Snapshot of recent developments
Tax Alert - December 2020
Tax legislations and policy announcements
The Electoral Commission declared the official results for the 2020 General Election on 6 November 2020 and the Governor General swore in the new Government executive on the same day. Hon David Parker is the new Minister of Revenue, along with his other roles, which can be viewed on the Ministerial List. Dr Deborah Russell has been appointed as a Parliamentary Under-Secretary to the Minister of Revenue.
Revenue Minister’s speech at CAANZ Tax Conference
On 19 November 2020, the new Revenue Minister Hon David Parker presented his speech at the 2020 CAANZ Tax Conference. The Minister discussed the Government’s tax priorities and the Tax Policy Work Programme’s key work plans over the short term.
Inland Revenue statements and guidance
New COVID-19 Variation for changing GST taxable period
On 4 November 2020, Inland Revenue published a new COVID-19 variation COV 20/11: Variation of section 15D(2) of the Goods and Services Tax Act 1985 for applications to change GST taxable period. This variation applies where a registered person wishes to file on a one-monthly basis to provide earlier access to any GST refunds. It allows the change of taxable period to take effect sooner and applies from 4 November 2020 to 31 March 2021.
Variation to finance lease definition
On 5 November 2020, Inland Revenue issued COV 20/12 – Variation in relation to the definition of “finance lease” in section YA 1 of the Income Tax Act 2007. This extends the application period of COV 20/08 which varies and extends the definition of finance lease to ‘more than 75% of the asset’s useful life plus an additional 18 months’. This new determination applies from 5 November 2020 to 31 March 2021.
Student loan repayment – options for relief
On 10 November 2020, Inland Revenue released Standard Practice Statement SPS 20/05: Student loan repayment – options for relief. This statement describes how the Commissioner of Inland Revenue will exercise a statutory discretion or deal with practical issues arising out of the administration of the Inland Revenue Acts. It updates and replaces SPS 11/03 Student Loans - Relief from repayment obligations. This replacement standard practice statement reflects the Student Loan Scheme Act 2011 and changes introduced by the Inland Revenue transformation programme to encourage borrowers to self-manage student loans via the myIR secure online service.
Calculating income from personal services to be attributed to the working person
On 12 November 2020, Inland Revenue released consultation document PUB00321: Income tax – calculating income from personal services to be attributed to the working person. This draft interpretation statement provides guidance on how to calculate the amount of income from personal services that is attributed to the working person under the attribution rule in the Income Tax Act 2007. The attribution rule may apply if an entity earns income from supplying services that are personally performed by an associated person (the working person). The rule is aimed at ensuring the appropriate amount of income is recognised as being the working person’s income – so taxpayers in this situation cannot use associated entities to achieve a tax advantage. Submissions close on 24 December 2020.
Whether “negative interest” payments are subject to withholding taxes
On 22 November 2020, Inland Revenue released draft Question We’ve Been Asked ADV000097 – Whether “negative interest” payments are subject to withholding taxes for external consultation. It explains the application of the resident withholding tax (RWT) and non-resident withholding tax (NRWT) rules to situations where negative interest is charged on an advance of money or a loan and concludes that the payment of negative interest will not be subject to withholding taxes. The deadline for comment on this item is 15 January 2021.
Tax depreciation for e-scooters and e-bicycles
On 30 November 2020, Inland Revenue released a consultation item ED0228 which proposes depreciation rates for e-scooters and e-bicycles used in the ordinary course of business as well as e-scooters, e-bicycles and pedal bicycles used for short-term hire. Once finalised the rates are proposed to apply for the 2021 and subsequent income years. Submissions close on 29 January 2021.
Income tax treatment of accommodation provided to employees
On 1 December 2020, Inland Revenue released a draft optional statement ED0227 which outlines the tax treatment of accommodation provided to employees. The draft operational statement essentially consolidates previous guidance on this topic following major reforms to the taxation of accommodation which took effect from 1 April 2015. Submissions close on 1 February 2021.
Taxation and Philanthropy
On 26 November 2020, the OECD released a report “Taxation and Philanthropy”. The report provides a detailed review of the tax treatment of philanthropic entities and giving in 40 countries.
Note: The items covered here include only those items not covered in other articles in this issue of Tax Alert.
December 2020 Tax Alert contents
- Tax rate change enacted along with big-brother information gathering powers
- Inland Revenue steps up activity on taxing house sales
- Double taxation disputes – good things take time…
- Snapshot of recent developments