- Positive steps for CA ANZ advocacy priorities
- Possible reviews of current tax rules relating to land
- Focus on reducing compliance costs for small business
Positive steps for CA ANZ advocacy
NZ Tax Leader John Cuthbertson says "the updated tax policy work programme contains a number of positive movements on key advocacy areas. CA ANZ heavily advocated during the Tax Working Group process to reduce compliance costs for small businesses to let businesses ‘get on with business’ and to focus on growth and innovation."
"Feasibility and black-hole expenditure is another long-standing issue, and resolving the tax treatment of innovative spending (as the work programme has appropriately dubbed it) will encourage businesses to explore products and activities outside of their core business," he says.
"This line of work complements the current work being undertaken on the Research and Development Tax Credit Incentive scheme and it’s possible that this item may be one of the first projects off the rank this year."
The Minister of Revenue, Stuart Nash, says the programme, “highlights [the Government’s] intention to deal with land speculation and land banking.”
This focus on land banking and speculation comes as no surprise. Inland Revenue was directed to review this area as part of the Government's response to the Tax Working Group.
The objective of this year's work programme is to recommend ways to improve the efficient use of land, and ensure that the current tax settings are fair, balanced, and encourage and support productive investment. This is likely to focus on strengthening and enforcing the current rules as the work programme notes that vacant land and property reforms are not likely to be feasible in the short term.
Some of the highlights from the short-term package for land include:
- ways to encourage seismic strengthening of residential property
- review the exemptions in the land rules, in particular the exceptions for developers and habitual renovators.
Longer-term items include the Productivity Commission's advice on the use of vacant land to discourage land banking and a review of the "10-year" land rules and whether or not these rules are negatively impacting the supply of land or creating "lock-in" effects.
The work programme prioritises the need to address tax barriers to investment in infrastructure and to reduce compliance costs for business.
CA ANZ is thrilled with the heavy focus on reducing compliance costs for small businesses in the work programme. In particular, items that may form a small business package include simplifying FBT rules, resolving compliance and enforcement issues and, tax disputes for small taxpayers.
Resolving the tax treatment of feasibility and black-hole expenditure will be an important step for the wider business community and start-ups and innovating businesses in particular may benefit from a review of the loss continuity rules.
Other policy items
A major component of the work programme covers the release of stage 4 of Inland Revenue’s Business Transformation project which includes the release of student loans and Kiwisaver changes, and the design of release 5 (child support). These projects will be carried out in tandem over the next 18 months. The work programme also hints at reviews of the prescribed investor rate and taxation of lump sum payments, such as ACC.
In the charities space, a report on addressing the Tax Working Group recommendations is expected to go to ministers by the end of 2019 and detailed policy is expected in the first half of 2020.
Work on digital taxation is already underway following consultation on the Options for Taxing the Digital Economy government discussion document. CA ANZ strongly urged the Government in our submission to focus on the multi-lateral work being undertaken at the OECD and we hope to see a significant amount of attention being directed to this issue in the next 18 months.