A Week in Review

Employer issued Crypto-Assets Ruling finalised

IR has now finalised its public binding ruling BR 19/03: Income tax – Employer issued crypto-assets provided to an employee, which provides the Commissioners’ view as to the income tax consequences of the transaction.

BR 19/03 only has application where the employer is issuing crypto-assets (e.g. an ICO), the employee will only receive the crypto-assets if they are still employed by their employer at a future specified date (referred to as “the condition”), and the employee cannot sell/otherwise transfer the crypto-assets until the specified future date. The Ruling also only applies to employees and not to the self-employed, and will not have application where either the crypto-asset is defined as a “share” received under an “employee share scheme” or either BR 19/01 (Salary & wages paid in crypto-assets) or BR 19/02 (Bonuses paid in crypto-assets) apply.

In scenarios where BR 19/03 is of application:

• A fringe benefit will be provided under s CX 2 when “the condition” is met and the employee becomes entitled to the crypto-assets; and,
• The value of the benefit will be determined in accordance with either s RD 40 or s RD 27(3) as applicable or if neither of these sections apply, then the Commissioner will need to determine the value

Foreign Trust distributions

IR has released PUB00345, which is a draft interpretation statement which considers the income tax treatment of amounts of money/property transferred to NZ resident taxpayers by a person overseas, including through inheritance, how to then address determining the character of the transferor and in this regard, the scenarios when a taxpayer will be seen to have derived either beneficiary income or a taxable distribution from a foreign trust.

The key items discussed by the draft statement, include how to determine if the amounts of money/property will be deemed to have come from a trust (defined purely from a NZ law perspective regardless of how the overseas jurisdiction may characterise the arrangement between the parties, the character of the trust itself once one has been deemed to exist (with the focus on foreign trusts for the purpose of this ruling), and upon a foreign trust definition having been satisfied, whether the distribution will then be considered to be either beneficiary income or a taxable distribution, with either categorisation then having NZ income tax consequences for the NZ resident beneficiary.

The deadline for comment on PUB00345 is 10^th September 2019.

Child Support debt relief

IR has also released ED0209, which is a draft standard practice statement settling out the Commissioner’s proposed practice of exercising her discretions to provide relief to a liable parent who is unable to make the immediate payment of an overdue child support or domestic maintenance obligation.

The form of the relief can come in one of three ways, being either an agreement for the person to repay the debt by way of an instalment arrangement, the writing off of penalties in certain circumstances or in limited cases, actually writing off part or all of the child support debt.

The deadline for comment on ED0209 is 16^th September 2019.