A Week in Review

Are you on time?

IR has now finalised its draft standard practice statement in relation to when tax payments will be treated as having been received in time. SPS 20/01 is effective from 5^th February 2020, and replaces the previous SPS 19/01.

A few points to remember:

• You can pay by credit card, but it will cost you a ‘convenience’ fee of 1.42%;
   
• You can no longer pay over the counter at IR branches;
   
• You can continue to pay over the counter at Westpac branches, however from 1^st July 2020, your payment must be accompanied by a barcode either obtained from IR issued correspondence or created via the IR website;
   
• Cheques will no longer be accepted from 1^st March 2020, unless in exceptional circumstances, where IR has agreed to payment by cheque in advance; and,
   

Remember that if the payment due date falls on a weekend or public holiday, then the payment will be treated as received in time, provided it has been paid on or before the next working day.

Budget 2020

This year’s Budget will be presented on the 14^th May 2020, with its priorities being:

• Just Transition — supporting New Zealanders in the transition to a climate-resilient, sustainable and low-emission economy;
   
• Future of Work — enabling all New Zealanders to benefit from new technologies and lift productivity through innovation;
   
• Māori and Pacific — lifting Māori and Pacific incomes, skills and opportunities;
   
• Child Wellbeing — reducing child poverty and improving child wellbeing; and,
• Physical and Mental Wellbeing — supporting improved health outcomes for all New Zealanders.

Financial Transactions – OECD TP Guidance

The latest report issued by the OECD in support of the BEPS (base erosion profit shifting) Action Plan, provides guidance on the transfer pricing aspects of financial transactions. The report is to support Action 4 (limiting base erosion involving interest deductions and other financial payments) and Actions 8-10 (aligning transfer pricing outcomes with value creation), and will contribute to ensuring consistency in the interpretation of the arm’s length principle and help avoid transfer pricing disputes and double taxation.

You can locate the report on the OECD website www.oecd.org – using the key words; Transfer Pricing Guidance on Financial Transactions: Inclusive Framework on BEPS: Actions 4.

IR clarifies operational position

OP 20/01 has been released by IR, with an effective date of 5^th February 2020 in respect of taxpayer requests for transfers of excess tax made on or post this date.

The issue covered by the OP, is the effective date for ICA entries, particularly where due to the association of the parties, the tax transfer rules permit an earlier effective date for the transfer, than the date IR actually processes the transfer request.

For ICA recording purposes, historically IR has in essence ‘closed its eyes’ to taxpayers simply recording the ICA debit/credit in the present ICA return period (when IR processes the transfer request), rather than requiring taxpayers to request ICA return amendments, to reflect an ‘effective date’ entry.

OP 20/01 sets out IR’s view that this historic blind eye practice should not continue, and that taxpayers will now be required (post 5^th February requests) to file amended ICA requests, where the effective date of the requested transfer of tax, falls within an already filed return period.

IR however will not devote any resources to reviewing pre February 5^th requests, where it is likely ICA accounts will reflect incorrect transfer dates as having been used.