Date posted: 18/07/2018 3 min read

NZ Tax Update July 2018

Recent developments in New Zealand tax

In brief

  • New Tax Bill
  • Recent Submissions
  • Inland Revenue direct contact

New Tax Bill Introduced

The Taxation (Annual Rates for 2018-18, Modernising Tax Administration, and Remedial Matters) Bill was recently introduced in Parliament. The Bill builds on earlier business transformation projects and proposes to automate and modernise tax return and refund processes. CA ANZ is currently making a submission on this Bill and a copy will be made available on our website

Copies of the Bill and supporting documentation can be found here and submissions can be made to Parliament before 13 August 2018.

Recent Submissions

PUB00300: Income tax and GST – Writing off debts as bad

CA ANZ recently submitted on PUB00300: Income tax and GST – Writing off debts as bad. This item updates the earlier item BR PUB 05/01 Bad debts – writing off debts as bad for GST and income tax purposes. There is no change to the Commissioner's position on tests as to whether or not a debt is "bad", but does consider when a debt will become bad and when the bad debt will be written off.

We suggested that the item be updated to reflect the increasing presence of technology and accounting software in a small business setting. We also recommended that an education campaign is carried out by the Inland Revenue to assist small business owners who many not have an accountant to ensure that the process for writing off debts as bad is completed in full.

A copy of our submission is available on our website.

GST on Low Value Imported Goods: an Offshore Supplier Registration System

CA ANZ's submission on the GST on low value imported goods: an offshore supplier registration system discussion document is available to view on our website.

We found the proposals sensible and appropriate as an interim measure until technology allows New Zealand Customs to tax imported goods at source. We support the proposals to exclude supplies to New Zealand businesses and strongly believe officials should consider a public register of a business's GST status.

The rules proposed for marketplaces and redelivers (such as Etsy, Amazon or YouShop) need to clearly define what is considered a marketplace. In particular we suggest that online classifieds should not be included in this scope.

To ensure voluntary compliance, the rules must be workable and easy to comply with. Joint compliance initiatives with other jurisdictions, in particular Australia, should be investigated as well as technology to support this process. We believe a joint registrations system with Australia would likely result in additional Government revenue.

Using a Kilometre Rate for Business Running of a Motor Vehicle

Earlier this year CA ANZ had the opportunity to make a submission on ED0203: Commissioner's Statement on Using a Kilometre Rate for Business Running of a Motor Vehicle. We expressed concerns that sole traders or employees may be locked into either the cost or kilometre method before the rates are set for the 2018 year, and as such we recommended a transitional or part year arrangement. We also suggested an optional single rate for the first 5,000km of business travel for employees to simplify reimbursements for private vehicle use. We further reiterated these comments prior to the final version being published by Inland Revenue in July.

Agents who have filed early returns on behalf of clients before this statement was published on 4 July 2018 or taxpayers who do not have an agent may be locked into the treatment taken for the remaining ownership of the vehicle.

A copy of CA ANZ's original submission is available on our website.

International Visitor Conservation and Tourism Levy

In our submission to MBIE on the proposed International Visitor Conservation and Tourism Levy our recommendations included the need for a comprehensive analysis of funding gaps and a detailed study of the effects of a levy on visitor numbers. Overall we were concerned with the inadequate information in the discussion documents for submitters.

A copy of our submission is available on our website.

Inland Revenue contact

The CA ANZ Tax Team is aware that there have been recent instances where Inland Revenue has contacted member's clients directly regarding tax debt, perceived unpaid tax where tax pooling is being used, and in relation to the Accounting Income Method.

We are having on-going discussions with Inland Revenue to mitigate the extent of direct contact with taxpayers where they have engaged a tax agent. As a starting point we have asked Inland Revenue to investigate the extent and reasons why there has been a spike in direct contact in recent times. We are currently scheduling meetings with Inland Revenue to address the problems this action is causing members. Please feel free to provide any recent examples to us where direct client contact has caused problems for you or your practice.

We will update you on progress on this matter in future editions of Insight.

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