Snapshot of recent developments

Tax legislation and policy announcements

Special report on the Annual Rates Act

On 9 April 2021, Inland Revenue released a special report on the Taxation (Annual Rates for 2020-21, Feasibility Expenditure, and Remedial Matters) Act 2021 and this has been further updated on 28 April 2021, to incorporate a few minor corrections and updates under feasibility expenditure. The report includes further guidance and examples on key areas of the Act. This precedes the coverage of the Act in an upcoming edition of the Tax Information Bulletin.

Order in Council - Meaning of accommodation

On 22 April 2021, the Income Tax (Employment Income - Meaning of Accommodation) Regulations 2021 was issued under s CE 1(4) of the Income Tax Act 2007 and came into force on the same date. This Order in Council establishes a tax exemption in relation to accommodation that is provided to an employee between 22 April 2021 and 30 June 2022 in order to enable the employee to isolate due to the risk of the outbreak or spread of COVID-19.

Inland Revenue statements and guidance

Deduction notices

On 12 April 2021, Inland Revenue issued Standard Practice Statement SPS 21/01 – Deduction notices. This replaces SPS 11/04 – Compulsory deductions from bank accounts and takes effect from 12 April 2021. The statement sets out Inland Revenue’s power to issue a deduction notice to recover outstanding amounts of tax from a third-party and provides guidance on how the Commissioner will use such notices.

Depreciation rates for e-scooters and e-bicycles

On 26 March 2021, Inland Revenue published Determination DEP106 - Tax Depreciation Rates for e-scooters and e-bicycles used in the ordinary course of business, and e-scooters, e-bicycles and bicycles (pedal) used for short term hire of 1 month or less. This determination applies for the 2020/21 and subsequent income years.

Consultation items

Deemed dividends

On 21 April 2021, Inland Revenue published consultation document PUB00362 - Deemed dividends. This draft interpretation statement considers when a transfer of company value from a company to a shareholder is treated as a dividend for tax purposes. It focuses on the types of transactions that are often entered into between small and medium-sized companies and their shareholders. It also considers when a transfer of value from a company to a shareholder is not treated as a dividend and is instead taxed under other rules. Submissions close on 27 May 2021.

Compulsory zero-rating rules in transactions involving commercial leases

On 14 April 2021, Inland Revenue released consultation document PUB00383 – GST – How do the compulsory zero-rating of land rules (CZR rules) apply to transactions involving commercial leases? Submissions close on 25 May 2021.

Income tax and GST treatment of meal expenses

On 21 April 2021, Inland Revenue published consultation document PUB00361 - Income tax and GST - Treatment of meal expenses. This draft interpretation statement covers the income tax and GST treatment of meal expenses incurred by self-employed persons. It also discusses the treatment of meal allowances paid to employees to illustrate the differences with the treatment of self-employed persons, as well as the treatment of entertainment expenditure for the same reason. Submissions close on 27 May 2021.

Deductions for businesses disrupted by the COVID-19 pandemic

On 15 April 2021, Inland Revenue published consultation document PUB00393 – Income tax and GST – deductions for businesses disrupted by the COVID-19 pandemic. This draft interpretation statement considers whether a business can claim an income tax deduction for expenditure or loss incurred where the business has downscaled or stopped operating because of the COVID-19 pandemic. This statement also briefly considers the GST implications of these events. Submissions close on 28 May 2021.

Depreciation rates for brake test rollers

On 7 April 2021, Inland Revenue released consultation document ED0229 – Tax depreciation rates for brake test rollers. This draft determination sets depreciation rates for brake test rollers used in the ordinary course of business and applies for the 2020/21 and subsequent income year. Submissions close on 20 May 2021.

Note: The items covered here include only those items not covered in other articles in this issue of Tax Alert.

May 2021 Tax Alert contents

• Inland Revenue is watching your residential property transactions
• Research and development tax incentive – New guidance and deadlines, you might be back in the running for a 15% credit
• Loss carry back rules – is it too late to get the benefit?
• Data analytics - Inland Revenue loves it, how can you make it work for your business?
• Time to review your Employer Superannuation Contribution Tax rates
• Taxing Social Media
• Do you know who can sign your corporate tax return?
• Snapshot of recent developments