Excusing estates from filing income tax returns

On 8 June 2021, Inland Revenue released draft operational statement ED0231 - Excusing Estates from filing income tax returns. This consultation document sets out a change in the Commissioner’s approach to applying the income tax return filing exemption in s 43B of the Tax Administration Act 1994 to estates. Submissions close on 7 July 2021.

Income tax treatment of accommodation provided to employees

On 10 June 2021, Inland Revenue published Operational Statement OS 21/01 - Income tax treatment of accommodation provided to employees. The Commissioner’s view has remained unchanged from the draft version. This statement deals with the tax treatment of the provision of accommodation by the employer or the payment of an allowance to the employee; and reimbursement by the employer of accommodation expenditure incurred by an employee (also known as expenditure on account). The purpose of this statement is to clarify when these circumstances apply and to assist in determining the amount of tax payable.

Apportioning expenditure for motels and hotels

On 17 June 2021, Inland Revenue released draft QWBA PUB00391 - If I run a hotel, motel or boarding house and live on site, what expenditure can I claim? This consultation document states that if a person has a business of providing accommodation through a hotel, motel, boarding house, or other business premises, and live on-site, any expenses they incur relating solely to the running of their business are fully deductible. However, expenses relating to their private quarters or family life are not deductible as they are private or domestic in nature. If the expenses relate to both their private quarters and their business, they can claim a deduction to the extent that the expenses relate to the running of their business. This requires a person to calculate the portion of these mixed expenses that are attributable to their business. Submissions close on 30 July 2021.

Compulsory zero-rating of land rules for commercial leases

On 29 June 2021, Inland Revenue issued finalised QWBA QB 21/08 - GST - How do the compulsory zero rating of land rules apply to transactions involving commercial leases? The Commissioner’s answer remains unchanged from the draft version and covers various factual situations, such as stand-alone lease assignments, lease assignments in the context of business asset sales and lease procurement services in the context of business asset sales.

GST public ruling on debt factoring arrangements

On 17 June 2021, Inland Revenue released Public Ruling BR Pub 21/03 - Goods and Services Tax - Debt factoring arrangements. This statement applies to the arrangement that is the sale, by a GST registered person (the Assignor), to a third party (the Factor), on a recourse or non-recourse basis, of an outstanding debt at a price less than the debt’s face value. This statement considers whether a GST input tax deduction can be claimed for a bad debt write-off when a debt is factored.

Application date for depreciation of commercial buildings

On 22 June 2021, Inland Revenue issued finalised Question We’ve Been Asked (QWBA) QB 21/05 - The application date for the depreciation of commercial buildings. The Commissioner’s answer remains unchanged from the draft version, stating that the new rules for depreciation for commercial buildings apply from the beginning of the 2020-21 income year for all taxpayers regardless of the taxpayers balance date.

Deductions for businesses disrupted by COVID-19

On 29 June 2021, Inland Revenue published finalised Interpretation Statement IS 21/04 - Income tax and GST - deductions for businesses disrupted by the COVID-19 pandemic. The Commissioner’s position remains unchanged from the draft version. This statement considers whether a business can claim an income tax deduction for expenditure or loss incurred where a business has downscaled or stopped operating because of the COVID-19 pandemic. This statement also briefly considers the GST implications of these events.

Global corporate tax and withholding tax rates

Deloitte has recently published Global Corporate Tax and Withholding Tax Rates 2021 which provides corporate income tax, historic corporate income tax, and domestic withholding tax rates for close to 150 jurisdictions.

Capitalisation of Software-as-a-Service costs

A recent International Financial Reporting Interpretations Committee (IFIRIC) decision regarding the capitalisation of Software as a Service costs (SaaS) may be quite different to how many people have previously thought about the ability to capitalise costs associated with customisation of SaaS products. This could materially impact your business depending on your previous policy. The tax consequences of any change in accounting positions should be considered by taxpayers. This Deloitte accounting alert had further information about this change.

Remote work: Setting the right strategy

The landscape of remote work is changing rapidly as the pandemic has accelerated the future of work. For many businesses, there will be reduced importance as to where work is done and increased focus on how work is done, leveraging robotics, automation, digital capabilities, connected platforms, tools and techniques. We are seeing remote work come to life in several scenarios today, and each has different features, challenges and possible approaches. In this Deloitte Asia Pacific Dbrief, our Deloitte experts review alternative employment models and where these may or may not be attractive remote work solutions.

OECD developments

The key news updates from the OECD over the past month are as follows:

• On 17 June 2021, heads of tax crime investigation from 44 countries welcomed the launch of the second edition of Fighting Tax Crime - The Ten Global Principles. The report also presents 33 country profiles (including New Zealand), detailing countries’ domestic tax crime enforcement frameworks as well as highlighting the progress made in implementing the Ten Global Principles.
• On 22 June 2021, the OECD published Model Reporting Rules for Digital Platforms: International Exchange Framework and Optional Module for Sale of Goods. Reflecting the interest of a number of jurisdictions to permit the extension of the scope of the Model Rules to the sale of goods and the rental of means of transportation, the OECD has developed an optional module allowing such jurisdictions to implement the Model Rules with an extended scope. Exchanges of information under the Model Rules are operationalised by an international legal framework in the form of the Multilateral Competent Authority Agreement.