A snapshot of recent developments
Tax Alert - December 2016
OECD releases text of multilateral instrument to counter base erosion and profit shifting
The OECD has released the text of the Multilateral Convention that will swiftly implement a series of tax treaty measures to update international tax rules and lessen the opportunity for tax avoidance by multinational enterprises. The new Convention will essentially transpose results from the OECD/G20 BEPS Project into more than 2,000 tax treaties worldwide. The New Zealand Government is one of more than 100 jurisdictions that have participated in the negotiation of this document. Officials intend to consult on the implementation of the Convention in the coming months. The Convention will be open for signature from 31 December 2016 and a signing ceremony in Paris is planned for 5 June 2017. After signing, individual signatories will need to ratify the Convention in line with their domestic constitutional arrangements. For more Deloitte analysis, please refer to this tax@hand article.
Tax measures to help those affected by the earthquakes
Minister of Revenue Michael Woodhouse has announced tax measures to help those affected by November’s earthquakes in Kaikoura and surrounding areas. Inland Revenue will provide the following relief:
- Use of money interest will be waived, until 31 January 2017, when a taxpayer is prevented from paying on time as a result of the earthquakes,
- Late filing and late payment penalties will be remitted for all affected taxpayers, and
- Discretion as to income equalisation for farmers and fishers who are significantly affected by the earthquakes.
Customs and Excise Bill
On 23 November 2016, the Government announced the introduction of a new Customs and Excise Bill (“the Bill”). The Bill modernises but does not substantially change the Customs and Excise Act 1996. Proposals support the movement of travellers and goods across the border, protect New Zealand from harm and support the collection of Crown revenue.
On 10 November 2016, the Government released the Trusts Bill and accompanying exposure draft. This Bill adopts 48 of the Law Commission’s 51 recommendations in replacing the Trustee Act 1956. The Bill largely restates the existing law, which means that existing trust deeds will not need to be changed. Submissions are due 21 December 2016.
Consultation paper on electric vehicles
Inland Revenue has released a consultation paper (“the Paper”) on electric vehicles, which considers whether the current tax depreciation rates that apply to conventional vehicles are appropriate for electric cars (i.e. whether the depreciation rate for electric cars should be accelerated) and whether the current FBT calculation method is overvaluing the private benefit of being able to use a company owned electric car.
The Government’s Electric Vehicles Programme provides an overview of the Government’s target of 64,000 electric vehicles by 2021. Also relevant to this Paper is the Energy Innovation (Electric Vehicles and Other Matters) Amendment Bill, which is currently with the Select Committee (submissions are due 1 February 2017).
ACC levy recommendations for 2017-2019 period
On 24 November 2016, ACC announced that it is making levy recommendations to the Minister for the 2017-2019 period. Recommendations include a 13% reduction in the average Motor Vehicle levy for car owners, a 10% reduction in the average Work levy, changes to workplace safety incentive products for businesses, and a 3% increase in the Earners’ levy for employees due to an increase in claims volumes and costs.
CRS for AEOI – Low risk entities or accounts
The Common Reporting Standard for Automatic Exchange of Financial Information provides for an exclusion to due diligence and reporting obligations for “low risk” excluded entities and accounts. Inland Revenue has requested submissions from financial institutions who consider they are a low risk entity or have low risk accounts. The financial institution will need to meet the technical criteria set out in Inland Revenue’s fact sheet, which also provides a list of information required for a submission. Submissions are due 31 January 2017.
Draft QWBA: Income tax and Goods and Services Tax — Treatment of bloodstock breeding partnership
On 17 November 2016, Inland Revenue released a draft QWBA on Income tax and Goods and Services Tax — treatment of bloodstock breeding partnership. The draft QWBA clarifies the Commissioner’s view on income tax and GST treatment for a partnership formed to carry on a bloodstock breeding business. In particular, it covers a new partnership’s purchase of its first horse in order to race the horse for a number of years before using it for breeding. Submissions are due 23 December 2016.
December 2016 Tax Alert contents
- Timely revised guidance on deductibility of certain earthquake related costs
- Closely held companies bill reported back with significant changes
- Charitable change to the FBT rules? Depends on your facts
- Business tax simplification measures are a step closer
- Calculating “market rental value” on employee accommodation – guidance finally released
- R&D tax credits – our experience to date
- IR’s Operational Guidelines: Pre-Litigation Settlements
- What’s on the Tax Policy Agenda?
- A snapshot of recent developments