SENIOR BOOKSELLER WARNS ON GST MISINFORMATION


Hi Graham,

I would like to draw your attention to misinformation being promulgated in respect of the pending increase in the rate of GST from 12.5% to 15%.. Certainly there is an issue with price points on books that are currently have prices ending in 95 or 99 cents. But, in the latest edition of NZ Booksellers The Read, in correctly stating that by holding 99 cent price points the bookseller would suffer, the article goes on to say “this decrease isn’t in isolation – remember your rent, your telecommunications charges, electricity, fuel and even your accountant’s bills will all go up. Margins are already tight in our industry, so absorbing the increase just is not possible for a bookselling business”. This is incorrect. Whatever GST (in dollars) is actually paid is claimed back so the percentage rate is immaterial. Also, say, for example, a electricity account was for the period mid-September to mid-October, the whole charge would be invoiced in October at the rate of 15% but again whatever the amount of GST is in dollars and cents, that is what would be paid to Inland revenue by the supplier or claimed by the retailer.

Further, there has been talk about publishers/suppliers post 1st October issuing credit invoices for returns that were supplied pre 1st October at the GST rate of 12.5%. Our understanding is that the law says the rate to be applied is that applying at the ‘time of supply’. Time of supply is not the time possession took place but the date the invoice (debit or credit, no difference) was written. But in any case, while there are implications for the final customer, for businesses the same situation as in the above applies. Say a publisher invoices a book pre 1st October with an invoice value of $10.00, at 12.5% GST the GST added would be $1.25 and this is what would be shown on the GST return and passed on to the IRD (regardless of when the actual GST return was actually made). If that book was returned to the publisher after 1st October the credit invoice would be issued for $10.00 plus GST of $1.50 and the $1.50 would be claimed. So in each case the net cost of the book would have been $10.00 for both parties.

Regards,
Ken

Ken McIntyre
Executive Director
University Bookshop Ltd