It is not always clear when a business collaboration becomes a joint venture for GST purposes. The latest tax bill before Parliament introduces new rules designed to simplify how GST applies to joint ventures. While the changes will not answer every question, several refinements recommended by the Select Committee should make the regime easier to apply in practice. 

Joint ventures (JVs) are common in industries such as property development, horse breeding, and natural resources exploration. The Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Bill proposes changes to the GST rules applying to these arrangements, which should be helpful for taxpayers operating in those sectors. The Bill is expected to be enacted by the end of this month.

JVs have long been subject to GST when the JV is carrying on a “taxable activity”.  However, some members of a JV would prefer to account for GST in their own right, especially when they are carrying on their own taxable activities.  This bill, once passed, will allow the new “flow through” treatment.

How will the new rules work?  

The Bill as reported back  from the Select Committee includes new rules allowing the members of a JV to choose to account individually for GST on supplies made.  This approach is intended to reduce compliance costs for both Inland Revenue and joint venturers.  

There are some changes from the previous version in response to submissions on the Bill from CA ANZ and others.  It is our view that the changes will make the rules easier to follow and to apply.
One notable point is that “joint venture” is still not defined. However, the structure of the new rules is clearer.

Under the revised framework there will be two categories of joint venture:

• flow-through joint ventures, and
• ordinary joint ventures.

In a “flow-through joint venture”, each member accounts for GST in its own GST return. In an ordinary joint venture, the joint venture itself accounts for GST as a separate registered person. 
Members of a flow-through JV will be required to maintain records supporting the flow-through treatment. This includes documenting how supplies and acquisitions are allocated between joint venturers and the proportions attributable to each member.

Removal of the “output-sharing joint venture”

The previous version of the rules had proposed a new category of JV called “output-sharing joint venture”.   

This concept was intended to apply automatically where the outputs of the joint venture were shared between members. However, submitters raised concerns that the concept would add complexity and create uncertainty about which arrangements could access the flow-through treatment.

The Select Committee agreed with those concerns and recommended removing the distinction. CA ANZ supports this change, as it simplifies the structure of the rules and reduces the risk of confusion when determining which GST treatment applies.

Election timing

The flow-through treatment applies by election only.   The bill requires the joint venturers to agree to the election and notify the Commissioner within 21 days of the agreement.
The Select Committee has recommended a practical improvement: a new provision allowing the Commissioner discretion to accept a late election where the other criteria have been satisfied.

This flexibility will help taxpayers to navigate the new rules and comply in the way that works best for them.

Overall, the changes to the JV rules, as reported back, seem flexible and workable. It is hoped that they will save compliance costs for those in the industries most affected.