Date posted: 21/11/2018 4 min read

NZ Tax Update - November 2018

Recent developments in New Zealand tax.

In Brief

  • Inland Revenue guidance regarding the conduct of an audit
  • Items open for consultation
  • Recent submissions

Inland Revenue guidance regarding the conduct of an audit

Inland Revenue have provided guidance relating to privacy and information gathered during audits. This outlines how information may be collected during an audit, the role of the investigator, obstruction of an audit, legal privilege and non-disclosure rights for tax advice documents.

Read a copy of the guidance.

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Changes coming for investment income reporting

Inland Revenue have updated their guidance on Resident Withholding Tax (RWT) to include the changes to investment income reporting which were introduced in the Taxation (Annual Rates 2017-18, Employment and Investment Income, and Remedial Matters) Act 2018. While the requirements for new PIE investors to provide their IRD number to the portfolio investment entity have been in place from 1 April 2018, more frequent reporting of investment income in an electronic format is voluntary from 1 April 2019 and compulsory from 1 April 2020.

Items open for Consultation

Standard practice statement ED0208: Tax Payments – when received in time

Inland Revenue recently colsulted on draft standard practice statement ED0208: Tax Payments – When received in time, which proposes that from 1 February 2019, payments made to Inland Revenue by post-dated cheques will no longer be accepted. After this date cheques will be banked on the day they are received. A number of members have reached out to the CA ANZ tax team to share their thoughts on this item, you can read a copy of our submission on our website.

Requirements for claiming tax deductions for payments to family members for services

A draft 'Question We've Been Asked' (QWBA) has been released by Inland Revenue and asks what the requirements are for claiming tax deductions for payments to family members for services. The daft QWBA concludes that the family member must provide services to your business, the payment mustn't be excessive, and if the family member is a spouse or partner, Commissioner's prior approval (unless operating as a company). The statement also works through four examples.

Feedback on (PUB00311: What are the requirements for claiming tax deductions for payments to family members for services?) can be made to the Inland Revenue prior to 21 December.

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Taxation (Research and Development Tax Credits) Bill

Have your say on the Taxation (Research and Development Tax Credits) Bill! Consultation closes on 14 December. The Bill intends to incentivise more businesses to undertake R&D, Minister of Research, Science and Innovation, Megan Woods, said "the R&D tax incentive is a key lever for addressing the critical issues New Zealand is facing... The tax credit will also incentivise businesses to do more R&D, creating more high value jobs and lifting household incomes."

CA ANZ provided feedback on the R&D Tax Incentives discussion document earlier this year and are pleased to see a number of our recommendations have been included in the Bill, including; lowering the minimum spend threshold for eligibility and widening the definition of R&D as to not exclude research it the social sciences, arts and humanities. If you would like to provide feedback to CA ANZ on this item please contact the Tax Team. A copy of our submission will be available on our website following our oral submission before Parliament.

Taxation (Research and Development Tax Credits) Bill.

Have your say

CA ANZ recommendations included in the Bill.

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GST on low-value imported goods

The Minister of Revenue signalled at our recent Tax Conference that legislation for GST on low-value imported goods will be included in an upcoming tax bill, expected before the end of the year. Keep an eye out in Insight and on our website for updates. Members will be able to provide feedback once the Bill has been introduced.

Recent Submissions

Tax Working Group – Memorandums following Interim Report

Following the release of the Tax Working Group’s interim report, CA ANZ held a series of workshops with the Group as part of our further consultation. Our recommendations are summarised in the following memorandums available on our website:

  • Administration and Integrity of the Tax System – Further Consultation with the Tax Working Group
  • Business – Further Consultation with the Tax Working Group
  • Capital and Wealth – Further Consultation with the Tax Working Group

A copy of our submission can be found here.

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Application of Bright-line test

We recently provided feedback to Inland Revenue on two 'questions we've been asked' (QWBAs) regarding the main home exclusion provision under the bright-line test in regards to the sale of subdivided sections and lifestyle blocks.

A copy of our submissions can be found here.

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