78 Effect of imposition or alteration of tax

(1)

For the purposes of this section the expression alteration in the law means the coming into force of the provisions of this Act or any amendment to this Act by which—

(a)

a supply of goods and services is charged with, or exempted from, tax; or

(b)

the rate of tax in relation to a supply of goods and services is increased or reduced.

(2)

Where an alteration in the law is made and a supplier has, at any time entered into any agreement or contract in respect of the supply of goods and services with a recipient, unless express provision for the exclusion of any such alteration in the law is contained in the agreement or contract, every such agreement or contract shall be deemed to be modified as follows:

(a)

where the alteration in the law renders that supply liable to be charged with tax or increases the amount of any tax charged or chargeable in relation to that supply, the supplier may add to the agreed price in the said agreement or contract the amount of that tax or the increase of that tax; or

(b)

where the alteration in the law renders that supply exempt from tax or reduces the amount of tax charged or chargeable in relation to that supply, the supplier or the recipient may deduct from the agreed price in the said agreement or contract the amount of that tax or the reduction of that tax:

provided that this subsection shall not apply where that contract or agreement is entered into after the expiry of the period of 3 months that commences with the coming into force of the alteration in the law:

provided further that this subsection shall not apply to require a public authority to alter any amount agreed to be paid by the authority in respect of any supply of goods and services where the consideration for that supply is in the nature of a grant or subsidy.

(3)

Where an alteration in the law is made, any fee, charge, or other amount, prescribed by, or determined pursuant to, any Act or by any legislative instrument (within the meaning of the Legislation Act 2012) or by any regulation (within the meaning of the Regulations Act 1936), in respect of any supply of goods and services shall, unless provision to the contrary is contained in that Act or regulation, be deemed to be modified as follows:

(a)

where the alteration in the law renders the fee, charge, or other amount prescribed by, or determined pursuant to, that Act or regulation liable to be charged with tax or increases the amount of tax charged or chargeable, the said fee, charge, or other amount so prescribed or determined shall be increased by that amount of tax charged or chargeable; or

(b)

where the alteration in the law renders the fee, charge, or other amount prescribed by, or determined pursuant to, that Act or regulation exempt from tax or reduces the amount of tax charged or chargeable, the said fee, charge, or other amount so prescribed or determined shall be exempted from tax or reduced by the amount of tax no longer charged or chargeable:

provided that where any such Act or regulation prescribes or determines either a maximum or a minimum amount in respect of any supply of goods and services, that maximum or, as the case may be, minimum amount shall, for the purposes of any such Act or regulation, be deemed to be increased or, as the case may be, decreased, by the amount of tax charged or, as the case may be, tax no longer charged by virtue of this subsection:

provided further that this subsection shall not apply to any fee, charge, or other amount prescribed or determined which is required by virtue of that Act or regulation to be paid by any public authority to any person other than a public authority.

(4)

Where any alteration in the law takes place so as to operate retrospectively from any date, this section shall also apply retrospectively in the same manner and from the same date, and section 94A(1) of the Judicature Act 1908 shall apply to any money paid by a recipient to a supplier in excess of the amount which by virtue of the application of this section is properly payable in respect of that agreement, contract, Act or regulation, notwithstanding section 94A(2) of the Judicature Act 1908.

(5)

Where any supply is or becomes charged with tax pursuant to this Act, the amount of any increase in consideration in respect of that supply attributable to the tax charged on that supply shall be recoverable by the supplier from the recipient of the taxable supply.

(6)

This section does not apply to a supply of services that is treated by section 8(4B) as being made in New Zealand.

Section 78(2): amended, on 20 May 2010, by section 52 of the Taxation (Budget Measures) Act 2010 (2010 No 27).

Section 78(2): amended (with effect on 3 December 1985), on 8 August 1986, by section 34(1)(a) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 78(2) first proviso: substituted, on 23 March 1989, by section 20 of the Finance Act 1989 (1989 No 13).

Section 78(2) second proviso: added, on 23 March 1989, by section 20 of the Finance Act 1989 (1989 No 13).

Section 78(3): amended, on 5 August 2013, by section 77(3) of the Legislation Act 2012 (2012 No 119).

Section 78(3): amended (with effect on 3 December 1985), on 8 August 1986, by section 34(3)(a) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 78(3) first proviso: added (with effect on 3 December 1985), on 8 August 1986, by section 34(4) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 78(3) second proviso: added (with effect on 3 December 1985), on 8 August 1986, by section 34(4) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 78(3) second proviso: amended (with effect on 1 October 2010), on 21 December 2010, by section 22 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 78(3)(a): amended (with effect on 3 December 1985), on 8 August 1986, by section 34(3)(a) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 78(3)(a): amended (with effect on 3 December 1985), on 8 August 1986, by section 34(3)(b) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 78(3)(b): amended (with effect on 3 December 1985), on 8 August 1986, by section 34(3)(a) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 78(3)(b): amended (with effect on 3 December 1985), on 8 August 1986, by section 34(3)(b) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 78(5): substituted (with effect on 3 December 1985), on 8 August 1986, by section 34(5) of the Goods and Services Tax Amendment Act 1986 (1986 No 43).

Section 78(6): added, on 25 November 2003, by section 168 of the Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 (2003 No 122).