A legislative error that prevented GST-registered taxpayers from being able to receive a refund of input tax on certain assets acquired before 1 April 2023 that had a permanent change of use on or after 1 April 2023 has been temporarily remedied by an Order in Council, with retrospective effect.

IRD have also recently released a Special Report SL 2024/189 providing guidance about this modification.

Back in 2023, various changes were made to simplify the GST apportionment and adjustment rules. One of the changes made was to reduce the number of GST adjustments required for a permanent change of use.

The policy intent was that the calculation should be available for taxpayers to apply in GST returns for taxable periods beginning on or after 1 April 2023 (when the 2023 Act came into force).

After those changes came into force, however, IRD identified a legislative error which prevented taxpayers being able to use these new rules for assets acquired before 1 April 2023.

A remedial amendment was included in the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Matters). The Order in Council is a temporary remedy until the amendments take effect; these are expected to come into force before 31 March 2025.