Date posted: 11/11/2019 8 min read

Have your say: open New Zealand consultation items

Help shape NZ tax policy and guidance. This month Inland Revenue have called for feedback on changes to their policies regarding received cheques as a form of tax payment, guidance on the GST treatment of Airbnb’s, guidance on the treatment of Airbnb’s held by a trust, alterations of rights attached to shares, and development or division of land.

In brief

  • Cheque Changes
  • Short stay accommodation – Airbnb’s
  • Treatment of alteration of rights
  • Development or division of land

Items open for consultation:

Tax Payments – When received in time 

Inland Revenue and ACC announced earlier this year that from March 2020 payments made by cheque would no longer be accepted. Inland Revenue have now released draft standard practice statement ED0221 Tax payments – when received in time which sets out Inland Revenue’s practice for accepting tax payments. Part of this statement addresses the announced changes to cheques.

The statement, when finalised will apply to all tax types, as well as student loan repayments and child support payments. 

While the draft standard practice statement outlines that “the commissioner may agree in exceptional circumstances to continue to receive a payment by cheque where a customer is unable to pay by any other means” – it is silent on what constitutes exceptional circumstances and ‘unable to pay by any other means’. Chartered Accountants ANZ intend to clarify both these points as part of our submission to Inland Revenue. We welcome feedback from members on practical suggestions or processes that can be promoted to Inland Revenue so that the revised policy works efficiently for both taxpayers and Inland Revenue

Submissions close 13 December 2019. 

PUB00347: GST treatment of short-stay accommodation

Three further items have been released regarding the tax treatment of short stay accommodation (Airbnb’s). Following the last round of Airbnb consultation, several members asked about the GST treatment of short-stay accommodation, and what happens when the property is held in a trust. PUB00347: GST treatment of short-stay accommodation considers the GST implications of someone considering supplying for the first time and concludes that they may potentially be subject to GST.

The document also discusses the requirements for registration, consequences of registration, and what happens when a property is sold or the short-stay accommodation ceases.

Submissions close 3 December 2019

PUB00346: If property held in a trust is rented out by a beneficiary of the trust for short-stay accommodation, who should declare the income, and what deductions can be claimed?

Three further items have been released regarding the tax treatment of short stay accommodation (Airbnb’s). Following the last round of Airbnb consultation several members asked about the GST treatment of short-stay accommodation, and what happens when the property is held in a trust.  

PUB00346 covers the common situation where a beneficiary of a trust rents out all or part of their family home, where the property is held in trust, for short-stay accommodation.

Submissions close 3 December 2019

PUB00346: If property held in a trust is rented out by the trustees for short-stay accommodation, who should declare the income, and what deductions can be claimed?

Three further items have been released regarding the tax treatment of short stay accommodation (Airbnb’s). Following the last round of Airbnb consultation several members asked about the GST treatment of short-stay accommodation, and what happens when the property is held in a trust.  

This draft QWBA asks If property held in a trust is rented out by the trustees for short-stay accommodation, who should declare the income, and what deductions can be claimed? The document concludes that the income belongs to the trustees and will generally have to be declared on the trust’s tax return, however some or all of the income may be allocated as beneficiary income.

Submissions close 3 December 2019.

Income Tax – Treatment of alteration to rights attached to shares under Section CB 4, and Treatment of a disposal of shares with altered rights under Section CB 4

Inland Revenue are currently consulting on two draft public rulings; PUB00369: Income Tax – Treatment of alteration to rights attached to shares under Section CB 4, and PUB00369 Income Tax – Treatment of a disposal of shares with altered rights under Section CB 4.

The two rulings consider the situation where the right attached to shares are altered by the issuer.  The rulings conclude that the shares remain the same property as they were prior to the alteration.

Thus, shares acquired for the purpose of resale will be taxable on sale, even if the shares sold confer different rights from the ones originally purchased.  The date of acquisition will be the date at which the shares were originally acquired, not the date on which the share rights were altered.

These are reissues of BR Pub 17/04 and 17/05

Feedback can be provided to Inland Revenue before 2 December 2019

PUB00326: Income tax - when is development or division work minor?

Inland Revenue has released a draft interpretation statement for consultation which intends to help taxpayers assess whether development or division work they are undertaking on land is minor, such that the amount they receive from the disposal of that land will not be subject to tax. This draft statement replaces an earlier guideline published in 2005.

A copy of this draft statement will be available on Inland Revenue’s website shortly. Members are welcome to send thoughts to the NZ Tax Team before 19 December.

Recently closed items 

Inland Revenue have recently finished consultation on the following items:

  • Holding costs for privately used land that is taxable on sale
  • Habitual buying and selling of land
  • PUB00352: Changing GST treatment after reducing the previously agreed consideration
  • Submissions also closed on the OECD consultation on ‘Digital Tax: Secretariat Proposal for a “unified approach” under pillar one’ on 12 November.

Tax Policy consultation

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Public Consultation

Inland Revenue's draft consultation items

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