Snapshot of recent developments
Tax Alert - March 2022
Deloitte Tax Calendar
We’re currently working on the Deloitte tri-fold tax calendar containing key tax payment dates, rates and quick tax facts for 2022-2023. If you would like a free copy for your desk or for members of your accounting team, please click here to order.
The calendar will be sent out in early April. Please order your copy by 18 March 2022.
Tax Legislation and Policy Announcements
Changes made to the Small Business Cashflow Loan Scheme
On 21 February 2022, the Government announced the following changes were being made to the Small Business Cashflow Loans Scheme to support businesses:
- An additional $10,000 can be drawn down for the SBCS base loan with a repayment period of five years, the first two years being interest-free, providing the loan does not default.
- Removing the first two years of accrued base interest from all borrowers who have, or will, take out a loan under the scheme. This change will mean interest will only start accruing at the beginning of the third year (previously the loan would only be interest-free if repaid in full within two years).
Extension of the remittance of penalties and interest
Inland Revenue’s ability to remit interest if a business is late paying its tax because they are adversely affected by COVID-19 has been extended. Penalties and interest can be remitted for tax payments due on or after 14 February 2020 up until 24 March 2022 (including provisional tax). This will soon be extended to 7 April 2024. Please contact your usual Deloitte advisor to discuss eligibility if you have any further queries or would like to make a remittance application.
Clean car legislation passed by Parliament
On 17 February 2021, the Land Transport (Clean Vehicles) Amendment Act received Third Reading in Parliament and was enacted on 22 February 2022. The Act amends the Income Tax Act 2007 by inserting a definition of “clean vehicle discount scheme” into the FBT rules to clarify that, for fringe benefit tax purposes, the cost of the vehicle is net of the amount of the any payment under the clean vehicle discount scheme. The amendments to the Income Tax Act 2007 are deemed to have come into force on 1 July 2021.
NZ Customs deferred payment scheme credit limit may increase automatically
From February 2022, NZ Customs has started to automatically increase credit limits for selected importers using the Deferred Payment Scheme. This is to allow Customs to trade more freely, as a result of the global supply chain challenges.
New Zealand signs free trade deal with United Kingdom
The Government has announced that on 28 February 2022, New Zealand signed a high quality, comprehensive free trade agreement with the United Kingdom, one of the world’s largest economies and an important long standing partner.
On day one, 99.5% of current New Zealand trade will enter duty-free, through a combination of tariff elimination and duty-free quotas. Quotas will grow over time and then be removed.
Inland Revenue statements and guidance
New depreciation rate finder and calculator
Inland Revenue has added a new combined Depreciation rate finder and calculator onto their website to replace the Depreciation claim calculator and the Depreciation rate finder that was removed in October 2021. The new tool can be used to find the depreciation rate and/or calculate depreciation for a business asset.
Australian listed share exemption from the Foreign Investment Fund (FIF) rules tool
Inland Revenue has added a new FIF exemption tool to replace the previous tool that was removed in October 2021. The new tool can be used to check if shares in an Australian company are exempt from the FIF rules.
Support for Taranaki floods
Significant rainfall and flooding affected the Taranaki region over the Waitangi weekend 2022. If this has caused taxpayers to miss a payment, the filing date or they are struggling to deal with tax affairs as a result, they can contact Inland Revenue as they have a range of support available for businesses, individuals and families affected by the floods.
Support for flooding in West Coast region and top of South Island regions
On 13 February 2022, Minister for Rural Communities, Damien O’Connor declared a medium-scale adverse event for the West Coast and top of the South Island regions. To assist farmers and growers, Inland Revenue is exercising discretion to allow early withdrawals from the income equalisation scheme. Inland Revenue also has a range of support in place for affected businesses, individuals and families.
Public consultation on Pillar One and Pillar Two
On 4 February 2022, the OECD released the first stage of public consultation on the “building blocks” for Amount A of Pillar One. The first building block released is the Draft Model Rules for Nexus and Revenue Sourcing, with submission having closed on 18 February 2022. The Draft Model Rules provide the detail necessary to identify the end market for specific categories of transactions, i.e., to identify the jurisdiction in which revenue arises for the purposes of Amount A. The Draft Model Rules constitute a working document reflecting the work undertaken to date and do not yet have the consensus of the OECD Inclusive Framework. The OECD has also published the public comments received.
On 18 February 2022, the OECD released the Pillar One – Amount A: Draft Model Rules for Tax Base Determinations for public consultation, with a submission deadline of 4 March 2022. The tax base rules are designed to calculate the profit (or loss) of a Covered Group that will be used for the Amount A calculation. The tax base is therefore the measure of profit that forms the basis for partial reallocation under Amount A rules. The rules determine that profit (or loss) will be calculated based on the consolidated group financial accounts while making a limited number of book-to-tax adjustments. The rules also include provisions for the carry-forward of losses.
The OECD has also confirmed that a public consultation document for Amount B of Pillar One will be issued in mid-2022, followed by a public consultation event after the comment period.
A public consultation document on the implementation framework for Pillar Two will be launched soon, with the public consultation event being held in March. The Subject to Tax Rule of Pillar Two draft model provision and commentary will be released in March 2022 with a defined set of questions set for input.
OECD Countries continue the successful implementation of international standards on harmful tax practices and tax dispute resolution
On 24 January 2022, the OECD released an update explaining that progress continues in combatting harmful tax practices and providing greater tax certainty. New outcomes on the review of preferential tax regimes and new peer review reports on Mutual Agreement Procedures have been approved by the OECD/G20 Inclusive Framework on Base Erosion Profit Shifting, which groups over 140 countries and jurisdictions on an equal footing for multilateral negotiation of international tax rules.
Note: The items covered here include only those items not covered in other articles in this issue of Tax Alert.
March 2022 Tax Alerts
- Tax Governance: How do NZ taxpayers stack up against Inland Revenue’s expectations and what are Inland Revenue doing next?
- A glance over the Tasman Sea for future GST compliance activity in NZ
- COVID-19 Support Payments Explained
- A New Zealand Income Insurance Scheme – What does this mean
- Going digital
- Fringe Benefit Tax season is coming – helpful tips and tricks to surviving Quarter Four FBT returns
- Draft COVID-19 guidance provides a refresher on tax deduction rules
- 10 Tax System Insights
- Snapshot of recent developments