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New Zealand

IRD change angers tourism operators  Aug 19, 2008

Tourism operators say a policy change from the IRD (Inland Revenue Department) could force some operators to go overseas and others to go out of business.

They are being told to pay back-taxes and there are arguments on exactly how much is owed.

Operators had been hoping for support from the Tourism Minister Damien O'Connor at the Tourism Operators Conference in Queenstown.

But any support was hardly forthcoming from the minister, with the mood at the conference being downcast.

Operators have called the policy change, which sees them paying two years of backdated GST, as unjust and outrageous.

"To suddenly ask for hundreds of thousands of dollars in back-taxes, that's pretty big chunk for any business to find in this climate," says Brian Henderson from the Inbound Tour Operators Council.

It is one of NZ's biggest export earners and though tour operators pay GST for the services used here, the fees they charge overseas wholesalers have been zero rated.

The IRD provided an agreement in writing seven years ago but has now changed its mind.

"This shouldn't come as a surprise for anybody in the industry. We've been talking to the Tourism Operators Council for the last two years about this issue," says Carolyn Tremain, Acting Commissioner IRD.

Operators had hoped for support from O'Connor on Tuesday but he says the facts are in dispute.

"What isn't helpful is for us to debate figures that are highly contentious," said O'Connor at the conference.

The operators claim the back-taxes will total around $30 million, but the IRD says its much less. And even if they started paying GST now, operators say it has thrown all their costs out.

"We need to be able to cost and prepare our packages for a year to give to our overseas wholesalers to put into brochure and then get that to the travelling public overseas," says Stuart Neels, a tour operator.

Henderson says they are going to be disadvantaged and will not be able to compete. But the IRD says many already pay the GST. That is news to many of those at the conference.

IRD change angers tourism operators

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