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Snapshot of Recent Developments: September Tax Alert

Tax Alert - September 2019

Other Policy Developments (not covered elsewhere):

New UOMI rates now applying

A reminder that the new UOMI rates started to apply from 29 August 2019. The rate charged on underpaid tax increased from 8.22% to 8.35%, while the rate for overpayments of tax decreased from 1.02 to 0.81%.

Trusts Bill receives Royal Assent

On 30 July 2019, the Trusts Bill received Royal Assent. The Trusts Act 2019 is now available on NZ Legislation’s website.  Broadly, the Act will come into force on 31 January 2021 (18 months after the date of Royal Assent). The transition period is to allow trustees to review their existing trusts and deeds before the Act comes into force.

Swiss DTA updated

On 8 August 2019, New Zealand and Switzerland signed a protocol which will update the double tax agreement between the two countries. The main purpose is to include model treaty provisions to prevent tax treaty abuse and improve dispute resolution as recommended by the OECD and G20. The amended agreement will come into force once both countries have introduced the necessary domestic legislation.

Special report on GST on low-value imported goods

On 15 August 2019, a special report on the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 was released to provide early information on the new rules applying to “distantly taxable” goods supplied to consumers in New Zealand from 1 December 2019. Non-resident suppliers will be able to apply to be registered from 1 September 2019, with the registration taking effect from 1 December 2019. The registration form and information about registering for GST will be located on the Inland Revenue website. For general enquiries, or to apply for the Commissioner of Inland Revenue (the Commissioner) to exercise various discretions included in the rules, an email has been provided info.lvg@ird.govt.nz.

Further measures to be added to the KiwiSaver Bill

On 13 August 2019, Supplementary Order Paper (SOP) No 293 was introduced in order to add further measures to the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill. The SOP proposes further changes to the KiwiSaver Act 2006 to create a new withdrawal category to allow a person with a life-shortening congenital condition to withdraw their savings early. A member would be able to apply for a withdrawal under this new category if they have medical evidence to verify that they have a condition that is listed in regulations. Alternatively, they would be able to apply if they have medical evidence to verify that they have a condition that is a life-shortening congenital condition.

On 23 August 2019, Revenue Minister Stuart Nash announced an intention to introduce a legislative amendment to ensure that payments received by a land owner from the grant of a land right (such as a licence or a limited term easement) continue to be taxable. These changes will also be made by way of an SOP yet to be introduced.

Finalised Inland Revenue Items:

Income tax - employer issued crypto-assets provided to an employee – BR Pub 19/03

On 30 July 2019, Inland Revenue released the finalised public ruling, BR Pub 19/03: Income tax - employer issued crypto-assets provided to an employee. It considers how FBT applies where cryptocurrency issued by an employer is provided to an employee. In particular, it covers the situation where the crypto-assets are subject to conditions that the employee must satisfy to become entitled to the crypto-assets.

Commissioner's statements on using a kilometre rate - OS 19/04a and OS 19/04b

On 22 August 2019, Inland Revenue released two operational statements, OS 19/04a: Commissioner’s statement on using a kilometre rate for business running of a motor vehicle – deductions where a person intends to claim an expense deduction for a motor vehicle that is used partly for business purposes and partly for non-taxable purposes; and OS 19/04b: Commissioner’s statement on using a kilometre rate for employee reimbursement of a motor vehicle which explains the acceptable method to establish the tax-exempt portion of an amount paid to an employee as reimbursement of expenditure incurred by that employee where the employee uses their private motor vehicle in the employer’s business. These statements have also been updated with the recently announced kilometre rate figures. Refer to our Tax alert article on mileage reimbursements.

Tax depreciation rate for lay-flat hoses – General Determination DEP104

On 19 August 2019, the finalised depreciation determination General Determination DEP104: Tax depreciation rate for lay-flat hoses was released by the Inland Revenue. “Lay-flat hoses” was added into the “Hire Equipment” asset categories and has a 3-year estimated useful life. The diminishing value depreciation rate for lay-flat hoses is 67% and straight-line depreciation rate is 67%. DEP104 applies for the 2018/19 and subsequent income years.

Finalised Public Guidance work programme 2019-20

The new 2019-20 Public Rulings work programme of the Office of the Chief Tax Counsel has been finalised. This work program sets out guidance (e.g. rulings, questions we’ve been asked, operational statements etc) that Inland Revenue will produce over the coming year. The new programme contains items rolled over from the previous programme as well as some new items. This will be updated monthly.

September 2019 Tax Alert contents

·         What's on the tax policy work programme

·         A stick and carrot approach: FATCA, CRS and QI update

·         Customs is also interested in your transfer pricing 

·         Taxing telecommunication tools

·         Mileage reimbursements revisited - again!

·         Follow the rules when deducting bad debts

·         Recent developments

·         Deloitte Insights app 

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