Reverse charge for imported services

Sections 8(4B)(b)(ii) and 9(2)(h) of the Goods and Services Tax Act 1985

The changes ensure that the reverse charge rules for imported services operate as intended and with minimal compliance costs to business.

Key features

The new rules:

• amend the reverse charge threshold from 90% to 95% for "percentage actual use", to bring this threshold in line for the initial test of "percentage intended use"; and
• when a registered person has to make an input tax adjustment, change the time of supply from the first day of the relevant adjustment period to the last day of that period (which is generally a year). Under the previous wording there was a possibility of the person not finding out the adjustment was due until after the relevant return was filed.

Application date

The changes apply from the introduction of the apportionment rules, being 1 April 2011.