PUB00516 explains the Commissioner’s view on whether court awarded costs and disbursements, and out of court settlement payments for those costs and disbursements, are subject to GST. The statement also outlines how New Zealand courts calculate awards for costs and disbursements, including scale, increased and indemnity costs, and explains how the GST status of the successful party can affect the quantum of an award. In addition, the statement addresses the application of specific deeming provisions, including s 5(13) and s 20A(4), and provides practical examples covering insured claims, employee litigants, partially exempt persons, and global settlements.

CA ANZ considers the statement to be technically sound and helpful for taxpayers and their tax advisers. CA ANZ welcomes the inclusion of the summary table, the expanded discussion of partially exempt litigants, and the clarification of record keeping expectations.

CA ANZ also provides several recommendations to further enhance the practical clarity and usability of the statement.