A Week in Review

“Time is of the essence”

IR has issued a draft Standard Practice Statement (“SPS”) ED 0208, which sets out the Commissioner’s position on when tax payments will be considered to have been received in time. The SPS replaces the earlier version, SPS 14/01, and alerts taxpayers and their agents to two main changes in practice:

• Post-dated cheques will no longer be accepted from 1^st February 2019, from the perspective that they will simply be presented to the bank for payment on the date received – although IR will endeavour to identify these cheques and return them to the taxpayers (well as if that isn’t going to create headaches for the taxpayer, particularly if the reason for post-dating was because they’re popping overseas for a month or two); and,
   
• If you wish to physically deliver your tax payment to an IRD office, you will need to do it during office hours, as drop boxes will only be located inside the premises.

Other interesting tidbits I thought from ED 0208 were:

• Internet payments must be completed before the end of your banks online business hours for the relevant day (which needs to be a day on or before the due date), otherwise it will be treated as having been made the following day (you all probably know this one anyway);
   
• You can set up direct debits for paying GST/FBT through your myIR (income tax from April 2019);
   
• You can pay your tax using your credit/debit card, although you will be charged a 1.42% convenience tax, unless it’s a payment of child support or student loans, where perhaps because its already exceeding ones acceptable pain thresholds, IR will graciously bear this cost on your behalf;
   
• While you can make cash or eftpos tax payments at your local Westpac branch, they are not able to accept your accompanying returns; and,
   
• If a due date falls on a weekend or public holiday (including provincial holidays), payments will still be in time if received by IR on the next working day.

The deadline for comment on ED 0208 is 28^th November 2018.

CPTPP on the verge of the green light

Not exactly tax, however I thought of potential interest to most of you, is that NZ has now ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (who comes up with these names??), and is the fourth country in the Asia-Pacific trade deal to do so.

However the CPTPP still requires two more countries to ratify, before the light changes from red to green, at which time its provisions will come into effect 60 days post that sixth signatories ratification.

R&D Legislation hits the House

Further to my article at the beginning of this month, which outlined the final proposals for the R&D tax credit, the Taxation (Research and Development Tax Credits) Bill (108-1) has been introduced into the House for its first reading.

The Bill highlights:

• Applying from 2019-20 income year (in-year approval requirements from 2020-21 income year);
   
• You’re eligible if you perform (or contractor on your behalf) a core R&D (“core activity”) in NZ (although 10% outside NZ permissible), you carry on a business through a fixed establishment in NZ, and you have R&D controlling rights – essentially you own the results, which you can use for no further consideration;
   
• A “core activity” is one conducted using a systematic approach, purpose of creating something new, and purpose of resolving scientific or technological uncertainty – some support activities may be included;
   
• You must spend at least $50k (capped at $120m) on R&D in relevant year, credit then 15% of the spend; and,
• Where credit exceeds year’s tax liability, first $225k refundable, with balance to be carried forward subject to usual tax loss continuity rules i.e. 49% shareholder ownership continuity for period commencing income year credit arises through to income year offset claimed.