CA ANZ recently had the opportunity to submit on the Taxation (Annual Rates for 2020-21, Feasibility Expenditure, and Remedial Matters) Bill. We have requested an appearance before the Finance and Expenditure Select Committee to discuss our submission.
While this Bill covers a wide range of issues, our principle comments relate to:
- Purchase price allocation;
- Feasibility expenditure;
- Habitual buying and selling of land;
- GST on outbound mobile roaming services.
Purchase Price Allocation
CA ANZ accepts that change is required if the issues identified are wide spread and the estimated fiscal cost of the problem when extrapolated out by Inland Revenue is accurate. However, we do not support the proposed approach to move directly to a legislative solution which will potentially affect the negotiating position of the parties to a commercial sale and purchase transaction and place increased compliance costs on to virtually the entire transactions market. This compliance burden should not be dismissed lightly.
CA ANZ are pleased to see the introduction of proposed legislation that will provide increased taxpayer certainty and additional deductibility for certain feasibility expenditure following the Supreme Court decision in Trustpower Ltd v Commissioner of Inland Revenue but note that further work will be needed.
The need for a wider scope with appropriate integrity measures has been elevated in significance following the challenges presented by the global pandemic. Business innovation and asset development will be key strategies to New Zealand’s successful recovery from the economic impacts of COVID-19
Habitual Buying and Selling of Land
The bill proposes to expand the regular pattern restrictions to prevent a person, who habitually buys and sells land, structuring their transactions to take advantage of the main home exclusion, the residential exclusion or the business premises exclusion to avoid tax. CA ANZ recommend that the amendments be limited to the main home and residential exclusions.