Snapshot of recent developments

Who will be eligible to use the accounting income method (AIM) for calculating provisional tax?

Inland Revenue has published some practical information on how the AIM method will operate from 1 April 2018.  This is an alternative method of calculating provisional tax payments during the year, for taxpayers using approved accounting software meeting certain requirements.  To choose AIM, it will be necessary for Inland Revenue to confirm if a taxpayer is eligible.

Key points to note about who is eligible to use AIM are as follows.

• To use AIM, taxpayers must opt in at the beginning of the tax year before the first payment is due (new provisional taxpayers can opt in at any time before their first instalment would be due)
• Taxpayers cannot use AIM in a transitional year. Partnerships, portfolio investment entities, superannuation funds, trusts, Māori authorities or taxpayers that derive FIF or CFC attributed income are also not allowed to use AIM.

The webpage also includes information on how approved accounting software will work out a taxpayer’s AIM payments. A future Tax Alert article covering more details on AIM will be published closer to 1 April 2018. Watch this space.

QB 17/08: Are proceeds from the sale of gold bullion income?

On 21 September 2017, Inland Revenue released a finalised QWBA on whether the proceeds from the sale of gold bullion are income. This item concludes that, in most cases, gold purchased in bullion form will be purchased for the dominant purpose of disposal, so the amount derived on its disposal will be income. However, there are situations where the Commissioner may accept that the taxpayer’s dominant purpose in acquiring gold bullion was to retain it for reasons other than eventual disposal. In this case, the onus is on the taxpayer to satisfactorily show this is the case. 

Use of a valid electronic signature on documents provided to the Commissioner

Inland Revenue has released a Standard providing finalised guidance on when the use of electronic signatures on documentation and information provided to the Commissioner is permissible. In sum, Inland Revenue will accept an electronic signature on all documents and information that currently require a conventional signature, where this option is specified in the relevant document or associated guidelines. Taxpayers may use an electronic signature if they are using Inland Revenue’s online services or are using software that complies with the requirements set out in the Standard. 

Special Determination S54: Application of financial arrangement rules to Investors in the Lifetime Income Fund

Inland Revenue has released Special Determination S54: Application of financial arrangements rules to Investors in the Lifetime Income Fund. This determination specifically relates to the application of the financial arrangements rules in relation to investors in a Lifetime Income Fund, which is a managed investment scheme in which investors can invest their retirement savings in return for a stream of regular payments for the rest of their life.

General Determination DEP101: Tax Depreciation Rate for abrasive blasting booths (including media recovery/recycling, dust extraction and ventilation systems)

Inland Revenue has finalised a depreciation determination for abrasive blasting booths (including media recovery / recycling, dust extraction and ventilation systems). The new estimated useful life is 12.5 years and the depreciation rates are 16% DV and 10.5% SL.

Business Tax Update – September 2017

The September 2017 edition of Business Tax Update has been published. The item covers due date reminders for PAYE (employer monthly schedule IR 348 and employer deduction form IR 345) and GST and FBT return and payment due date reminders for the periods ending 31 August 2017 and 30 September 2017 respectively. Other topics in this item include back-paid holiday pay, Common Reporting Standard due diligence and reporting obligations, the taxing of schedular payments made to contractors and myGST system enhancements.

October 2017 Tax Alert contents

• Tax Alert - October 2017
• GST on Mortgagee Sales  
• OECD adds complexity and uncertainty to intangible property pricing
• New Customs law to be implemented next year – how prepared is your business
• High Court provides guidance on shortfall penalties  
• Country-by-Country Reporting: What is your risk profile?
• A snapshot of recent developments