Snapshot of recent developments
Tax Alert - February 2018
Tax Working Group members announced
On 20 December 2017, Finance Minister Grant Robertson and Revenue Minister Stuart Nash announced the additional members that have been appointed to the Government’s Tax Working Group. Along with chair Sir Michael Cullen, the Working Group members being appointed are:
- Professor Craig Elliffe, University of Auckland
- Joanne Hodge, former tax partner at Bell Gully
- Kirk Hope, Chief Executive of Business New Zealand
- Nick Malarao, senior partner at Meredith Connell
- Geof Nightingale, partner at PwC New Zealand
- Robin Oliver, former Deputy Commissioner at Inland Revenue
- Hinerangi Raumati, Chair of Parininihi ki Waitotara Inc
- Michelle Redington, Head of Group Taxation and Insurance at Air New Zealand
- Bill Rosenberg, Economist and Director of Policy at the CTU
- Marjan Van Den Belt, Assistant Vice Chancellor (Sustainability) at Victoria University of Wellington
It was also announced that Andrea Black, tax specialist and commentator has been appointed as an independent advisor to the Group.
The Group has its own website where updates will be available. Its first meeting is scheduled to be held early this year.
BEPS Bill receives first reading
The Taxation (Neutralising Base Erosion and Profit Shifting) Bill received its first reading on 12 December 2017. The Bill introduces amendments to the Income Tax Act 2007, and the Tax Administration Act 1994, and proposes measures to counter the particular BEPS strategies observed in New Zealand. It has now been referred to the Finance and Expenditure Select Committee.
Submissions are due by 8 February 2018.
Overseas Investment Amendment Bill receives first reading
On 19 December, Associate Finance Minister David Parker welcomed the first reading of the Overseas Investment Amendment Bill, which has been referred to the Finance and Expenditure Select Committee. Residential land will be brought within the category of “sensitive land” in the Overseas Investment Act 2005. The Overseas Investment Office will generally prohibit overseas persons who are not permanent resident in New Zealand or Australia from buying existing houses or other pieces of residential land without undergoing screening.
The submission period has now closed and the Select Committee Report is due 20 February 2018.
Families Package (Income Tax and Benefits) Bill receives royal assent
The Families Package (Income Tax and Benefits) Act 2017 (2017/51) received royal assent on 20 December 2017. The Act includes measures to support the Government’s aim of providing more targeted assistance to low and middle income families with children and forms part of the Government’s 100-day plan.
OECD Model Tax Convention 2017 released
The latest edition of the OECD Model Tax Convention has been released, incorporating significant changes developed under the OECD/G20 project to address base erosion and profit shifting (BEPS).
Tax relief for affected farmers
Revenue Minister Stuart Nash has confirmed tax relief measures will be extended to farmers in drought areas. Inland Revenue will allow farmers in drought areas to make late income equalisation deposits for the 2016-2017 income tax year. They will also be able to apply for early refunds. This allows farmers to smooth out fluctuations in their income from year to year.
Inland Revenue – The New Zealand tax system and how it compares internationally
Inland Revenue has released a report comparing New Zealand’s tax system to international standards - including comparisons of company tax, personal income tax, GST and administrative and compliance tax.
Read the full report here.
Group insurance policies – income tax and FBT treatment
The Inland Revenue has released a Question We’ve Been Asked (QB 17/10) on the income tax and fringe benefit tax treatment of group insurance policies taken out by an employer in respect of its employees, where the employer holds the policy on behalf of its employees (being life term cover, accident/ medical cover, or both).
Loss offset elections between group companies
Inland Revenue has released a Standard Practice Statement (SPS 17/03) on “Loss offset elections between group companies”. The statement sets out how the Commissioner will exercise her discretion and what practices will be accepted when companies offset losses by election as provided for in Subpart IC of the Income Tax Act 2007. The statement does not consider all questions relating to loss offsets within a group of companies and accordingly is not a fully comprehensive guide to Subpart IC of the Income Tax Act.
The statement applies from 14 December 2017.