A Week in Review

Having your say

I thought it would be useful to remind you all of certain draft IR document’s presently out in the public arena for feedback, from both the perspective of reminding you of closing submission dates in case you were eager to share your views with the policy drafters, or in more general terms, of a number of specific issues in relation to which we are likely to see finalised statements by IR over the coming 12 months.

Draft OS ED0207 — Square metre rate for the dual use of premises

To coincide with recent simplification measures (s.DB 18AA) which will assist you in calculating expense claims in relation to premises used for both business and personal purposes, ED0207 sets out IR’s proposed operational statement as to how the new legislation will be interpreted and applied in practice. Submissions are due no later than 10^th May 2019.

PUB00344 — Salary, wages and bonuses paid in cryptocurrency

This item covers two draft rulings, the first in respect of whether a bonus received by an employee in cryptocurrency is subject to PAYE, and the second, and perhaps more primary question, of whether actually paying your employees general remuneration in cryptocurrency in the first place, is subject to PAYE (as opposed to FBT). Submissions are due no later than 3^rd May 2019.

Draft QWBA PUB00333 — What is the fringe benefit tax, GST and income tax treatment of an employee contribution to a fringe benefit?

The paper considers the potential implications for employers from a FBT, GST and income tax perspective, where the employer has provided a fringe benefit to the employee, and the employee then makes a contribution towards the fringe benefit provided by their employer. Submissions are due no later than 1^st May 2019.

Draft QWBA PUB00337: Donations — What is required to establish and maintain a fund under s LD 3(2)(c) of the Income Tax Act 2007?

Have you ever considered establishing a fund to which others can contribute to and receive a donation rebate credit? If so, then this draft QWBA may be of interest to you, as it sets out IR’s views of what is required to establish and maintain such a fund. Submissions are due no later than 25^th April 2019.

IRRUIP 13 — Consequences of GST group registration

The GST group registration rules allow a group of related entities to be treated as a single entity for GST purposes. Supplies made or received by a group member are treated as made or received by the representative member. This issues paper sets out two possible interpretive approaches to the GST group registration rules and identifies cases where the GST outcome differs depending on the approach applied. Submissions are due on 5 April 2019.

Minimum wage increases

Just in case you have forgotten, and with the new tax year kicking off on the 1^st, increases to the minimum wage and the minimum starting-out/training wages come into play. From Monday, the minimum wage increases to $17.70 per hour, while the minimum starting-out/training wage (which is usually set at 80% of the minimum wage) increases to $14.16.

Also recently published, was the current Governments intention to increase the minimum wage to $18.90 per hour effective 1^st April 2020, and to $20 per hour effective 1^st April 2021.

Final SPS version on voluntary disclosures issued

In a previous AWIR, I alerted you to the release of IR’s draft standard practice statement with respect to taxpayers who have filed a voluntary disclosure, and the factors that IR will consider when forming an opinion as to whether the potential application of shortfall penalties should be impacted by the contents of the voluntary disclosure.

In the first instance, there are four essential elements which must be present in any voluntary disclosure filed by a taxpayer, before IR will form an opinion with respect to whether what has been disclosed by the taxpayer, amounts to a full voluntary disclosure, to which a potential shortfall penalty reduction could then be considered.

The four essential elements required, are that the voluntary disclosure:

• must disclose a tax shortfall; and
   
• must disclose all the details of the tax shortfall; and
   
• must disclose something to the Commissioner; and
   
• must be made voluntarily.

The SPS goes on to explain each of these four elements in quite some detail, and to explain what IR considers will be a “full” voluntary disclosure by the taxpayer, which should see the following information, at a minimum, being disclosed:

• sufficient details for the Commissioner to satisfactorily identify the taxpayer (name, trade name, IRD number) and confirm the taxpayer’s contact details (postal address, contact telephone number(s), email address); and
   
• the tax periods and tax types involved; and
   
• an explanation as to why the tax shortfall occurred; and
   
• sufficient detail of the tax shortfall including its amount, and full details of the facts and circumstances leading to the tax shortfall to enable the Commissioner to make a correct assessment of the tax shortfall; and
   
• any further information that is necessary for the Commissioner to make a correct assessment.

SPS 19/02 applies from the 29^th March 2019, so any voluntary disclosures now being filed, should be prepared in accordance with the latest practice statement, particularly if relief from potential shortfall penalty application is going to be sought.