emPOWER Newsletter 15 Feb 2010

Monday, 15 February 2010

Possible GST Increase

There has been quite a bit of talk in the press about the effect the proposed change in the GST rate may have on accounting systems. The purpose of this e-mail is to let you know that emPOWER will be taking a proactive stance on any changes and we are very confident that you, as an emPOWER User, should not suffer any major disruption from the proposed changes ... well from emPOWER's perspective anyway.

As you might be aware emPOWER has a number of different GST codes that can be set to a defined rate and specified as being either inclusive or exclusive. We envisage that when the change happens - it if goes ahead - it will simply be a matter of changing a few of these rates and continuing on processing in the system without too much disruption. The GST rate is not hard coded in emPOWER.

However, there may be some other issues you might want to consider:

  • If you use GST inclusive pricing and sell an item for $19.99, post the rate increase are you going to sell it for $20.43, being the new price based on 15% GST (we assume GST will be changing to 15%). If the GST rate is changed without some thought into pricing polices then there might be some anomalies you will want to work through.
  • Where an item is sold with 12.5% GST but then credited post the GST increase, do you credit it back at 15% GST or 12.5% GST?
  • Does the price of an item purchased on Lay-By at 12.5% increase once GST increases?

When GST was increased last time round - yes we were selling and supporting accounting systems back then as well - the IRD released a series of Guidelines to provide clarification of some of the issues that were encountered when GST rose from 10% to 12.5%. We expect that there will be a similar release this time around and we might even be able to dig out some of our old files!

We will keep you informed of any new information we receive and, if the GST increase does happen, you can rest easy knowing that emPOWER will be there to help you through the process.