Past Tax and Trusts News Items

27 March 2024 - A major tax bill passed its third reading, enacting on royal assent the alignment of the trustee income tax rate with the top individual marginal rate of 39%. Also addressed in the new Act are the phased resumption of investor residential interest deductions and the scaling back of the bright line test applicable to residential property to two years.

20 December 2023 - Residential interest deductions coming back - The Minister of Finance has signalled that a timetable for the phased return of residential housing interest deductions will be announced in the early New Year.

20 December 2023 - Bright line change signalled - The Government's December mini budget presages the return of the land sales bright line test to two years from 1 July 2024. There is no suggestion that the test (currently set at 10 years) will be retrospectively amended so we will have a curious situation where the extended bright line runs on for some properties, when those acquired from 1 July next year are subject to a much shorter test. Presumably this is justified on the basis that those who acquired property under the old test knew what they were getting into! 

14 December 2023 - Forfeited deposits in land sales can be income - IR has stated that when the underlying property transaction would have generated income, a forfeited deposit has the same character and so will be taxable. See QB 23/09.

14 December 2023 - Electric scooters not subject to FBT - IR has ruled that the provision of "Workride" electric scooters in lieu of remuneration, to assist employees to commute to and from wok is not subject to FBT. to read more click here. 

7 December 2023 - Call for loans to be repaid - Inland Revenue has called for borrowers under the Covid era Small Business Cashflow Scheme to repay their debts. Some $2bn was advanced under the scheme and already 10,000 borrowers have defaulted to the extent of $177m. 

6 December 2023 - Tax bills rolled over to new Parliament - One of the first events of the new Parliament has been for the tax bills that were unresolved prior to the October election to be rolled over for consideration in the current term.

29 August 2023 - DST Bill to be introduced - The Finance Minister has announced that legislation allowing for a Digital Services Tax will be introduced to the House this week. The Government consulted on this in 2019 but there has been no attempt to have draft legislation considered ahead of this announcement. The Bill cannot pass before the House rises for the election, and so will need to be reconsidered by the next Government and Parliament, whatever the shape of that may be. The legislation is designed to allow a DST to be implemented if the OECD's multi-lateral approach fails.

30 March 2023 - IR has published new guidance effective 1 April 2023 on the extent to which working from home reimbursing allowances paid by an employer will be tax free. Determination EE004 sets new levels of reimbursement which are still probably short of the allowances many employers pay. To read more, click here.

29 March 2023 - In a helpful publication IR has explained the circumstances in which the costs of acquiring and maintaining software as a service (SaaS) will be deductible. The matter has some complexities but in most cases SaaS costs will be deductible under the general permission or as depreciable intangible property. To read more click here.

7 February 2023 - The Commissioner's interpretation statement on tax avoidance has been updated to take account of the Supreme Court's decision in Frucor. The statement notes that, while certain comments of the majority suggest a different interpretative approach, IR sees little practical change. To read the statement in full, click here.

13 December 2022 - Inland Revenue has released a discussion paper seeking submissions on the business tax exemption for tax charities. The paper discusses practical issues a charity may face when applying s CW 42 of the Income Tax Act 2007 to income it derives from a business carried out exclusively for charity. To read more, click here.

27 September 2022 - The Charities Amendment Bill was introduced to Parliament on 21 September 2022 with the objective of making practical changes to support charities to continue their contribution to community well-being, while ensuring that contribution is sufficiently transparent to interested parties and the public. The Bill includes a new appeals process that directs appeals to the Taxation Review Authority rather than the High Court. To read more, click here.

5 September 2022 - IR has issued an important draft publication setting out the impact of the bright line test on certain close family property transactions such as when parents have assisted a child into home ownership. To read more about this, click here.

31 August 2022 - Government has announced that it will scrap plans to impose GST at 15% on the management fees charged to Kiwi Saver funds. The proposal was part of the Tax Bill presently before the House. It was thought to merely regularise the treatment of services supplied to Kiwisaver funds when compared with other types of investment. However, the outcry against the move, which was predicted to cost Kiwisaver balances many billions by 2070, has led to a very swift about-face by Government.

4 July 2022 - At a time when some taxpayers may need reminding that the days of audacious offshore planning are well past, IR has released its compliance focus on offshore transparency, which highlights the extensive international exchanges of information taking place as well as the new intelligence tools being used by IR to track offshore income. To read more, click here.  

10 June 2022 - Cabinet has directed that further work be done before so-called "dividend integrity" measures are enacted. Treasury and MBIE were consulted and expressed concerns at the lengths to which the proposals would go. A number of private sector submitters also raised such concerns. The proposals could have gone as far as to impose a capital gains tax on the sale of closely held companies when any earnings had been retained and not distributed by way of dividend. The adverse impact of that on the reinvestment of earnings in a new or growing company are obvious, but seemed to have escaped the proponents of the measures. Given the existing attribution rules that are designed to prevent the use of companies to avoid personal tax rates, the proposals had all the hallmarks of a misguided attempt to push again the taxation of capital gains. Perhaps the rethink will signal a return to saner tax policy development. 

26 May 2022 - Legislation has been passed enabling the Accident Compensation Corporation (ACC) to carry out work to bring an income insurance scheme into operation, should it be established under subsequent legislation. The proposed scheme is jointly designed by the Government, Business New Zealand and the New Zealand Council of Trade Unions. A levy will apply on income up to $130,911 and for employees will be collected through the PAYE system. The employer levy will be collected by ACC which will also manage the scheme. To read the Bill, click here.

11 May 2022 - A new Commissioner of Inland Revenue has been appointed, with effect from 1 July 2022. Peter Mersi, currently the Chief Executive of the Ministry of Transport (though presently Government's Covid -19 system leader), will replace outgoing Commissioner, Naomi Ferguson. Ms Ferguson has held the position of Commissioner since 2012 and has overseen a huge (but as yet somewhat untested) modernisation of Inland Revenue's systems. That business transformation project officially ends in June. Mr Mersi is a former Deputy Commissioner of Inland Revenue. 

5 May 2022 - IR is seeking submissions on whether NZ should enact measures to implement a minimum 15% tax on the excess income of multinational enterprises in every country in which they operate.  In October 2021, this solution to international profit shifting was endorsed by over 130 countries in the OECD-sponsored inclusive framework, including NZ. This endorsement did not bind any country to adopt either Pillar. Our Government has not decided whether to adopt these measures and has not ruled out adopting a digital services tax. To read more about the issues paper on which submissions are sought, click here.

31 March 2022 - IR is seeking submissions on a draft public ruling which considers when benefits provided by charitable organisations to their employees may be excluded from being treated as fringe benefits. To read more, click here.

17 March 2022 - Taxpayers should be aware that expected rollover relief from the bright-line test for land transfers from trustees back to the principal settlor of the trust seems to be very limited. The legislation currently before the House proposes such relief only when the land in question was transferred to the trust by the settlor to whom it is being transferred back. The anticipated rollover relief for trust resettlements has not eventuated. To view the relevant supplementary order paper , click here. 

16 March 2022 - IR has issued a consultation document in which it proposes a suite of measures to prevent avoidance of the top individual marginal tax rate of 39%. The proposals include attributing company income that is essentially personal services income to shareholder employees and measures to prevent profits being retained for realisation in a later sale of company shares. These proposals seem to suggest that the existing company intermediation rules are not adequate (that case is not strongly made) and hark back to the days of excess retention tax. They are a dangerous foray by stealth into a capital gains tax. To read more, click here.  

16 March 2022 - Consequent upon the enactment of the Russia Sanctions Act 2022, a new provision has been inserted in Schedule 7 Part C of the Tax Administration Act, permitting the Commissioner of Inland Revenue to provide tax information to any government agency when that is necessary or desirable for the purposes of the RSA.   

15 March 2022 - IR has published the most recent work programme for the office of Chief Tax Counsel. To view the programme summary, click here.

11 March 2022 - Amongst amendments proposed for the current Tax Bill, one clarifies that if a "new build" is on land by the time settlement of the land and building purchase occurs, the transaction will qualify for the new build bright line rule even though no new build existed at the time the agreement was entered into.

11 March 2022 - An order has been issued (SL 2022/56) stipulating the financial reporting requirements imposed on certain domestic trusts for the current financial year. The order sets out the required form and content of trust financial accounts but also exempts trusts whose income or losses for the current year are less than $100,000 and whose assets are less than $5m. The information requirements are part of a concerted effort by IR and government to understand how wealth is held in New Zealand. Another part of that effort is the High Wealth Individual survey currently being pursued by IR.

10 March 2022 - IR has opened consultation on the future role of digital platforms in the taxation of the gig and sharing economy. These are aimed at making it simpler for people to earn income and pay tax in these fields. To read more, click here.  

9 March 2022 - Several Covid variation determinations have been issued/extended by IR. These include relaxation of certain day-count rules when a person has been practically restricted for leaving New Zealand between 17 March 2020 and 30 June 2022. To see the IR list of Covid variations including these (COV 22/06 to 09), click here.  

20 October 2021 - IR will this week send out information sheets to some 400 high net worth individuals introducing its research project into effective tax rates. 

20 October 2021 - IR's Office of Tax Counsel is to begin progressively publishing technical decision summaries of rulings and adjudications. This is a welcome addition to the resources available to taxpayers and advisers and has been advocated by parties such as the NZLS Taxation Law Committee for several years.

29 September 2021 - Tax guidance for online creators has been finalised by IR. An interpretation Statement (IS 21/08) and fact sheet covers issues such as identifying what is income and how withholding tax may apply. To read more, click here. 

29 September 2021 - By supplementary Order Paper the Government will tweak the business continuity test for carrying forward company losses. This will allow losses to be offset against a pre-breach part year profit, as intended but not permitted in the law as first proposed. 

28 September 2021 - The Minister of Revenue has announced details of the limitation on property-related interest deductions just days before they are due to become operative. These include a 20 year tax life for a "new" build property for which tax deductible interest is preserved and a five year bright-line period. To read more, click here. 

28 July 2021 - Policy and Regulatory Stewardship, Inland Revenue, has prepared a set of questions and answers about the Government’s design proposals outlined in the discussion document, “Design of the interest limitation rule and additional bright-line rules”. To read more, click here.

21 July 2021 - The Government's 2021-22 tax policy work programme sets out an extensive range of work that will see continued change in the tax system. To see a summary of the work programme, click here.

13 July 2021 - The 2021 public work programme of the IR's Office of Chief Tax Counsel has been published. To check the extensive range of topics under review or action, click here.

2 June 2021 - A draft interpretation statement is a reminder that the concept of tax residence for GST purposes is different from that for income tax. It includes a person who has a “fixed or permanent” place in New Zealand, where that place is related to a taxable activity carried on by the person in New Zealand. For an unincorporated body, it provides for a residence test based on its centre of administrative management. For individuals, aspects of the day-count test differ from income tax. To read more click here.

23 March 2021 - The current 5 year bright-line test is to be extended to 10 years for all but new built residential property. The new bright-line period will apply to residential property acquired on and after 27 March 2021. In the same suite of measures interest deductions on borrowing used to acquire residential property will be abolished for property acquired on and after 27 March and will be phased out over 4 years for borrowing related to all other residential investment property. Property developers are unaffected by these changes. To read more click here.  

4 March 2021 - The shareholder continuity requirements for carrying forward company losses are to be amended. A business continuity test will be introduced to ensure that, as a company transitions from start-up, in which losses often arise, to more mature operations, often with new shareholders investing, the early tax losses are not extinguished because of a breach of shareholder continuity. Legislation has not yet been issued but is expected shortly.   

28 February 2021 - The OECD has encouraged member states, of which NZ is one, to explore strategies and actions against professional service providers who play a crucial part in the planning and pursuit of white collar crimes like tax evasion, bribery and corruption which are often hidden through complex legal structures and financial transactions. Tax advisers in NZ are already the subject of promoter penalties when involved in aggressive tax avoidance and the party provisions of the Tax Administration Act and the Crimes Act apply to those who aid, abet, counsel or procure criminal activity. To read more click here.  

18 February 2021 - The business media is reporting increased debt recovery and enforcement action by IR. Liquidation and bankruptcy action is returning to pre-COVID levels. As at 15 February IR is advancing 144 liquidation cases and 83 bankruptcies. After a time of leniency during the initial impact of COVID in 2020, enforcement action has also restarted in earnest. 

21 December 2020 - Inland Revenue has issued draft guidance on the extent to which trusts can access the double tax agreements NZ has with other countries. There has been little public information about this, and the draft guidance covers matters such as the residence of trust for the purposes of DTAs. Submissions have been called for between now and 1 March 2021. To read more, click here. 

15 December 2020 - A Covid resurgence support scheme has been announced to provide some financial relief in the event that an outbreak of Covid-19 occurs over the coming summer break. This will be administered through Inland Revenue if it is activated. To read more, click here.

2 December 2020 - Parliament has passed the legislation to introduce a new top marginal rate of personal income tax for the 2021 income year onwards. Income above $180,000 pa will be taxed at the rate of 39%, up from the current 33%. The move has prompted warnings from IRD that it will closely monitor taxpayers using trusts and companies to reduce personal income artificially. The Minister of Finance has warned that the trust tax rate could be increased to counter artificial reductions of personal income. 

30 November 2020 - IRD is cracking down on investment property owners who sell without paying tax on the profits. In recent weeks, it has sent letters to tax agents warning them that some of their clients may have sold properties that are caught by the residential bright-line test. IR has new analytics capabilities and is matching property records with taxpayers’ returns to identify questionable transactions. Calculating where the bright line date falls can be complicated. A voluntary disclosure may be the best avenue to minimise an adverse tax outcome. If you are concerned, get in touch here. 

28 July 2020 - An updated round-up of global tax responses to the COVID-19 pandemic has been posted to our COVID resource section. To view it, click here.

23 July 2020 - The Commissioner has released a practice statement dealing with dual civil and criminal action against taxpayers. It says that if a taxpayer is subject to criminal proceedings, that will be treated as an exceptional circumstance allowing the taxpayer to continue the civil tax disputes process out of time, if they opt to wait until the criminal matter has concluded. This is to avoid the risk that a taxpayer may undermine their criminal defence when dealing with the civil dispute. 

16 July 2020 - A proposed amendment will provide a pathway for migrant foreign trusts, that have not made an election to pay tax on world-wide trustee income within the prescribed period, to become complying trusts. Under current law, such trusts are classified as non-complying trusts and distributions are taxed at 45%. When the new law passes, if such a trust makes a voluntary disclosure and pays the related tax, it can be a complying trust for the periods to which the voluntary disclosure relates. Inland Revenue’s commentary on the draft amendment notes that the definition of complying trust does not currently address the voluntary disclosure situation for migrant foreign trusts. Adding that “a purpose of the voluntary disclosure rules is to allow the taxpayer to “put right” their past tax position, subject to appropriate penalties and interest being imposed” Inland Revenue acknowledges that the proposed amendment will protect tax positions assessed under such voluntary disclosures by allowing tax-paid trustee income to be distributed tax-free to beneficiaries. 

19 May 2020 - Figures from Inland Revenue show there were 104,443 instalment payment arrangements operating in March 2020 - up from 41,014 a year earlier. The total dollar value of the instalments rose from $659 million to $1.167 billion. The greater part of March fell before the COVID lockdown, so this trend can be expected to continue and the numbers to increase considerably.

15 April 2020 - A suite of tax changes has been announced to further assist businesses weather the cash flow impacts of the COVID-19 lock down and its aftermath. Legislation has still to be introduced to formalise these arrangements, which cover a tax loss carry back scheme, loosening the shareholder continuity rules, and flexibility over statutory deadlines. Legislation is to be introduced by the end of April. To read more click here.    

2 April 2020 - IR has published an update of COVID-19 related advice to businesses, covering key issues such as remission of interest, broadened exchange of information within Government and its approach to some audit activity. To see this update, click here.

2 April 2020 - There is some confusion about the tax treatment of the Government's COVID-19 wage subsidy. A good summary of the tax treatment is available here. 

17 March 2020 - Government's $12 billion business continuity package to counter the effects of coronavirus on the economy contains four main tax measures all effective for the tax year staring 1 April 2020: the permanent reintroduction of depreciation on commercial and industrial buildings; an increase in the threshold for immediate deduction of asset purchases from $500 to $5,000, to aid the investment required to work from home (applicable for one year only); an increase in the provisional tax threshold from $2,500 to $5,000; and the discretion for IR to waive use of money interest for taxpayers late paying tax who have been significantly adversely affected by COVID-19. To read more click here.    

28 February 2020 - Two double tax agreement have been amended recently. The agreement with Switzerland has a new protocol whose coming into force is to be notified in the future. The amendment to the treaty with Guernsey gives effect to new agreements on the exchange of information on taxes and taxing rights.  

20 February 2020 - Inland Revenue has just published new prosecution guidelines that in some respects supplement the Solicitor-General's guidelines. They are designed to improve consistency in prosecution decisions. The guidelines can be viewed here. We will shortly be publishing commentary on the significance of the guidelines.

19 February 2020 - Inland Revenue has announced that tax relief and income assistance is available to people affected by the downturn in business due to the Coronavirus COVID-19. Ways that IR can help are listed on the IR website that can be viewed here.

18 February 2020 - IR has issued a new standard practice statement (SPS 20/01) covering when tax payments will be treated as received by it. The main differences introduced are that from 1 July 2020, over-the-counter payments at a Westpac branch must include an Inland Revenue bar-code and from 1 March 2020, IR will no longer accept cheques as a method of payment unless the Commissioner agrees that exceptional circumstances require that IR continue to receive payment by cheque.

14 November 2019 - IR has released guidance to reporting entities under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, explaining the complex relationship between tax evasion and tax fraud, and money laundering, with examples. It also identifies specific aids to detect and deter money laundering, tax evasion and tax fraud. to read the guidance, click here.

8 November 2019 - A short-process rulings system has been introduced for taxpayers with effect from 1 October 2019. Short-process rulings state how a taxation law applies, or would apply, to a person in relation to their particular circumstances. These rulings are available at a lower cost than other rulings and are intended to be provided in a more streamlined fashion. 

29 October 2019 - As part of renewed efforts to dissolve New Zealand's "hidden economy", estimated to be worth close to $1 billion, the tax department is targeting cafes, restaurants, bars and takeaway operators, bakeries and liquor stores who under-report cash sales and pay staff under the table. None of this is new, although Inland Revenue now has a very effective suite of forensic tools to be able to identify likely cash discrepancies. If you are worried that this crack down is going to affect you, contact us. Our team has years of experience representing members of the hospitality industry against Revenue.

24 September 2019 - Picking up recommendations from the Tax Working Group the Minister of Revenue has announced work on simplifying the deduction of feasibility expenditure and changing the rules for shareholder continuity that affect losses being carried forward. These steps are intended to make it easier for start ups to attract capital and to retain tax assets that have accrued as a result of exploratory expenditure, without losing them as the start up company grows and shareholding changes. This is not law yet, but will proceed though the standard tax reform process. 

16 September 2019 - New Zealand has signed a protocol amending its Tax Information Exchange Agreement (TIEA) with Guernsey. The protocol updates the TIEA to include model treaty provisions to prevent tax treaty abuse and improve dispute resolution as recommended by the OECD and G20.

8 August 2019 - The Minister of Revenue has outlined the updated Inland Revenue work programme for the next 18 months. The tax treatment of land remains a focus as do the treatment of feasibility and "black hole" expenditure. It looks also as though the conduct of business by charities is likely to get a work over. To read more information about the work programme, click here.  

24 July 2019 - The major Trusts Bill that will overhaul trust law in NZ has passed its third reading and now awaits the Royal Assent. When passed into law and operative, it will usher in a suite of new laws regulating the rights and obligations of trustees and beneficiaries. To read the statement by the Minister of Justice, click here. 

4 June 2019 - A Government discussion document outlines two broad options for the future taxation of offshore digital companies:
• Changing the current international income tax rules to allow more taxation in market countries. This option is currently being discussed by the OECD and the G20 group of large economies.
• Applying a separate DST of 3% to certain revenues earned by highly digitalised multinationals operating in New Zealand.

30 May 2019 - In a Budget light on tax announcements the Government announced it will shortly release a discussion document exploring options for taxing the digital economy. No details of the proposed digital services tax are given in the Budget, but the Prime Minister has indicated that a 2–3% tax on turnover is one of the templates being considered.

21 May 2019 - The Government has announced changes to the GST treatment of outbound roaming services used by New Zealand residents overseas, intended to apply from 1 October 2020. From that date, telecommunications service providers would need to start charging GST on roaming services supplied to New Zealand-resident consumers. If implemented, the changes will mean outbound mobile roaming services received by New Zealand residents overseas would be subject to GST at the standard rate of 15%, and inbound mobile roaming services received by non-residents in New Zealand would no longer be subject to GST.

14 May 2019 - Regulations have been passed to exempt support payments and any related income received by the victims of the Christchurch mosque attacks and their families when assessing a client’s income and cash assets. This ensures that donations to support those affected by the Christchurch mosque attacks of 15 March 2019 do not negatively impact recipients’ entitlements to government assistance through the tax credit and transfer system. 

18 April 2019 - The Government's response to recommendations of the Tax Working group emphasises possible tax responses to land banking, seismic strengthening expenditure, investment in nationally significant infrastructure, loss continuity issues, securing tax debts, and director liability for company GST and PAYE debts. Matters, apart from a capital gains tax, that have been dropped include a taxpayer disputes service and additional tax resource for the Ombudsman. Read more about the Government's response here.

17 April 2019 - In a surprise announcement the Prime Minister has said that the coalition Government will not proceed with a capital gains tax and that the Labour Party will not advance such a policy while the PM is leader. Other initiatives suggested by the recent Tax Working Group will be considered by Inland Revenue, as part of its ongoing work program, or by the Productivity Commission.

10 March 2019 - A major consolidation of aspects of the Tax Administration Act has been carried into law. This changes a number of provisions relating to the Commissioner's investigative powers, although the changes are not supposed to involve any change of policy. As with any legislative amendment, however, alterations of language can have consequences. 

6 March 2019 - The Department of Internal Affairs has released a discussion document on modernising the Charities Act. This is part of a consultation process that is open for submissions until 30 April 2019. The document can be read here.

5 March 2019 - From 1 April 2019 NZ will add 30 further jurisdictions to the 60 it already recognises for the purposes of Automatic Exchange of Information on tax matters. This marks a substantial expansion of NZ's commitment to the common reporting standard promoted by the OECD. The additional territories include the Cook Islands, Vanuatu, Niue, Panama, Switzerland and several Caribbean countries. To see the release by the Minister of Revenue, click here. 

21 February 2019 - The final report of the Tax Working Group was released today. It makes a raft of recommendations for re-balancing the tax system but most focus is on the majority recommendation for a comprehensive capital gains tax. The Government is to respond in April with its policy choices from the report. The details of the report can be found here.  

18 February 2019 - Frustrated with the time being taken to institute OECD reforms for taxation of international digital companies such as Google and Facebook, the Government has announced that it will shortly issue a discussion document canvassing steps it will take to impose a domestic digital services tax.  This is likely to take the form of a levy on revenues generated in NZ from a range of online activity, from search engines to social networks. In the meantime the tax world (or at least NZ's tax world) awaits the final report of the Tax Working Group on 21 February!

15 February 2019 - Officials are urging the Government to pass retrospective legislation to overturn the effect of the High Court decision in Roberts. This case found that a charitable gift need not be one of money and that the words "monetary gift" include other financial benefits. The case is under appeal but IR wants to clarify the law, overturning its loss in the High Court. See our case note on Roberts here. 

16 January 2019 - The Finance and Expenditure Committee has recommended that controversial provisions that would allow the IR to by-pass Parliament to remedy anomalies in the law be removed from the tax Bill it has just reported back. The Committee considers that these provisions require further consultation before coming back to it. The Committee is concerned that Parliament's law making role should be respected.  

December 2018 - A new tax "Christmas" Bill has been introduced dealing with a number of previously announced tax initiatives. These include the introduction of GST on lower value retail goods imported from overseas and the ring fencing of residential property rental losses from 1 April 2019. To review the Bill, click here.

5 November 2018 - Inland Revenue released IS 18/06 Income tax – treatment of the costs of resource consents. This finalised interpretation statement considers the tax treatment of the costs of obtaining a resource consent after the Supreme Court decision in Trustpower Limited v CIR [2016] NZSC.

29 June 2018 - The legislation seeking to protect New Zealand’s tax base from erosion through abuse of the tax system is now law. The Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018/16) received the Royal assent on 27 June 2018. The Act mainly comes into force on 1 July 2018.

29 March 2018 - The residential property bright-line test has been extended from two to five years with effect on properties acquired on or after 1 October 2018. Despite criticism that the five year test would impose tax on property sales having no connection with property speculation, the Government has implemented the change as a matter on which it had campaigned.   

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 21^st 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.