Last week the New Zealand government announced they are investigating increasing GST from 12.5% to 15%. Subsequent comments have indicated this would probably be effective from 1 October this year. Whether this proceeds or not is expected to be announced in the government's budget statement in late May, if not earlier.

There has already been speculation in the media about the costs this will impose on business - not the least of which are costs for updating IT systems to handle such a change in the GST rate. Last week an article in Wellington's Dominion Post stated:

Big businesses are confident altering their systems to comply with GST changes will be a simple job, but some firms are in for a nasty surprise, experts say ... Computer Society [CEO] Paul Matthews says updating systems will be a costly exercise, as many software programs have not been designed to allow for changes to GST.

We would like to confirm that if JDE has been configured properly it should be a simple matter of adding a new GST rate effective from 1 October and end-dating the current rate as at 30 September - and that this change can be made before 1 October. JDE should take it from there quite seamlessly.

That said, Jireh always recommends you first make such changes in a test environment and test your system thoroughly to ensure it functions as expected - particularly if you have modifications. Only then should you make such changes in your production environment(s).

You should also check your other systems to ensure they will handle a change in the GST rate. For example, as the DomPost article goes on to say:

Deloitte tax partner Allan Bullot says the magnitude of the systems changes will depend on what software businesses are using and to what extent it has been customised. Large enterprise systems may simply require one data field to be changed. "But any subsidiary systems for budgeting or spreadsheets built up over the years may have 12.5 per cent hard-coded into them in many different places, and I see that as being a major issue. People could potentially get caught out."

We will update this article when the government announces further details.

If you would like help with planning for, or making, this change please contact Gavin Knight - our Principal Consultant for Applications Services - on phone 027 672 5125 or by email.