Date posted: 23/08/2018 3 min read

NZ Tax Update August 2018

Looking to the future. Recent developments in NZ tax

In Brief

  • Relief for Canterbury businesses
  • Automation coming for tax refunds
  • On the horizon: what will the future of tax look like?
  • Have your say! Member satisfaction of IR services

Extension of relief for Canterbury businesses affected by earthquakes

Earlier this year CA ANZ engaged with Inland Revenue to extend the Canterbury earthquake depreciation roll-over relief rules. Our discussions were supported by valuable insights gathered from members in the region during our annual Tax Roadshow. We are pleased to see that officials’ have taken up our feedback, resulting in the Minister of Revenue announcing an extension of the depreciation roll-over relief rules for a further five years to the end of the 2023-24 income year.   

Many of our members and their clients continue to be impacted by the earthquake in ways that are outside of their control. The announcement provides members and taxpayers with certainty and enables appropriate business decision-making.  We recommend that you review the specific extensions granted to ensure they cover your clients factual circumstances.

Automation coming for tax refunds

CA ANZ supports one of the key changes proposed in the current Tax Bill which will enable Inland Revenue to automatically pay tax refunds to individuals who earn only salary or wages and investment income. However, we raise concerns in our submission regarding the system’s readiness for these changes and whether Inland Revenue will be sufficiently resourced to cope with the influx of taxpayers who will need to engage with the income tax system – many of whom will be unfamiliar with the process. We also identify possible issues that may arise as a result of automated refunds, and offer suggested actions Inland Revenue could undertake to minimise these risks. Following CA ANZ’s oral submission to Parliament in early September, a full copy of our submission on the Taxation (Annual Rates 2018-19, Modernising Tax Administration, and Remedial Matters) Bill will be available online.

Are you in the charities sector? Changes are coming.

Changes to the GST treatment of non-profit entities have been announced by the Minister of Revenue as part of the Supplementary Order Paper to the current Tax Bill in response to inconsistent interpretations of the current law. When enacted, the changes will apply retrospectively to 15 May 2018. The Regulatory Impact Assessment provides further details.

On the horizon: what will the future of tax look like?

The Tax Working Group (TWG) are due to provide an interim report on their recommendations for the New Zealand tax system in September, ahead of the final recommendations being made in February 2019. CAANZ’s submission to the TWG in May this year broadly covered the eight key areas of focus, including future challenges to be addressed, taxes on capital and whether environmental taxes should be part of our tax system. So what will the future of tax look like? CA ANZ NZ Tax and Financial Services Leader, John Cuthbertson will be hosting a joint panel breakfast discussion with ACCA on 18 September 2018 on key developments and the future of Tax.

Have your say! Member satisfaction of Inland Revenue Services

Since 2010, CA ANZ and Tax Management New Zealand Ltd have partnered with Colmar Brunton to canvas CA ANZ members’ views on Inland Revenue’s service. The practical administration of tax in New Zealand is rapidly changing, with Inland Revenue now more than half way through their Business Transformation project. Following the migration of GST to the new computer system in 2017, FBT, RWT and payday filing were also migrated in April this year. Want to have your say? Look out for your email invitation to participate in the survey in early September.

Results of the survey will be announced at our annual Tax Conference in October.

Changes to New Zealand Customs Act

From 1 October 2018 a new Customs Act comes into force and changes contained will mainly affect businesses (rather than consumers). One of the new services which will be particularly useful for a range of businesses is the ability to use provisional values for imported goods. New Zealand Customs has published guidance material online relating to the ten new services available. Applying early will enable you to use the provisional values service from October.  

Recent Submissions

Copies of our recent submissions can be found on our website.  

Income tax - Treatment of costs of resource consent  

PUB00171: Income tax – treatment of costs of resource consents addressed the ways and circumstances when the cost of a resource consent can be deducted or depreciated.  This item is narrow in its application.  

Whether remuneration paid to an employee in cryptocurrency is subject to PAYE or FBT

IRRUIP11: Whether remuneration paid to an employee in cryptocurrency is subject to PAYE or FBT looks at whether cryptocurrencies received by an employee as part of their regular remuneration is subject to PAYE or FBT.

Inland Revenue contact

Last month we asked for your feedback on recent examples where direct client contact by Inland Revenue had created issues for you and your practice.  Member feedback received has been relayed to Inland Revenue for our upcoming meeting of the CA ANZ National Tax Liaison Group (a meeting of selected CA ANZ members in practice around the country and Inland Revenue leaders and managers from the Customer and Compliance Services team).   

We have asked Inland Revenue to investigate the extent and reasons why there has been a spike in direct contact in recent times.  

We will update you on progress on this matter in next month’s Insight.  

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