A snapshot of recent developments

Government accepts Shewan Inquiry recommendations

In last month’s issue of Tax Alert, we reported on the Government inquiry into the foreign trust disclosure rules.  In a joint statement on 13 July 2016, Minister English and Minister Woodhouse announced that the Government will adopt the Shewan recommendations.  Minister English says that “the Shewan Inquiry’s recommendations are sensible and well-reasoned and by acting on all of them, we will ensure that our foreign trust disclosure rules are strengthened and New Zealand’s reputation is protected”.  This table summarises the Government’s responses to the Inquiry.

Special report: Simplifying tax collection on employee share schemes

As noted earlier in this issue of Tax Alert, Inland Revenue has released a special report, Simplifying the collection of tax on employee share schemes, to provide more detail and practical information on the changes included in the recently enacted Taxation (Transformation: First Phase Simplification and Other Measures) Act.  The new rules apply to income years beginning on or after 1 April 2017.

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

On 5 July 2016, Inland Revenue released a draft standard, EPR616, on the use of a valid electronic signature on documents provided to the Commissioner.  The draft standard sets out the application of section 13B of the Tax Administration Act 1994 and specifies the conditions under which Inland Revenue will accept documents and information with an e-signature.  Submissions close on 22 August 2016.

Income tax treatment of software development expenditure

On 13 July 2016, Inland Revenue released an issues paper on the income tax treatment of software development expenditure, IRRUIP10.  The issues paper notes that the current approach, developed in 1993, does not adequately address the rapidly evolving world of software development.  For more information on this topic, see our article within this issue.  Submissions are due 25 August 2016.

Submissions on bill close

Submissions on the Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill closed on 29 July 2016.  This is the omnibus bill that contains significant tax changes to look-through companies, the NRWT and AIL rules and changes to the related party debt remission rules amongst many other things.  Refer our Alert article in May for an outline of the contents of this bill. The report back to the Finance and Expenditure Committee by Officials has been set for 15 December 2016.

Remote Services – GST Registration Form Released

Inland Revenue has released the GST registration form (IR994) for non-resident suppliers who are required, or wish, to register for New Zealand GST under remote services regime. The regime applies to supplies of “remote services” made by non-resident suppliers to New Zealand customers from 1 October 2016.  Inland Revenue has also published two new webpages providing additional information on the remote services regime for both suppliers and recipients of remote services.  Further information on the regime can be found in an earlier article here.

Tax Alert August 2016 Contents:

• Supreme Court delivers Trustpower decision
• Undeveloped software taxation
• Safe Harbours for Trans-Tasman related party loans
• Employee share schemes?  New PAYE rules will impact you 
• Making tax simpler… for some
  
• Inland Revenue targeting language schools on GST issue
• Will the Commissioner be an unlikely beneficiary of the unitary plan?
• A snapshot of recent developments