A summary of the latest tax changes relating to individuals and businesses.
The Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016, enacted on 13 May 2016 makes changes to the previous Acts:
- Introducing a new withholding tax on sales of residential property by offshore persons who sell the property within two years of acquisition.
- Certain information about New Zealand student loan borrowers living in Australia can be shared between Inland Revenue and the Australian Taxation Office.
- The Taxation (Use of Money Interest Rates) Amendment Regulations 2016 decreased from 9.21% to 8.27% interest on underpayments of tax and decreased from 2.63% to 1.62% on overpayments of tax.
The Taxation (Transformation: First Phase Simplification and Other Measures) Bill proposed changes to simplify the tax administration system. Some of the proposed measures include:
- Allowing earlier tax refunds based on personal tax summaries that meet the automatic refund threshold.
- Increasing the threshold for automatic refunds to $600 (up from $200).
- Allowing minors incorrectly enrolled into KiwiSaver to opt out before their 19th birthday.
- Excluding some social security beneficiaries from the compulsory requirement to apply for child support.
- Simplifying current tax rules for employee share schemes.
The Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Bill amends past and present Acts including the Goods and Services Tax Act 1985, to propose the following changes:
- Enable businesses to recover GST incurred on goods/services used to raise capital, to the extent that the capital funds their taxable activity.
- Allow large, partially exempt businesses (e.g. retirement villages) and industry associations to agree on an alternative method of apportionment within the rules.
- Provide for more consistent treatment of accounting for GST on supplies of goods/services where total consideration is not known at the time of supply.
- Impose a more objective test to allow certain taxpayers to file six-monthly GST returns and to introduce a one-off exception to enable a person to continue to file six-monthly if the threshold is exceeded.
The Government paper “Making Tax Simpler – Better Business Tax” released in April this year proposes an SME-friendly tax package to reduce compliance costs and simplify tax. Its key proposals include:
- Increasing the current $50,000 RIT limit for UOMI to $60,000 and extending it to non-individuals.
- Introducing two new provisional tax payment methods – the accounting income method (AIM) and paying provisional tax on behalf of related parties.
- The ongoing 1% monthly late payment penalty will be removed.
- Inland Revenue will be permitted to disclose information about taxpayers who have significant tax debts and/or may have committed serious offenses against the Companies Act 1993.
Please contact us if you have any questions regarding any of these tax areas.