Section RC 16 — Income Tax Act 2007: Who may use GST ratio?

RC 16 Who may use GST ratio? General eligibility (1) A person liable to pay provisional tax may choose to use a GST ratio to determine under section RC 5(6) the amount of provisional tax payable for a tax year only if they meet all the requirements of subsections (2) and (3) in relation to the same entity. Requirements for preceding tax year (2) For the purposes of determining their eligibility for a tax year, the person must meet the following requirements in the preceding tax year and corresponding income year: (a) their residual income tax, as calculated, was more than $2,500 but no more than $150,000; and (b) they were a registered person for the whole income year, and provided a return under the Goods and Services Tax Act 1985 for an entity whose taxable activity did not begin operations in that tax year; and (c) the ratio of their residual income tax to total taxable supplies, as calculated under section RC 11 and expressed as a percentage, is between zero and 100%. Requirement for current year (3) For the tax year in which the person uses a GST ratio, they must be liable to file a return under the Goods and Services Tax Act 1985 for a 2-month or a 1-month period under section 15(1)(b) and (c) of that Act. When election applies (4) A person’s election under section RC 15 to use a GST ratio applies for the tax year for which the election is made and in later tax years, unless the person changes their calculation method under section RC 18 . References to preceding tax year (5) In this section, a reference to a preceding tax year includes a reference to a tax year earlier than the preceding tax year if that earlier tax year is used for the purposes of calculating a GST ratio. Defined in this Act: amount , GST ratio , pay , provisional tax , registered person , residual income tax , tax year , taxable activity , total taxable supplies , Compare: 2004 No 35 s MB 15(1)–(4), (11) Section RC 16(2): amended, on 1 April 2008, by section 531(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section RC 16(2)(b): amended, on 1 April 2008, by section 531(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section RC 16(5): amended, on 1 April 2008, by section 531(3) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).