Inland Revenue - Tax policy Tax Policy

News and information about the Government's tax policy work programme, including:
- proposed changes to the laws that Inland Revenue is responsible for
- updates on the progress of bills through Parliament
- policy announcements

Recent consultation

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The Government is seeking feedback on proposals set out in the discussion document Making tax simpler - Better administration of individuals’ income tax.

The main proposal is that fewer individuals, who receive income only from salary, wages, interest or dividends, would have to provide year-end income information to Inland Revenue.

Inland Revenue would automatically calculate and issue refunds or amounts of tax to pay using information received from employers and banks and other investment companies.

The proposals include:

- setting the threshold levels at which Inland Revenue should issue refunds or tax bills;

- direct crediting refunds to bank accounts;

- working with people throughout the year to suggest the right tax code for their circumstances;

- making it easier to claim tax credits for donations.

Feedback from the 2015 consultation document, Making tax simpler - A Government green paper on tax administration, was used to develop the proposals, which are part of the Government’s overall modernisation of the tax system.

For more information see the online forum at www.makingtaxsimpler.ird.govt.nz.

Consultation closed on Friday 28 July 2017.

An officials' issues paper, Taxation of employee share schemes: start-up companies, seeks feedback on proposed deferral rules for taxing employee share schemes offered by start-up companies.

Submissions closed on 12 July 2017.

A Government discussion document, Black hole and feasibility expenditure, seeks feedback on proposals to improve the tax treatment of feasibility expenditure for businesses.

Submissions closed on 6 July 2017.

The Government and officials' are seeking feedback on proposals to strengthen New Zealand’s rules for taxing multinationals.

Three consultation documents released on 3 March 2017 contain proposals for:

–  Tackling concerns about multinationals booking profits from their New Zealand sales offshore, even though these sales are driven by New Zealand-based staff. These are set out in the Government discussion document BEPS – Transfer pricing and permanent establishment avoidance. Submissions closed on 18 April 2017.

–  Preventing multinationals using interest payments to shift profits offshore. These are covered in the Government discussion document BEPS – Strengthening our interest limitation rules. Submissions closed on 18 April 2017.

–  Implementing New Zealand’s entrance into an international convention for aligning our double tax agreements with OECD recommendations. These are set out in an officials' issues paper, New Zealand’s implementation of the multilateral convention to implement tax treaty related measures to prevent BEPS. Submissions closed on 7 April 2017.

From July 2017 financial institutions will need to begin meeting obligations under the OECD’s Common Reporting Standard for the Automatic Exchange of Financial Account Information in Tax Matters.

Legislation enabling the implementation of this international initiative in New Zealand is expected to be passed by March 2017. In anticipation of this, Inland Revenue has developed advanced draft guidance to help financial institutions prepare for their obligations as early as possible.

“Financial institutions” for the purposes of this initiative has a wide meaning, including some fund managers, investment advisers, insurance companies, and trusts as well as banks.

The draft guidance outlines how these various entities are affected and their responsibilities under the Common Reporting Standard.

The draft guidance also sets out the obligations that account holders (and other persons connected with accounts) will have to provide information to such financial institutions to assist those institutions comply with their responsibilities under the Common Reporting Standard.

For more information see implementing automatic exchange of information (AEOI).

Feedback and any queries about the draft guidance should be sent to global.aeoi@ird.govt.nz by 28 February 2017.

A Government discussion document, Making tax simpler – Proposals for modernising the Tax Administration Act, seeks feedback on detailed proposals for amendments to the Tax Administration Act.

These build on earlier proposals released for consultation in November 2015, set out in Making tax simpler - Towards a new Tax Admionistration Act.

The detailed proposals, which support the Government’s transformation of tax administration, are aimed at helping to get tax right from the start.

They centre around the roles of the Commissioner of Inland Revenue, taxpayers and their agents, information collection, confidentiality and disclosure, and the design of a new Tax Administration Act.

Online forum - https://www.makingtaxsimpler.ird.govt.nz/

Submissions closed on 24 February 2017.

The Common Reporting Standard for Automatic Exchange of Financial Information allows implementing jurisdictions to expand on the list of automatically excluded entities and accounts to also include “low risk” excluded entities and accounts.

This means these entities would be excluded from due diligence and reporting obligations.

To be considered a “low risk” entity or account, the financial institution first needs to meet the criteria set out in a fact sheet.

Submissions are welcome from financial institutions who meet these criteria and wish to be included in a list of excluded entities.

For more information see the fact sheet and implementing automatic exchange of information (AEOI).

Submissions closed on 31 January 2017.

A Government discussion document, Information sharing between Inland Revenue and the Ministry of Social Development, seeks views on changes to existing information sharing arrangements between Inland Revenue and the Ministry of Social Development.

The discussion document includes proposals to:

- bring together the various current information sharing agreements between Inland Revene and the Ministry of Social Development into one agreement;

- extend the information sharing to enable targeted housing assistance to those in need; and

- extend the information sharing to verify a student’s and their parents’ income in assessing student allowance entitlements.

Online consultation - https://www.govt.nz/Info-sharing-IR-and-MSD

Submissions closed on 16 December 2016.

Hybrid mistmatch arrangements are one of the main base erosion and profit shifting (BEPS) strategies used by some large international companies to pay little or no tax anywhere in the world.

The OECD developed recommendations for anti-hybrid measures in its 15 point Base Erosion and Profit Shifting (BEPS) Action Plan.

A Government discussion document, Addressing hybrid mismatch arrangements, seeks comments on how the OECD recommendations could be implemented in New Zealand:

Part I of the document describes the problem of hybrid mismatch arrangements, the case for responding to the problem, and a summary of the OECD recommendations.

Part II of the document explains the OECD recommendations in greater depth and discusses how they could be incorporated into New Zealand law.

Submissions closed on 11 November 2016 (extended from 17 October 2016).

An officials' issues paper, Taxation of employee share schemes, released in May 2016 sought feedback on proposals for taxing employee share schemes under New Zealand’s broad base low rate tax framework.

Tax treatment of employee share schemes – further consultation, released on 1 September 2016, provides an update on the proposals and an opportunity to make a further submission.

The objective is for the tax treatment of employment income paid in shares to be consistent with the treatment of income paid in cash.

Submissions on the updated proposals closed on 30 September 2016.

A Government discussion document, Making tax simpler - Investment income information, seeks views on proposed changes to the way that:

- tax on investment income is administered, and

- investment income information is collected.

It is the sixth in a series of government consultation documents looking towards a better tax administration system for New Zealanders.

Online forum - https://www.makingtaxsimpler.ird.govt.nz/

Submissions closed on 19 August 2016

An officials' issues paper, Making tax simpler - Better business tax, seeks feedback on the technical details and some design decisions for the Government's business tax package, announced on 13 April 2016.

Online forum - https://www.makingtaxsimpler.ird.govt.nz/

Submissions closed on 30 May 2016.

An officials' issues paper, Implementing the global standard on automatic exchange of information, seeks feedback on proposals for implementing the G20/OECD global standard for automatic exchange of information which will help detect and prevent tax evasion.

Under the new rules financial institutions such as banks, insurance companies, managed entities, certain brokers, custodians and collective investment vehicles would have obligations to review their accounts and report information to Inland Revenue.

Submissions closed on 31 March 2016.

A Government discussion document, Making tax simpler – Towards a new Tax Administration Act, seeks feedback on proposals for the development of a modernised framework for tax administration focusing on the roles of Inland Revenue, taxpayers and third parties.

Online forum - https://www.makingtaxsimpler.ird.govt.nz/

Submissions closed on 12 February 2016.

A Government discussion document, Making tax simpler - Better administration of PAYE and GST, seeks feedback on ideas for modernising and improving the administration of PAYE and GST.

Online forum - https://www.makingtaxsimpler.ird.govt.nz/

Submissions closed on 12 February 2016.

An officials’ issues paper, GST – Current issues, seeks feedback on options to improve the way certain GST-related rules work in practice.

Submissions closed on 30 October 2015.

An officials’ issues paper, Loss grouping and imputation credits, seeks feedback on the tax consequences of loss grouping and the implications for imputation credits.

Submissions closed on 27 October 2015.

An officials’ issues paper, Closely held company taxation issues, seeks public feedback on proposals to strengthen the closely held company tax rules. The main focus of the review is on ensuring that the look through company rules remain fit for purpose.

Submissions closed on 16 October 2015.

An officials’ issues paper, Residential land withholding tax, seeks public feedback on proposals for a residential land withholding tax.

The proposed withholding tax is intended to help improve tax compliance among property speculators, and would work in conjunction with the Government’s other property tax compliance measures announced as part of Budget 2015.

Submissions closed on 2 October 2015.

A Government discussion document, GST: Cross-border services, intangibles and goods, seeks feedback on proposals for the collection of GST on online purchases of services and intangibles. It also discusses the collection of GST on low-value imported goods.

Submissions closed on 25 September 2015.

An officials’ issues paper, Bright-line test for sales of residential property, seeks feedback on the proposed final shape of the “bright-line” test announced by the Government in Budget 2015. The test will require income tax to be paid on gains from the sale of certain residential property bought and sold within two years.

Submissions closed on 24 July 2015.

An officials’ issues paper, NRWT: related party and branch lending, seeks feedback on possible changes to the non-resident withholding tax rules.

Submissions closed on 3 July 2015 (the original closing date was 16 June 2015).

A Government green paper, Making tax simpler - A Government green paper on tax administration, seeks feedback on the overall direction of the tax administration modernisation programme.

Online forum - https://www.makingtaxsimpler.ird.govt.nz/

Submissions closed on 29 May 2015.

A Government discussion document, Making tax simpler - Better digital services, seeks feedback on proposals for greater use of electronic and online processes.

Online forum - https://www.makingtaxsimpler.ird.govt.nz/

Submissions closed on 15 May 2015.

An officials’ issues paper, Simplifying the collection of tax on employee share schemes, seeks feedback on options to simplify the way tax is collected on employee share schemes.

Submission closed on 5 May 2015.

An officials’ issues paper, Related parties debt remission, seeks feedback on proposed changes to make the debt remission rules more certain for taxpayers.

Submissions closed on 14 April 2015.

A government discussion document GST treatment of bodies corporate, seeks feedback on proposed changes to clarify the GST rules for bodies corporate.

Submissions closed on 18 July 2014.

An officials’ issues paper, Minimum financial reporting requirements for companies, sought feedback on the minimum financial reporting requirements that should apply for most companies.

Submissions closed on 20 December 2013.

A Government discussion document, Black hole R&D expenditure, sought feedback on proposals to resolve problems around the tax deductibility of certain types of business-related R&D expenditure.

Submissions closed on 17 December 2013.

An officials’ issues paper, R&D tax losses, sought feedback on a number of changes to the tax rules to help overcome problems experienced by start-up companies undertaking research and development.

Submissions closed on 30 August 2013.

An officials’ issues paper, Clarifying the tax consequences for deregistered charities, sought feedback on possible changes to the tax rules to clarify the tax consequences for charities that are removed from the Charities Register.

Submissions closed on 23 August 2013.

An tax policy officials’ issues, The GST treatment of immigration and other services, sought feedback on two problems with the application of GST zero-rating rules for services supplied to non-residents who are off-shore.

The problems primarily affect the immigration industry, but the suggested solutions may have broader implications.

The first problem concerns the difficulty in knowing the location of the non-resident at the time services are supplied.

The second problem concerns the interaction between the zero-rating rules and the income tax residence rules.

Possible ways to resolve the problems are outlined in the issues paper.

Submissions closed on 5 July 2013.

The officials’ issues paper, Clarifying the acquisition date of land, sought feedback on a proposal to clarify the date when land is acquired for sale or disposal.

Submissions closed on 28 June 2013.

An officials' note, Thin capitalisation review: technical issues, sought feedback on refined proposals for changes to the thin capitalsiation rules.

Submissions closed on 28 June 2013.

The Government sought public feedback on proposals for Inland Revenue to share some information with other government agencies to help fight serious crime.

Online forum - site now archived: https://targetingseriouscrime.ird.govt.nz/

Submissions closed on the 4 June 2013.

Tax policy officials’ sought feedback on options to reform the tax treatment of land-related lease payments. The suggested reforms were set out in the officials' issues paper, The taxation of land-related lease payments.

Submissions closed on 4 June 2013.

An officials’ issues paper, GST remedial issues, sought feedback on suggested changes to certain parts of the GST rules.

Submissions closed on 1 March 2013.

An officials’ issues paper, Review of the thin capitalisation rules, sought feedback on the proposed reforms raised in this paper.

Submissions closed on 15 February 2013

An officials’ issues paper, Reviewing the tax treatment of employee allowances and other expenditure payments, sought feedback on the proposed reforms raised in this paper.

Submissions closed on 1 February 2013.

An officials’ issues paper, Taxation of specified mineral mining, sought feedback on the proposals outlined in this paper.

Submissions closed on 7 December  2012.

An officials’ issues paper, Use of old GAAP in the CFC rules, sought feedback from taxpayers who use old GAAP when applying the CFC rules.

Submissions closed on 30 September 2012.

An officials’ issues paper, Taxation of foreign superannuation, sought feedback about the taxation of foreign superannuation.

Submissions closed on 3 September 2012.

An officials’ issues paper, The taxation of lease inducement payments, sought feedback on proposals to tax lease inducement payments made by commercial landlords to tenants.

Submissions closed on 31 August 2012

An officials’ issues paper, Financial arrangements - the sale and purchase of property or services, sought feedback on possible options to simplify the tax rules about agreements for the sale and purchase of property or services, especially in foreign currency.

Submissions closed on 17 August 2012.

An officials’ issues paper, Recognising salary trade-offs as income, sought feedback on possible options for broadening the tax rules relating to non-cash benefits received by employees as a substitute for salary or wages.

Submissions closed on 31 May 2012.

An officials’ issues paper, Herd scheme elections, sought feedback on options for fairer rules covering livestock valuation elections. The current rules appear to be too loose, allowing farmers to switch between valuation methods providing an unfair tax advantage.

Submissions closed on 31 October 2011.

Note: submission date extended from 30 September 2011.

Public submissions were sought on remedial matters focused on simplifying aspects of tax administration and compliance.

Submissions closed on Friday 28 October 2011.

A Government discussion document, GST: Business-to-business neutrality across borders, sought feedback on proposed changes to ensure that the GST rules do not act as an impediment to transactions between non-resident and New Zealand businesses.

Submissions closed on 7 October 2011.

An officials' issues paper, Mixed-use assets, sought feedback on options to address unfairness in the tax treatment of assets such as holiday houses used for both private and income-earning purposes.

Submissions closed on 30 September 2011.

A Government discussion document, Supporting Children, sought feedback on options to update the child support scheme, including possible changes to the formula used to determine the amount of child support that is payable and to the child support payment, penalty and debt rules.

Online survey - now closed.

Submissions closed on 29 October 2010.

An officials’ issues paper, Social assistance integrity: defining family income, sought feedback on suggested changes to improve the fairness of access to social assistance programmes.

Submissions closed on 24 September 2010

An officials’ issues paper, Post-budget depreciation issues, invited feedback on suggested changes to depreciation of non-residential building fit-outs and to the grandparenting of depreciation loading for assets acquired before Budget 2010.

Submissions closed on 1 September 2010.

An officials’ issues paper, Disputes: a review, invited feedback on proposed improvements to the tax disputes process. The proposals take the form of administrative changes set out in revised Standard Practice Statements supported by a number of legislative changes set out in the officials’ issues paper.

Submissions closed on 20 August 2010.

A Government discussion document, Making tax easier, sought feedback on proposals for reforming tax administration.

The proposals focus on tax being integrated into business processes so Inland Revenue can concentrate on providing services to taxpayers, rather than on back-office functions such as processing paper tax returns. The proposals also envisage a new or expanded role for specialist tax businesses to reduce costs for taxpayers and Inland Revenue, and new opportunities provided by technology.

Online forum - site now archived: Making tax easier online forum.

Submissions closed on 23 July 2010.

An officials' issues paper, Qualifying companies: implementation of flow-through tax treatment, sought comment on the implementation of changes to the rules for shareholders in LAQCs and QCs.

Budget 2010 announced proposed changes to tighten the rules around loss attributing qualifying companies and qualifying companies. The proposed changes will make LAQCs and QCs flow-through entities for tax purposes, similar to limited partnerships, and are intended to provide greater integrity in the tax system by removing opportunities to gain advantages through tax planning.

Submissions closed on 5 July 2010.

An officials' issues paper, Allowing a zero percent tax rate for non-residents investing in a PIE, sought views on two possible options for exempting non-residents investing in PIEs.

Submissions closed on 4 June 2010.

An officials' issues paper, New Zealand's International Tax Review: extending the active income exemption to non-portfolio FIFs, sought feedback on suggested changes to the tax treatment of non-portfolio foreign investment funds. It looks at ways to make the FIF rules easier and more coherent for taxpayers and advisors to understand and operate so the tax system does not act as a barrier to New Zealand companies wishing to expand into new and emerging markets.

Submissions closed on 30 April 2010.

The officials' issues paper, An income splitting tax credit for families with children, looked at the idea of having income splitting between couples with children operate through an annual tax credit system.

Submissions closed on 5 February 2010.

The government discussion document GST: Accounting for land and other high-value assets set out proposed changes to the GST rules on sales of land and other high-value assets, to prevent revenue loss. Other proposed changes included making it easier to account for the taxable and non-taxable use of assets on which GST is paid, and clarifying the boundary between residential and commercial accommodation for GST purposes.

Submissions closed on 18 December 2009.