Increased GST rate applied to September bills

Peter Dunne. Photo / Mark Mitchell

Hundreds of thousands of households have been charged the higher rate of GST on electricity, phone and water services that were supplied before the GST rise took place.

But companies are defending the policy because it would have been impractical to get meter readings ending on September 30, the day before GST rose from 12.5 per cent to 15 per cent.

The companies - including Meridian, Genesis, Contact Energy, Telecom and Auckland Metrowater - have come under fire from the Government, which has asked them to act in good faith and credit customers who have been unfairly charged.

The GST rise meant that bills on or after October 1 had to have GST at 15 per cent. But the Government introduced legislation to allow companies to charge GST at the lower rate for invoices up until October 11 for goods and services provided before October 1.

Revenue Minister Peter Dunne said it was regrettable that companies had decided to ignore the new legislation, which would have saved their customers money.

He encouraged customers to get in touch with companies that had unfairly charged them.

"The transitional provision was enacted in August, so these companies have had plenty of opportunity to do the right thing by their customer," Mr Dunne said.

"I call on them to act in good faith and credit the overcharged GST on customers' next accounts. People should therefore check their power bills and contact their suppliers if they are being unfairly charged the higher rate of GST on their September consumption."

It is not illegal for the utility companies to charge GST at a rate of 15 per cent on October invoices for goods and services used in September, and they will not profit from it because they will have to pass it on to the Government.

Genesis Energy spokesman Richard Gordon said it was not possible to check the day-to-day use unless someone read the meter.

"There's a meter attached to your house reading continuous supply ... most meters don't provide information on a minute by minute basis.

"We're not able to read 650,000 meters on September 30."

If their customer's billing period spilled over into October, then the GST rate for the whole period was charged at 15 per cent.

"We consulted with IRD on this and believe we are fully compliant with transitional rules," Mr Gordon said.

Meridian Energy had the same arrangements.

"Our obligation is at the time the invoice is issued as opposed to time of consumption," Meridian spokeswoman Michelle Brooker said.

She pointed to the GST Advisory Panel advice that said invoices dated from October should have a GST rate of 15 per cent, even if it is for goods or services provided before October.

The Meridian website said: "Please remember Meridian will not benefit from this GST component in any way."