A Week in Review
We have the power!
The recent passing of the Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019, has extended the Commissioners care and management role, by giving her the power to either modify how tax laws are to apply (by way of an Order in Council recommended by the Minister of Revenue to the Governor-General) or to grant an exemption from certain provisions of the Inland Revenue Acts.
The purpose of the legislative amendments (new sections 6C to 6G of the TAA94) is to provide more flexibility for the Commissioner to address legislative anomalies, where a view has been reached that a particular provision within the Inland Revenue Acts seems to contain an error, does not achieve its intended purpose, is inconsistent with other provisions, or appears to be ambiguous.
The new powers are now detailed in a document released by IR – “legislative modification power”, which states that they will only be exercised, if doing so would be beneficial to the taxpayers. In this regard, whether an affected person uses a particular modification or exemption, is entirely at their option.
Confirming the intent of the new legislation, that any modification or exemption is supposed to be temporary, a three year maximum time period will apply (although in some cases, retrospective application may also be appropriate).
It should be noted that any modifications or exemptions to the Inland Revenue Acts will not be solely IR driven, in essence any person who considers that a provision in the Inland Revenue Acts is not operating as intended, contains an error, is ambiguous, or is inconsistent with other provisions, entitled to raise possible issues with IR by using their dedicated email address [email protected].
Upon receipt, a specialist team will review the person’s submission, to determine whether it is appropriate to use the legislative modification power, and if it falls within the scope of the new rules, then the potential issue of a modification or exemption will be progressed through the usual public consultation process, to ensure that IR fully understands the issue.
Results will then be published, which will include an explanation of what steps need to be taken by affected people to take advantage of the rules (or to opt out as appropriate), and where retrospective application applies, how to request amendments to previously filed returns.
First reading of new Tax Bill
The Taxation (KiwiSaver, Student Loans, and Remedial Matters) Bill has received its first reading and following our usual law making processes, has now been referred to the Finance and Expenditure Committee (FEC) for their review and comment.
The Bill continues the Government’s simplifying and modernising of social policy administration and its desire to further improve the application of NZ’s broad-base, low-rate framework, and to encourage R&D expenditure. In this last regard, the Bill contains proposed changes to extend the refundability of R&D tax credits, with amendments intended to apply from the 2020/21 income year, making the credit more broadly refundable, with a cap based on the payroll taxes paid by a firm in each year.
The FEC is due to report back on 24 January 2020, with any submissions on the Bill due to be filed no later than 4th September 2019.
New guidance tool available
Following on from the last articles’ R&D tax credit flavour, to assist businesses with assessing whether they may eligible for the new R&D tax credit, IR has developed and now released a new on-line (apparently easy-to-use) eligibility tool with associated guidance material, which is aimed at providing businesses with a useful indication of whether they should explore their eligibility to receiving a tax credit further.
The new tool has been designed to facilitate Governments intention to encourage more businesses of all sizes and across a range of sectors to invest in R&D activities.
You can find out more about the new tool by following this link – www.ird.govt.nz/rd-credit
The wait is almost over
It has been nigh on two years (1st August 2017) since it was first introduced into the Big House, however the Trusts Bill has finally passed its third reading and consequently now awaits Royal assent.
The new legislation will replace the Trustee Act 1956 and the Perpetuities Act 1964, and has an intended purpose to make trust law more accessible, to clarify and simplify core trust principles and essential obligations for trustees, and to preserve the flexibility of the common law to allow trust law to continue to evolve through the courts.
The new Act’s principal changes include:
- clarification of key features of a trust and the duties of trustees;
- clear rules about when trustees are required to provide information to beneficiaries so that beneficiaries can enforce their rights;
- practical and flexible trustee powers that allow trustees to manage and invest trust property in the most appropriate way;
- options for removing/appointing trustees without having to go to court in simple cases; and,
- modern dispute resolution procedures.
Do not panic however if you are not yet fully up to speed with respect to any of the aforementioned changes, as there is still an 18 month lead-in time from the date the new Act receives Royal assent, until the date its provisions will take effect.