Trophies and animal products derived from the tourist, hunting and safari industry: zero-rating under GST

Background

Previously the status of some services performed by the taxidermy industry had been considered in a TIB item Vol 9, No. 6 (June 1997) titled "Trophies and animal products derived from the tourist, hunting and safari industry: zero-rating under GST".  Currently, the TIB item, in regard to the taxidermy industry, states:

INTERPRETATION

Taxidermy fee

The taxidermy fees are chargeable with GST at the standard rate as they do not fall within the zero-rating provisions of the GST Act.  While the services are supplied to someone who is outside New Zealand at the time the services are carried out, they are in connection with "moveable personal property situated inside New Zealand at the time the services are performed" and are clearly excluded by section 11(2)(e)(ii).

Section 11 of the Goods and Services Tax Act 1985 has been substituted by sections 11, 11A, and 11B pursuant to section 90(1) of the Taxation (GST and Miscellaneous Provisions) Act 2000 with application on and after 10 October 2000.  In particular, section 11A(1)(m) of the Goods and Services Tax Act 1985 has now been inserted into the Act.

Question 

We have received a query regarding whether the TIB item, as far as the taxidermy industry is concerned, is still correct given the amendments to the GST legislation enacted on 10 October 2000.

The TIB item is stated to apply to taxidermists performing the service of processing animal carcasses before they are exported to tourists.  We have also been asked whether the TIB item applies to all taxidermy arrangements in the taxidermy, hunting, and safari industries.

Legislation

Section 11A(1)(m) of the Goods and Services Tax Act 1985 applies to zero-rate services that are provided directly in connection with goods to which section 11(1)(a) to (e) apply.  Section 11A(1)(m) provides:

11A     Zero-rated services

(1)           A supply of services that is chargeable with tax under section 8 must be charged at the rate of 0% in the following situations:

...

(m)                the services are supplied directly in connection with goods to which any one of section 11(1)(a) to 11(1)(e) applies if  supplied to a person who is not resident in New Zealand and who is outside New Zealand at the time the services are performed; or

...

Conclusion

Taxidermy fees are chargeable with GST at a zero rate where they are consistent with the requirements of section 11A(1)(m).  That is, the service must be supplied directly in connection with goods to which any one of section 11(1)(a) to 11(1)(e) applies (that is, goods exported, or goods entered or deemed to be entered for export), and the supply must be to a person not resident and outside New Zealand at the time the services are performed.  Thus, in respect of the provision of taxidermy services, the TIB item is no longer correct due to the change in the legislation.

In relation to non-taxidermy services considered by the TIB item, it may also be noted that the title and drafting of the TIB item may be considered misleading in that it may suggest to some readers that it applies to all participants in those industries discussed in the item.  However the TIB item,in respect of these other matters, is only intended to explain the factual scenarios described.  Therefore, where a taxpayer's particular facts differ from those described in the TIB item different tax consequences may follow.