Date posted: 14/09/2021 6 min read

Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill Introduced

The Minister of Revenue recently introduced a new tax Bill. CA ANZ will be making a submission to Parliament and welcome feedback and thoughts from members.

In Brief

  • Extending use of money interest relief during COVID-19
  • Tax treatment of cryptoassets
  • Bright-line test remedials

The Minister of Revenue recently introduced the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill. As at the time of writing this Bill is awaiting it’s first reading, at which time the consultation period will be announced. However, Chartered Accountants Australia and New Zealand will be making a submission. 

In addition to proposals setting out the annual rates for the 2021-2022 year, this Bill contains a large number of remedials. The Bill intends to: 

  • align the GST invoicing rules more closely with current business practice
  • modernise the GST rules in relation to cryptoassets, and
  • set penalties for the sale and acquisition of sales suppression software.

We briefly summarize three key proposals below. 

COVID-19 is on everyone’s mind at the moment so it’s only right to start with the proposed amendment to modify the scheme that allows for an extension of use of money interest (UOMI) relief for taxpayers affected by COVID-19. The proposed amendments would allow the scheme to be extended retrospectively and for a specific group of taxpayers described in an Order in Council. The proposed changes would also include a time limit of 36 months for extensions that could be set within an Order in Council.

Secondly, proposals contained in the Bill intend to exclude cryptoassets from the GST and Financial Arrangement rules. If you missed our recent cryptoassets taxation webinar, our presenters touched on these proposals briefly. The Bill also proposes to introduce a definition of “cryptoassets” in section 2 of the Goods and Services Tax Act 1985 and section YA 1 of the Income Tax Act 2007. What’s most interesting about these proposals is the retrospective application date – 1 January 2009. This aligns with the launch of the now famous “bitcoin”. 

And finally, the Bill  introduces two key remedial changes to the bright-line test. As part of our 2021 NZ Tax Roadshow, our team expressed our concern that the new bright-line test would unfairly capture taxpayers who were building their home as this process typically takes more than the “12-month buffer” period. The intention of the proposed amendment is to allow the period when a person is “making reasonable efforts to construct a dwelling intended for use as their main home” to count that time as “main home days”.  This is a positive step, but as always, the devil will be in the detail. 

The Bill also intends to clarify the application of the “12-month buffer” to make it clear that a person could still qualify for the main home exclusion where there are multiple periods of less than 12 months. However, safeguards have been included to prevent back-to-back continuous periods adding to more than 365 days.  

The NZ Tax Team welcomes member feedback on the Bill. 

Read the Bill

Click here