GST increases from 12.5 per cent to 15 per cent from October 1, 2010.

On the face of it that sounds simple enough but the complications are endless. There are, however, some things that people can do to make sure they don't end up on the wrong side of the GST calculation.

GST is assessed on a transaction not when the service is performed or the goods are delivered, but at the 'time of supply”. The time of supply is usually when the supplier issues an invoice for the goods or services or receives a deposit or any other payment for them, whichever happens first.

Therefore, if someone buys an item such as a car or TV, as long as the invoice is written out or a deposit is paid before October 1, 2010 then GST will be assessed at 12.5 per cent rather than 15 per cent. It doesn't matter that the balance of the price is not paid or the goods are not delivered until after October 1.

On the other hand, if someone takes delivery of the goods or services before October 1, but doesn't make any payment or an invoice is not issued until after October 1, then GST will be assessed at 15 per cent.

Some people have seen an opportunity to reduce the GST cost by manipulating usual invoicing arrangements to bring the time of supply forward. However, the IRD has issued warnings about doing that where it is not in the normal cause of business.

Fixing the correct ‘time of supply' for land transactions has other complications. Expert advice is required on transactions that involve GST that are signed up before October 1 but settled after that date to ensure that GST is paid at 12.5 per cent and not 15 per cent.

As a result of public submissions there are a number of law changes on the way that change the ‘time of supply' rules for some periodic payment contracts. For example, GST on insurance premiums will be able to be charged at 12.5 per cent through to the next renewal date. There are also to be special rules for lay buy sales and for power, water and other utilities charges that span that changeover date. Watch out for publicity about those new rules when they are confirmed.

GST is never simple. Businesses have a complicated set of requirements to comply with over the transition period. Consumers who end up paying the GST can save some money by bringing forward some payments but they need to understand the basic rules and get the process and timing right.