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Basic compliance package process – update

Tax Alert - March 2017

In the latest edition of Inland Revenue’s Large Enterprises newsletter, Inland Revenue has reported back on the 2015 basic compliance package (BCP) process.  For 58% of taxpayers, no further action resulted. However, 38% of taxpayers were required to provide further information to Inland Revenue and 4% of taxpayers received an audit letter.  Inland Revenue has provided a list of some of the common issues arising.  As large taxpayers will need to submit the BCP for the 2016 year by the 31 March 2017, these issues could be worth double-checking now. 

For example:

  • Issues with fixed assets and the tax depreciation calculation;
  • GST (credit or zero-rating issues, underpayments, issues in GST apportionment methodology and incorrect treatment of capital raising costs);
  • Transfer pricing (related party purchases not being at arm’s length);
  • Breaches in continuity of shareholding not reflected in losses to carry forward or imputation credit accounts;
  • Loss (errors in forward/carry forward balances, loss offsets and/or subvention payments);
  • Imputation credit accounts (debit and credit entry errors and in the carried forward balance); and
  • Unpaid non-resident withholding tax on royalties and interest and errors in calculations.

Due to a decrease in the timeliness of the response rate for BCPs for 2015, Inland Revenue are considering further action in relation to the 2016 tax year if the BCP is late or requires follow-up. For assistance with this process please contact your Deloitte tax advisor.

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