Past Tax and Trusts News Items
15 February 2018 - A supplementary order paper has been introduced to extend the residential property bright-line test from two to five years. This now forms part of the tax bill that is before Parliament and due for report back from the Finance and expenditure Committee by June 2018. The bright-line regime makes residential property sale proceeds taxable income (subject to deductions on an orthodox basis) if the sale is contracted for within the bright-line period after acquisition. To see the Ministerial release, click here.
24 October 2017 - The coalition agreement between Labour and New Zealand First signals increased penalties for corporate fraud and tax evasion.
4 September 2017 - Inland Revenue has released a standard for the use of electronic signatures on documents submitted to it. The signature must be a secured authority that complies with section 209 of the Contract and Commercial Law Act 2017. To view the standard, click here.
3 August 2017 - The Government has announced a suite of measures to combat BEPS by multinationals. These follow on from initiatives signaled earlier in the year. They address interest rates, avoidance of permanent establishment rules, economic substance rules and rules to counter mismatched treatment of structures. They also propose increased investigative powers for IR. The Government says that non-NZ income derived by a foreign trust with a NZ trustee will be taxed in NZ if it is not taxed elsewhere. This is a complete reversal of the present exclusion of such income from NZ tax. To see the release and link to the underlying papers, click here.
To read commentary see below.
25 May 2017 - The first budget of Finance Minister Steven Joyce includes a substantial tax and tax-credit package for families but also addresses the vexed area of feasibility and "black hole" expenditure, narrowing considerably the unhelpful decision of the Supreme Court in TrustPower. The Treasury summaries of the budget can be found here. For the last case note on TrustPower, click here.
17 May 2017 - Geoff Clews and Sam Davies have successfully argued in the High Court that the China/NZ double tax agreement allows tax sparing credits to be claimed by a NZ resident shareholder of a controlled foreign company in China. Read the CCH summary here.
3 March 2017 - At the international Fiscal Association Conference today 3 discussion documents were released setting out Government proposals to tighten NZ's laws affecting large multinational companies doing business in NZ. The initiatives span transfer pricing and permanent establishment avoidance, strengthened interest limitation rules and the implementation of the multilateral convention on tax treaty matters. The Government seeks feed back by the end of April. To read more click here, here and here.
14 December 2016 - A Cabinet paper has been released setting out measures IR and Treasury will work on to strengthen transfer pricing and permanent establishment rules as a NZ response to BEPs, outside the OECD initiatives also being pursued. To read more, click here,
9 September 2016 - The IRD's paper on hybrid financial instruments adopts most of the OECD's recommendations for addressing hybrid tax avoidance opportunities. However the paper has been criticized for targeting a mischief that has been overtaken by the approach of our courts to tax avoidance. A case of much ado about yesterday's problem?
27 June 2016 - The report on New Zealand's foreign trust disclosure regime has been released. While endorsing the view that NZ is not a tax haven it recommends a number of changes to the registration of foreign trusts, the information collected about them and access to that information. To read more, click here.
27 May 2016 - New Zealand has signed the instruments for multilateral exchange of information aimed at allowing countries to better understand how multinational enterprises have structured their tax affairs. To see more click here.
13 April 2016 - New initiatives to simplify provisional tax have been signaled for future introduction, along with removal of use of money interest for many taxpayers. To read more, click here.
11 April 2016 - Respected tax expert John Shewan has been appointed to report on New Zealand's longstanding foreign trust laws. He is to consider their fitness for purpose and reputational risks arising from the foreign trust regime.
8 April 2016 - Some of the hysteria over New Zealand's foreign trust regime has been balanced by comments from former IRD policy guru, Robin Oliver. He writes in today's NBR that secret trusts are as dated as ABBA and that, far from foreign trusts making NZ a tax haven, they reflect the county's reputation as a safe haven in a volatile and unstable world.
4 March 2016 - The NZLS has welcomed signaled changes in the Tax Administration Act, which could lead to a new approach to the imposition of tax penalties. To read more click here.
20 January 2016 - Legislation enacting the 2 year bright line for the taxation of property sale profits has now been passed and a further bill containing a withholding tax mechanism for tax collections on property sales has been introduced.
25 November 2015 - A discussion draft has been issued by IRD dealing with the tax treatment of lump sum settlement payments for claims comprising both revenue and capital elements. The draft suggest a presumption of income which arguably marks a change in law. Consultation closes on 16 January 2016.
16 November 2015 - IRD has released a discussion document which foresees a real time tax interface between it and businesses, permitting them to auto file for PAYE and GST from their accounting software. To read more, click here.
13 November 2015 - IRD has released a revenue alert about employee share schemes where aggressive attempts have been made to reduce the ostensible taxable value to the employee. To read the revenue alert, click here.
13 November 2015 - IRD is reported to have increased non resident withholding tax recovery by $113 million in the first quarter of fiscal 2016. This is the result of initiatives such as increased investigation of approved issuer levy arrangements, especially since the expansion of the associated persons rules in 2010.
8 November 2015 - The Cook Islands Government has agreed with New Zealand to progress legislation in 2016 which will implement automatic exchange of financial information with parties to its Tax Information Exchange Agreements.
15 October 2015 - FATCA competent authority procedures have been implemented by New Zealand, establishing the rules for administering the bilateral agreement with the USA on FATCA.
17 September 2015 - An officials issues paper on several GST "fixes" has been released for submissions by 30 October 2015.
September 2015 - Consultation papers have been released dealing with closely held companies, loss grouping and offsets.
21 July 2015: A draft standard practice statement on the remission of student loan debts has been issued and can be viewed here.
21 May 2015: Budget day tax announcements can be viewed here
27 January 2015: Inland revenue has reported assessing high worth individuals (those controlling $50 million or more) for an additional $77 million of income tax in the last financial year.
17 November 2014: Commentators are suggesting a breakthrough in international taxation could be close. The G20 nations are said to be ready to introduce rules which would impose tax in the jurisdiction where income is accrued, ie where payment of the income occurs. This would have significant repercussions for international tax norms, tax treaties and where multinationals have to book income.
29 August 2014: A call has been made for the costs of seismic strengthening of buildings to be made tax deductible. At present commercial building owners face non-deductible and non-depreciable costs in the millions to bring buildings up to code, yet are taxed on the rents that this work preserves. 15 May 2014: The Budget signals a new cash-out for tax losses arising from R & D expenditure by start-ups. The benefit will be clawed back in certain cases such as a later disposal of the research or a company buy out.
12 May 2014: In pre-budget announcement the Government has pledged $132 m over 5 years to strengthen IRD's tax compliance activities. The pledge is for $48.6 m cash and the balance by way of a write off of tax that is not collectible. The Government expects a gross return of $297.5m.
17 February 2014: The Alesco case has apparently been settled before the Court of Appeal's criticised decision on tax avoidance can be tested by the Supreme Court. The scale of the settlement will not be known for some time until Alesco's parent reports.
12 February 2014: IR has released a new statement (QB 13/05) on the deduction of companion travel expenses. Most of the previously understood rules for deduction have been scotched. Essentially the companion must be making a substantial contribution to the traveller's business in undertaking the travel before their costs can be deducted. Simply providing support to the traveller will not suffice, even if the attendance of a spouse or partner is expected.
10 February 2014: IR has released an Interpretation Statement (IS 13/03) dealing with the deductibility of non-interest costs of borrowing such as related fees. It covers the application of the financial arrangements rules, the rules relating to mixed use assets and section DB 5 of the ITA. The IS sets out what is required to establish the necessary nexus with borrowing.
12 November 2013: The Government has released its tax policy work programme for the next 18 months. The key focus areas are: Further improvements to tax and social policy rules, including a review of tax rules for annuities, closely-held companies and measures to improve growth and innovation; International tax reform, including an active income exemption for branches, mutual recognition and various items on the OECD tax action plan; and IRD’s business transformation to deliver a 21st century tax system. To read more about the programme, click here.
7 November 2013: IRD's actions against the property sector are being talked up in the media. The number of active investigation files related to the taxation of property profits signals a real effort by IRD to review and revisit the Kiwi staple of home "do-ups" for sale. There are arguably large numbers of taxpayers who have either inadvertently or deliberately failed to return profits on such property sales.The recovery of tax from such taxpayers is a significant element of IRD's return of $8 per $1 spent in it investigation efforts.