Peter Dunne

Wellington, July 23 NZPA - Revenue Minister Peter Dunne today addressed some unintended consequences of the Government's move to increase the goods and services tax (GST) to 15 percent from 12.5 percent on October 1 -- to sighs of relief.

Legislation is required for the measures that address GST charged on insurance contracts, finance leases and lay-bys.

Accountants say privately that the GST rise is a nightmare for insurance and other companies collecting regular payments, which have to advise thousands of customers of tiny monthly payment changes and alter computer systems to cope.

Mr Dunne said the 12.5 percent rate will be grandfathered for health and general insurance contracts and finance leases that staddle October 1, subject to criteria. Accountants said they needed to see more detail on this.

If a lay-by was picked up after October 1 the 15 percent GST rate was expected to apply to all payments but Mr Dunne said today lay-by payments before October 1 on such goods will have a 12.5 percent GST rate applied.

"In all of these cases legislative change will either address unmanageable compliance costs for affected businesses or provide much needed certainty," Mr Dunne said.

Deloitte tax partner Allan Bullot welcomed the adoption of pragmatic solutions but said he needed to see the details of the moves.

"A number of companies are experiencing significant pressures in getting all of their systems in place for an October 1 start date," he said.