IRD signals GST-free fees

The two Questions We’ve Been Asked (QWBA) documents released on Thursday were expected as long ago as July last year.

The two documents propose that fees paid to the manager of a unit trust are not subject to GST but that administrative services, such as registry, fund accounting and unit pricing by a third party under a contract with the manager, are taxable.

The documents say the fees are exempt because the supply of financial services, and other goods and services that are reasonably incidental and necessary to the supply of those services, are exempt.

That would cover activities including issuing, redeeming, or re-purchasing units, paying to the trustee amounts received for the issue of units, investing the trust property, collecting and distributing amounts in respect of investments or units, and administering the unit trust including maintaining a register of unitholders, and accounting and other records.