While the most common GST filing frequency is 2-monthly, there are some instances where adopting a 6-monthly filing frequency will be more appropriate.
However, to be allowed to apply to the commissioner for a six-monthly filing frequency you must meet certain requirements. The IRD has recently released a Standard Practice Statement SPS 17/02 “Six-monthly GST return filing” which outlines some of the situations where the commissioner may allow the use of the six-month method. While six-monthly returns may not be a new concept to many this statement does cover a new criterion for six-monthly filing which may be of interest.
This new criterion was introduced in the Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill and is effective from 30 March 2017. This criterion covers a situation where a person may apply to the commissioner to use the six-monthly method where they make seasonal supplies. Seasonal supplies are defined as “where 80% or more of the taxable supplies are made within a six-monthly period that ends at any day within the last month of that person’s income year”. The seasonal supplies allowance is also not limited by the $500,000 threshold and may be suitable for businesses such as orchards or smaller tourism based ventures where there is low to no turnover in the other six months of the year.
An obvious advantage of a six-monthly filing frequency is the decreased compliance costs of only having to file two GST returns per year, as opposed to six (two-monthly) or twelve (one-monthly) returns. However, a more frequent method may allow a business manager to maintain a better understanding of how a business is performing and it’s cashflow needs.