A Week in Review

Richard AshbyPartner, Gilligan Sheppard

Travel to a distant workplace OS

IR has released draft operational statement ED0217, which considers the taxation issues associated with employer-provided travel from an employee’s home to a distant workplace.

A distant workplace is defined as one which is a workplace that is not within reasonable daily travelling distance of the employee’s home. Consequently if the employer-provided travel does not relate to the employee getting to a distant workplace as defined, ED0217 at first glance is unlikely to have application to your situation, although you may still find its commentary useful in terms of IR’s views on a number of relevant issues like whether the employees home may be considered a workplace of the employer for example.

IR’s starting premise is that home to work travel is private use (it gets the employee “to” work and is therefore not “on work” travel), and consequently the employer-provided travel will be taxable, either under the PAYE rules (employee reimbursements or allowances) or subject to FBT (employer pays for the travel or provides it directly).

The employer-provided travel may however not be taxable if one of the following scenarios apply:

  • the travel is one-off or very occasional (de minimis applies);
     
  • the travel relates to a temporary posting or secondment (up to two years);
     
  • the employee also genuinely works at a hometown workplace; or,
     
  • the employee works from home on specified days (home being their place of work on those days, and the travel relates to one of those days).

ED0217 provides commentary on each of the four scenarios, and a number of examples to illustrate the key principles which are likely to determine the tax consequences of the arrangement between the employer and the employee.

The deadline for comment is 6th September 2019.

It’s there if you want it

If you would like to gain a more in-depth understanding of exactly what was said by Tax Policy, Inland Revenue, to both the Minister of Finance and Minister of Revenue in relation to the Tax Working Group findings, IR has now released it advice documents, which includes policy reports, briefing notes, and emails prepared by Inland Revenue and the Treasury.

The index of documents in the information release can be found by clicking on the following link: http://taxpolicy.ird.govt.nz/publications/2019-ir-tax-working-group/overview.

Temporary relief from Annual Return filing

While not completely of a tax flavour, I thought I would include the following update, as I appreciate that a lot of us are still coming to grips with the AML/CFT reporting obligations that we as accountants have seen imposed upon us since 1st October last year.

As with our legal colleagues, a number of us are trustees of our client’s trusts, and most will use a corporate trustee structure to provide a desired level of personal protection. In this regard, the Department of Internal Affairs’ (DIAs’) view is that any corporate trustee company that has been set up to act as a trustee is a reporting entity under the AML/CFT Act, and consequently there is a requirement to submit an annual report by 31st August each year.

The obvious question/concern that has been raised in this respect, is whether the fact that the accounting or legal firm is now a reporting entity in its own right, should result in all these trustee companies coming under the one umbrella, not requiring multiple annual returns to be filed therefore.

Taking on board the issue, the Ministry of Justice is currently considering a class exemption for situations where a corporate trustee company is a subsidiary of the accounting or law firm, and has advised that while this exemption application is being assessed, the corporate trustee company, is not required to submit an annual report by 31 August 2019, provided that it:

  • is a subsidiary of a law firm or accounting practice that is a reporting entity under the AML/CFT Act in NZ;
     
  • is conditional that the parent law firm or accounting practice’s own annual report includes information relating to all relevant activities of the subsidiary corporate trustee company;
     
  • is temporary while the Ministry of Justice considers the corporate trustee company class exemption application; and,
  • applies to Annual Report obligations for the period from 1 July 2018 to 30 June 2019 only.