Happy New Tax Year – what you need to know in April 2019
Tax Alert - April 2019
By Emma Marr
The 2019 income year came to a screeching halt on Friday 29 March, and the dawn of the New (Tax) Year has broken. Those still recovering from the annual tax return filing festivities may be startled to discover that there is plenty left to do in the near future – Inland Revenue has been forging on with business transformation and changes affecting most taxpayers are now upon us. Read on for more information on how this, and other recent changes, could affect you. You should also refer to other articles in this edition of Tax Alert on research and development, and the Commissioner of Inland Revenue’s care and management obligations, as changes are afoot in those areas too. If you want to discuss any of the changes and how they impact you further, please contact your usual Deloitte advisor.
Some Inland Revenue downtime, and then a new website
Inland Revenue is rolling out their new website on 26 April 2019, following a seven-day shut-down of core-services (including office counters and contact centres) from 3pm Thursday 18 April 2019 to the morning of Friday 26 April 2019. Inland Revenue is taking advantage of the fact that due to Easter and ANZAC day being in the same week this year, there are only two working days in this period. The website will still be available during this period and payments can be made by online banking. Inland Revenue advise that the new website will have improved functionality and present content in a crisper, more accessible style.
A big change that all employers have to grapple with this month is the change to payday reporting. From April 2019 employers and intermediaries will be required to digitally file employment information, instead of the current employer monthly schedule, within two working days of payday. Different timeframes apply for those filing on paper. This will impact most employers, including those with shadow payrolls or who make schedular payments. Payday reporting was voluntary from April 2018 but is now compulsory. It is important to remember that the tax payment deadlines have not changed, it is only the employment information that must now be reported at different times.
You can read more about payday reporting in our February Tax Alert article.
Tax changes for individuals
Wage and salary earners – welcome to a brand new world. A major part of Inland Revenue’s transformation process is simplifying individual tax compliance processes, and the new rules are now in force. From the tax year ending 31 March 2019, individuals who only earn salary and wages or investment income will no longer have to request, or be provided with, a Personal Tax Summary. This means Inland Revenue will use information provided by employers and payers of investment income to pre-populate income tax returns. Using this information, Inland Revenue will determine whether it can automatically generate a refund or a request for a payment of additional tax. Individuals will have to let Inland Revenue know if they receive additional income so that their tax obligation is correctly calculated.
If Inland Revenue can’t automatically generate a refund or request for an additional tax payment, taxpayers will need to provide additional information via myIR, Inland Revenue’s online portal. Inland Revenue will prepopulate IR 3s with information they have gathered from employers and investment income payers. You can read more about these changes, including how individuals will claim donation rebates, in our March Tax Alert article.
Read your odometer
New mileage reimbursement rates apply from 1 April 2019 for those with standard balance dates. The tier one rate of 76c/km applies to the work related portion of the first 14,000km of combined business and private travel per annum, provided a log book or similar records are maintained by the employee. Tier two rates apply to travel exceeding this distance, and depend on the specific vehicle being used. Read more about the new rates in our article from August 2018, and make sure you take an odometer reading this month so you can comply with the new rules.
Recalculate your debt percentage and debt pricing
If you are controlled by a non-resident you will be subject to new rules on a range of issues, including debt pricing, debt/asset ratios and transfer pricing. The new rules apply from the income years starting from 1 July 2018 so if you have a March balance date, the rules apply from 1 April 2019. If your company is reasonably highly leveraged, you should carefully calculate whether you meet the new thin capitalisation debt/asset ratios. Any related-party debt should be considered in light of the new debt pricing rules. You can read a summary of the new rules here.
Landlords – remember the new rules
If you own investment property you should be aware of new rules about offsetting losses made from residential rental properties. The proposed legislation, which is still progressing through Parliament, intends to end landlords offsetting losses incurred on residential rental properties against other sources of income (for example salary or wages and investment income), which generally results in a reduced tax liability and in many cases an income tax refund. The rules, when enacted, will apply from 1 April 2019. You can read more about them in our March 2019 article.
RWT certificates are now available electronically rather than being posted to taxpayers. The government has also tinkered with provisional tax, student loan and working for families rules, Kiwisaver contributions and the binding rulings regime.