Date posted: 20/09/2018 3 min read

NZ Tax Update September 2018

Recent developments in New Zealand tax

In brief

  • Automation coming for tax refunds
  • Tax Working Group: the future of Taxation in NZ
  • Open for consultation
  • IR direct contact of Member’s clients

Automation is coming for Taxpayers

Earlier this month CA ANZ presented oral submissions to the Finance and Expenditure Select Committee on the Taxation (Annual Rates 2018-19, Modernising Tax Administration, and Remedial Matters) Bill.

Many of the proposals contained in the Bill are intended to modernise and improve tax administration as part of the IR’s Business Transformation Programme. These proposals include: automated tax refunds for salary and wage earners, the ability for the Commissioner to recommend a change of PAYE or withholding tax rate for certain individual taxpayers, and extending the Commissioner's care and management powers. CA ANZ fully supports the broad objective of the Bill to modernise the revenue system and automated refunds will be welcomed by many taxpayers. However, in our submission we identify a number of practical concerns, including the need to ensure the system and Inland Revenue is ready, ahead of the migration of income tax to the START system in April 2019.

While payday filing is currently voluntary, changes in this bill will make this compulsory from 1 April 2019 for all employers. CA ANZ recommends that employers talk to their software providers early to allow plenty of time to get systems and processes in place. To help employers make the shift to payday filing, Inland Revenue are running a series of seminars between September and October.

CA ANZ submission on Taxation

Full submission: Taxation (Annual Rates 2018-19, Modernising Tax Administration, and Remedial Matters) Bill

Read here

Inland Revenue contact

Last month we advised that CA ANZ was meeting with Inland Revenue to discuss recent direct contact of members’ clients. While acknowledging that Inland Revenue is entitled to contact taxpayers directly under the Inland Revenue Acts, the Tax Team have been actively working with Inland Revenue to mitigate the extent of direct client contact.

During a very constructive workshop we worked through a number of scenarios where members have experienced direct contact of clients by Inland Revenue. Inland Revenue have since met internally to identify these contact points and the reasons for their occurrence. It was acknowledged that not all contact was intentional and the restructuring of service delivery within Inland Revenue and the transition to the START system have been contributing factors.

Going forward the intention is that Inland Revenue will only contact clients of tax agents (for tax types linked to the agent) in exceptional circumstances. For the 2019 year and the integration of income tax into START in April 2019 Inland Revenue have agreed:

  • 7 April terminal tax debt reminder letters will not be issued to clients who have tax agents;
  • START will enable direct upload of tax pooling schedules into the Inland Revenue system. In addition agents will be able to give advance notice in START of client’s intention to use tax pooling to pay tax (thereby removing issue experienced this year);
  • Inland Revenue will consult with CA ANZ on suggested wording for Debt Campaign letters;
  • Increased functionality will enable an agent's contact details to be inserted as point of first contact in START for debt queries.

The Tax Working Group: What's the future got in store?

Sir Michael Cullen, Tax Working Group Chair, is joining us at the 2018 Tax Conference to discuss what the future of tax holds for New Zealand.

There was much speculation by the media early this month before the Tax Working Group released their draft recommendations to Government. You can hear NZ Tax and Financial Services Leader, John Cuthbertson, discussing the possibility of what those recommendations might be including a Capital Gains Tax.

Items open for Consultation

PUB00315: Income tax - bright line test - main home exclusion - sale of subdivided section, and PUB00314: Income tax - bright-line test - farmland and main home exclusions - sale of lifestyle blocks

Inland Revenue are currently seeking feedback on two draft QWBAs relating to the application of the main home exclusion of the bright-line test in two scenarios:

  • Draft QWBA PUB00315 concludes that a subdivided section will be excluded from the bright line test where more than 50% of the subdivided area has been used for a dwelling that was the seller's main home; and the seller has used the subdivided section as their main home for more than 50% of the time.
  • Draft QWBA PUB00314 concludes that the sale of a lifestyle block within the bright-line period is excluded when the farmland or main home exclusions apply.

PUB00299: Goods and services tax - zero-rating of services related to land

This draft interpretation statement sets out the Commissioner's view of the "directly in connection" test and the newly enacted "in connection with land in New Zealand" test under the GST zero rating rules.

Provide feedback on these items directly before 12 October 2018.

Read more

Alternatively you can provide comments to the CA ANZ Tax and Financial Services team

Email

Changes are coming! Join us at the 2018 annual Tax Conference on 18 & 19 October

Join us at the 2018 Tax Conference on 18 & 19 October to look to the future of taxation in New Zealand. Our world is becoming increasingly digitised and how we do business is now happening on the global stage. Hear our fantastic line-up of presenters tackle current challenges facing tax professionals and businesses, including: the future of taxation, the digital economy, the post-BEPS world and taking Kiwi SMEs global!

With a range of discounts available for groups and future tax leaders, register now to stay up to date and informed!

 

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