount of that excess.

(3)

Subject to this section, where a tax invoice has been provided as specified in subsection (1)(d), and—

(a)

the amount shown as tax charged on that tax invoice exceeds the actual tax charged in respect of that supply, the supplier shall provide the recipient with a credit note, containing the following particulars:

(i)

the words “credit note” in a prominent place:

(ii)

the name and registration number of the registered person:

(iii)

the name and address of the recipient:

(iv)

the date on which the credit note was issued:

(v)

either—

(A)

the amount of consideration for that supply contained in the tax invoice referred to above, the correct amount of consideration for the supply, the difference between those 2 amounts, and the tax charged in respect of that supply to the extent that it relates to the amount of that difference; or

(B)

where the tax charged in respect of the supply is the tax fraction of the consideration, the difference referred to above in this subparagraph and a statement that that difference includes a charge in respect of the tax:

(vi)
[Repealed]

(vii)

a brief explanation of the circumstances giving rise to the issuing of the credit note:

(b)

the actual tax charged in respect of that supply exceeds the tax charged shown on the tax invoice, the supplier shall provide the recipient with a debit note, containing the following particulars:

(i)

the words “debit note” in a prominent place:

(ii)

the name and registration number of the registered person:

(iii)

the name and address of the recipient:

(iv)

the date on which the debit note was issued:

(v)

either—

(A)

the amount of consideration for that supply contained in the tax invoice referred to above, the correct amount of consideration for the supply, the difference between those 2 amounts, and the tax charged in respect of that supply to the extent that it relates to the amount of that difference; or

(B)

where the tax charged in respect of the supply is the tax fraction of the consideration, the difference referred to above in this subparagraph and a statement that that difference includes a charge in respect of the tax:

(vi)
[Repealed]

(vii)

a brief explanation of the circumstances giving rise to the issuing of the debit note:

provided that—

(c)

it shall not be lawful to issue more than 1 credit note or debit note for the amount of the excess:

(d)

if any registered person claims to have lost the original credit note or debit note, the supplier or recipient, as the case may be, may provide a copy clearly marked “copy only”:

(e)

a supplier shall not be required to provide a recipient with a credit note pursuant to paragraph (a) in any case where and to the extent that the amount of the excess referred to in that paragraph arises as a result of the recipient taking up a prompt payment discount offered by the supplier and that the terms of the prompt payment discount offer are clearly stated on the face of the tax invoice:

(f)

in the case of a supply to which subsection (1)(ab) applies, a credit note may not be issued after 7 years from the date of settlement of the transaction relating to the supply.

(3A)

Where a recipient, being a registered person, creates a document containing the particulars specified in this section and purporting to be a credit note or a debit note in respect of a supply of goods and services made to the recipient by a supplier, being a registered person, that document shall be deemed to be a credit note or, as the case may be, a debit note provided by the supplier under subsection (3) where—

(a)

the Commissioner has granted prior approval for the issue of such documents by a recipient or class or classes of recipients in relation to the supplies or class or classes of supplies to which the documents relate; and

(b)

the supplier and the recipient agree that the supplier shall not issue a credit note or, as the case may be, a debit note in respect of any supply to which this subsection applies; and

(c)

a copy of any such document is provided to the supplier and another copy is retained by the recipient:

provided that—

(d)

where a credit note is issued pursuant to this subsection, any credit note issued by the supplier in respect of that supply shall be deemed not to be a credit note for the purposes of this Act:

(e)

where a debit note is issued pursuant to this subsection, any debit note issued by the supplier in respect of that supply shall be deemed not to be a debit note for the purposes of this Act.

(3B)

Where the Commissioner is satisfied that there are or will be sufficient records available to establish the particulars of any supply or class of supplies, and that it would be impractical to require that a credit note or a debit note be issued pursuant to this section, the Commissioner may determine that, subject to any conditions that the Commissioner may consider necessary,—

(a)

any 1 or more of the particulars specified in paragraph (a) or, as the case may be, paragraph (b) of subsection (3) shall not be contained in a credit note or, as the case may be, a debit note; or

(b)

a credit note or, as the case may be, a debit note is not required to be issued.

(3C)

Notwithstanding anything in subsection (3) where, in relation to any taxable supplies, or a class or classes of taxable supplies, made by a supplier to a recipient, or a class or classes of recipients,—

(a)

the supplier has provided, in terms of section 24, 1 or more tax invoices to a recipient in respect of those taxable supplies; and

(b)

the Commissioner is satisfied that there are or will be sufficient records available to establish the particulars of those taxable supplies to a recipient,—

the Commissioner may determine in respect of any recipient, or class or classes of recipients, that, subject to any conditions that the Commissioner may consider necessary, the supplier may issue 1 credit note or debit note to each recipient with respect to those tax invoices.

(4)

Where any recipient, being a registered person, has been issued with a credit note pursuant to subsection (3)(a), or has been notified, or otherwise knows that any tax invoice which that registered person holds is incorrect as a result of any 1 or more of the events specified in any of paragraphs (a), (aa), (ab), (b), and (c) of subsection (1), and has made a deduction of any amount of input tax in any taxable period in respect of that supply of goods and services to which the credit note or that notice or other knowledge, as the case may be, relates, the amount of the excess referred to in subsection (3)(a) shall be deemed to be tax charged in relation to a taxable supply made by the recipient attributable to the taxable period in which the credit note was issued, or that notice or, as the case may be, other knowledge was received, to the extent that the input tax deducted exceeds the output tax properly charged.

(5)

Where any recipient, being a registered person, has been issued with a debit note pursuant to subsection (3)(b), and has made a deduction of any amount of input tax in any taxable period in respect of that supply of goods and services to which that debit note relates, the recipient shall make a deduction under section 20(3) of the amount of the excess referred to in subsection (3)(b) in the taxable period in which the debit note is issued, to the extent that the output tax properly charged exceeds the input tax deducted.

(6)

Where any amount of tax charged is required to be shown on any credit note or debit note, and that amount consists of any number of dollars and cents together with any fraction or part of a cent, that fraction or part of that cent,—

(a)

if less than or equal to half of that cent, may be disregarded for the purposes of this section:

(b)

if in excess of half of that cent, shall be deemed for the purposes of this section to be an amount equal to 1 cent.

Section 25(1)(aa): inserted (with effect on 3 December 1985), on 8 August 1986, by section 20(1) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(1)(aab): inserted, on 1 October 2016, by section 64(1) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).

Section 25(1)(ab): inserted, on 1 April 2011 (applying to supplies made on or after 1 April 2011), by section 17(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 25(1)(abb): inserted, on 1 October 2016, by section 64(2) of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).

Section 25(2)(a): amended, on 21 June 2005, by section 157 of the Taxation (Base Maintenance and Miscellaneous Provisions) Act 2005 (2005 No 79).

Section 25(2)(b): amended, on 25 November 2003, by section 159(1) of the Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 (2003 No 122).

Section 25(3)(a)(ii): amended, on 24 March 1988 (applying to supplies made on or after 24 March 1988), by section 12 of the Goods and Services Tax Amendment Act 1988 (1988 No 7).

Section 25(3)(a)(v): substituted (with effect on 3 December 1985), on 8 August 1986, by section 20(3) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(3)(a)(vi): repealed (with effect on 3 December 1985), on 8 August 1986, by section 20(3) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(3)(b)(ii): amended, on 24 March 1988 (applying to supplies made on or after 24 March 1988), by section 12 of the Goods and Services Tax Amendment Act 1988 (1988 No 7).

Section 25(3)(b)(v): substituted (with effect on 3 December 1985), on 8 August 1986, by section 20(4) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(3)(b)(vi): repealed (with effect on 3 December 1985), on 8 August 1986, by section 20(4) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(3)(c): amended (with effect on 3 December 1985), on 8 August 1986, by section 20(5) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(3)(d): amended (with effect on 3 December 1985), on 8 August 1986, by section 20(5) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(3)(e): amended (with effect on 3 December 1985), on 8 August 1986, by section 20(6) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(3)(f): added, on 1 April 2011 (applying to supplies made on or after 1 April 2011), by section 17(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 25(3A): inserted (with effect on 3 December 1985), on 8 August 1986, by section 20(7) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(3B): inserted (with effect on 3 December 1985), on 8 August 1986, by section 20(7) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(3C): inserted, on 19 December 1989, by section 12 of the Goods and Services Tax Amendment Act (No 2) 1989 (1989 No 152).

Section 25(4): substituted (with effect on 3 December 1985), on 8 August 1986, by section 20(8) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(4): amended, on 2 June 2016, by section 189 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).

Section 25(4): amended (with effect on 1 April 2011), on 30 June 2014, by section 193 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section 25(5): amended, on 25 November 2003, by section 159(2) of the Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 (2003 No 122).

Section 25(5): amended (with effect on 3 December 1985), on 8 August 1986, by section 20(9) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 25(6): added (with effect on 3 December 1985), on 8 August 1986, by section 20(10) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).