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2019 New Zealand Master Tax Guidebooks.wolterskluwer.co.nz | [email protected] | 0800 500 224
TOP TAX CHANGES: 2018/19
Taken from the New Zealand Master Tax Guide 2019, the following summary provides an overview of what tax changes to look out for in the year ahead including, payday filing for employers, ring-fencing residential property losses, the R & D tax credit, GST on low-value imported goods, and more.
To help you stay abreast of recent developments in tax, the Master Tax Guide includes:
• summaries of changes affecting the 2018/19 tax year and future years in the “Looking Ahead” and “The year at a glance” sections
• a calendar of important dates for the 2018/19 tax year, including provisional tax dates
• a table of tax rates, topic index, section finding list and case table.
NEW ZEALAND MASTER TAX GUIDE TAX AND ACCOUNTING COLLECTION
2019 New Zealand Master Tax Guide
TOP TAX CHANGES
2019 New Zealand Master Tax Guidebooks.wolterskluwer.co.nz | [email protected] | 0800 500 224
TOP TAX CHANGES: 2018/19
RING-FENCING RESIDENTIAL PROPERTY DEDUCTIONS
• From 1 April 2019, investors will no longer be able to deduct expenditure relating to their loss-making residential investment properties from their other income to reduce their tax liability. Deductions for residential land will be allocated to the next income year, to the extent those deductions exceed income from residential land.
Note: this change is proposed in the Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Bill that is currently progressing through Parliament.
GOODS AND SERVICES TAX ON IMPORTED GOODS
• For supplies made on or after 1 October 2019, GST will be applied to imported goods valued at or below $1,000 supplied to New Zealand-resident consumers by requiring offshore suppliers (as well as marketplaces and redeliverers) to register and return GST on these supplies. Customs will continue to collect GST on imported consignments valued above $1,000. GST will not apply to supplies of low-value goods made to New Zealand GST-registered businesses.
Note: this change is proposed in the Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Bill that is currently progressing through Parliament.
PAYDAY FILING REPLACES MONTHLY SCHEDULES
• Employers and PAYE intermediaries are no longer required to file an employer monthly schedule but instead will file employment income information on a payday basis from 1 April 2019. Employers using payroll software can report information from within their payroll software. A transitional rule allowed employers who provide their information electronically to adopt payday filing from the beginning of any month from 1 April 2018.
EMPLOYEE SHARE SCHEMES
• From 29 September 2018, new core rules apply for determining the amount and time of derivation of income and incurring of expenditure under an employee share scheme.
• A simplified set of rules for exempt employee share schemes applies from 29 March 2018, or 6 April 2017 for certain shares.
TAX INFORMATION
• Payers of interest, dividends, royalties, PIE income and Māori authority distributions will be required to file more frequent and detailed investment income information electronically from 1 April 2020, although they may choose to do so from 1 April 2019.
• The “non-declaration” rate for taxpayers that do not provide their IRD number to payers of interest income will be increased from 33% to 45% from 1 April 2020.
• The threshold for availability of the subsidy for listed PAYE intermediaries will be reduced from 1 April 2019 and the subsidy will be repealed from 1 April 2020.
• From 1 April 2020, payers of interest, dividends and Māori authority distributions will have to provide more frequent and detailed information and will be required to file investment income information electronically.
2019 New Zealand Master Tax Guidebooks.wolterskluwer.co.nz | [email protected] | 0800 500 224
TOP TAX CHANGES: 2018/19
BASE EROSION AND PROFIT SHIFTING
• A permanent establishment anti-avoidance rule applies from 1 July 2018 to deal with artificial arrangements aimed at avoiding a taxable presence in New Zealand.
• The transfer pricing rules are strengthened to align with the OECD’s and Australia’s broader economic substance approach from 1 July 2018.
• From 1 July 2018, new rules require related-party loans between a non-resident lender and a New Zealand resident borrower to be priced using a restricted transfer pricing approach (interest limitation rules).
• A number of changes are made to the thin capitalisation rules with effect from 1 July 2018.
• New rules to deal with hybrid mismatch arrangements exploiting differences between countries’ tax rules to obtain tax advantages apply from 1 July 2018.
• Tax owed by a member of a large multinational group is able to be recovered from any wholly-owned local group member from 1 July 2018.
RESEARCH AND DEVELOPMENT TAX CREDIT
• A research and development tax credit of 15% of eligible expenditure will be available from 1 April 2019 for a person for performing, or contracting the performance of, activities to create new knowledge, or new or improved processes, services or goods.
Note: this change is proposed in the Taxation (Research and Development Tax Credits) Bill that is currently progressing through Parliament.
OTHER CHANGES
• The “bright-line” period for residential land has been extended from two years to five years from 29 March 2018.
• From 1 January 2019, new investors in certain bloodstock yearlings will be able to claim tax deductions as if they had an existing bloodstock breeding business.
• A new short process binding ruling application will be available from 1 October 2019 for taxpayers with turnover below $20m where the tax at stake is less than $1m.
• A number of enhancements are made to KiwiSaver settings, including introducing additional contribution rates and reducing the maximum contributions holiday from 1 April 2019, and allowing over 65s to opt in from 1 July 2019.
• The year-end income tax obligations for individuals are amended and the process for issuing refunds and advising individuals that they have tax to pay is improved, including providing for automatic direct crediting of refunds, with effect from 1 April 2019.
• Taxpayers will be able to switch to the AIM provisional tax method during the income year from 1 April 2019.
• From 1 April 2019, the Commissioner will be able to recommend a more suitable tax code or RWT rate.
• Student loan borrowers who receive schedular, election-day, and casual agricultural income will have student loan repayments deducted from their income by their employer from 1 April 2020.
2019 New Zealand Master Tax Guidebooks.wolterskluwer.co.nz | [email protected] | 0800 500 224
TOP TAX CHANGES: 2018/19
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Note that, in some cases, implementation of these changes may be dependent on the future passage of the necessary legislation.
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OTHER CHANGES (continued)
• Expenditure incurred to mitigate noise pollution is deductible from 1 April 2018.
• Taxpayers are able to hold tax records in te reo Maori without the need to seek the Commissioner’s prior approval.
• From 1 April 2019 an overpayment of employment income will not amount to an employment-related loan subject to FBT.
• An alternative definition of “market interest” will be available for banks and other money lenders to use from 1 April 2019 for valuing the fringe benefit value of employment-related loans.
To stay up-to-date with recent developments in all areas of tax, view the current and upcoming titles available from our Tax and Accounting collection.
NEW ZEALAND MASTER TAX GUIDE TAX AND ACCOUNTING COLLECTION
