GST rise will score with World Cup

It is understandable that people are concerned with the prospect of having to pay an extra 2.5 per cent in GST from October 1 for goods and services.
Hopefully, through the combination of lower personal taxes and adjustments to superannuation and benefit entitlements no one will be worse off, and the initial negativity towards the GST rise will abate.
The owners of businesses that are GST registered need to start thinking about the implications it will have on their business.
A few things come immediately to mind:
Where you use a computer-based accounting system, you need to find out if you can change the GST rate to 15 per cent from October 1.
Can it correctly deal with two GST rates for supplies made, and returns or credit notes given?
For expenditure, you need to ensure it claims the correct amount of GST as per the tax invoice issued to you. It may be necessary to change stationary.
If your business is able to claim back all GST on costs, then there is no saving in purchasing goods or services prior to October 1.
However, for example banks cannot claim back all GST - as well as non-GST registered persons - and so there may be a saving by purchasing goods or services prior to October 1.
 If the customers of your business are generally not GST registered and therefore unable to claim back GST, they may be keen to trigger the GST time of supply before October 1 and only incur GST at 12.5 per cent.
It may be possible to do this even though the goods or services are not physically supplied until sometime after September 30.
For example, the purchase of a motor vehicle or the building of a home - even though they may not be supplied till after September 30, it may be possible to trigger the GST time of supply before and pay GST at 12.5 per cent.
The effect of GST on the cashflow of a business is in some cases positive (for example, a business with no credit sales) and in other cases negative (a business with slow debtor collections).
The extra cashflow effect of a 2.5 per cent rise may not be significant but should be considered.
It's important that pricing is carefully considered to maintain margins.
Existing contracted supply arrangements (for example, lease of premises or equipment, or product supply agreement) should be reviewed.
The GST Act generally allows a supplier to increase the agreed price under a contract where subsequent to entering into the contract the rate of GST increases.
Care should be taken with the changeover and especially with high value transactions (such as land) to ensure the correct amount of GST is charged and returned by the supplier in its GST returns.
Interest and penalties may be incurred where errors are made.
The real losers with this GST increase other than financial institutions are charities and not-for-profit organisations which are not GST registered.
Their increased operating costs will not be compensated for by the reduction in tax rates or increase in any Government-provided benefits.
These organisations should carefully review their budgets as they will need to find more income to fund the same level of activities.
The same applies to tourists in New Zealand - from October 1, they will be paying a bit more for most things they do while visiting New Zealand.
With 2011 being Rugby World Cup year, it should be a "good" year for GST revenue. Let's hope the All Blacks can also make it a good year.
Paul Hodson is a Tax Specialist Partner with BDO Tauranga, an independent member firm of the BDO New Zealand network of independent chartered accounting and business advisory member firms. View: www.bdo.co.nz