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A Snapshot of Recent Developments

Tax Alert - February 2019

Policy Developments:

Tax Working Group

The Tax Working Group has reported to the Government its findings and recommendations regarding New Zealand’s tax system. We now wait for a response from Government and the release of the group’s final report. Any changes the Government proceeds with will be subject to the full generic tax policy process. We expect the legislation introducing these changes to be announced by the beginning of next year.

Finalised Inland Revenue Items:

GST— zero-rating of services related to land IS 18/07

On 21 December 2018, Inland Revenue released Interpretation Statement IS 18/07: “Goods and services tax — zero-rating of services related to land”. The interpretation statement concerns amendments to the Goods and Services Tax Act 1985 that applied from 1 April 2017, and relate to the circumstances in which services related to land can be zero-rated under s 11A(1)(e) and (k).

Income tax - bright-line test - farmyard and main home exclusions - sale of lifestyle blocks QB 18/17:

On 19 December 2018, Inland Revenue released the finalised Questions We’ve Been Asked (“QWBA”) QB 18/17: Income tax - bright-line test - farmyard and main home exclusions - sale of lifestyle blocks. This QWBA explains that lifestyle blocks sold within the bright-line period will be excluded from the bright-line test when:

  • the lifestyle block is farmland; or
  • the lifestyle block is residential land and is the seller’s main home, and:
    • more than 50% of the area of the lifestyle block has been used for the seller’s home, curtilage and residential purposes, and the lifestyle block has been used in that manner for more than 50% of the time the seller has owned it.

Income tax - bright-line test - main home exclusion - sale of subdivided section QB 18/16:

On 19 December 2018, Inland Revenue released the finalised QWBA QB 18/16: Income tax - bright-line test - main home exclusion - sale of subdivided section.

This QWBA explains that a subdivided section sold within the bright-line period will be excluded from the bright-line test for residential land when:

  • more than 50% of the area of the land in the subdivided section has been used for a dwelling that was the seller’s main home; and 
  • the seller has used the land in the subdivided section in that manner for more than 50% of the time since the seller acquired the undivided land.

National Standard Costs for Specified Livestock Determination 2019.

On 25 January 2019, Inland Revenue released “The National Standard Costs for Specified Livestock Determination 2019”.

The determination is made in terms of s EC 23 of the Income Tax Act 2007 and applies to any specified livestock on hand at the end of the 2018/19 income year where the taxpayer has elected to value that livestock under the national standard cost scheme for that income year.

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