New tax policy web site launched
Our new web site offers you the latest information about tax policy developments, new tax legislation and New Zealand's international tax law. It brings together information like Government discussion documents on tax policy, commentaries on tax bills before Parliament, officials' reports on public submissions on bills, and information on New Zealand's many tax treaties. Through our web site you can make submissions on Government proposals, contact the manager of a policy area, or simply find out more about how tax policy works. Message from Robin Oliver, General Manager.
Latest discussion documents await submissions on proposals
On 20 September the Government released two discussion documents on tax improvements for business. Less taxing tax looks at a range of options for individuals and businesses, especially small businesses, and Interest deductions for companies sets out proposals for clarifying and simplifying the law, as it relates to most companies, on claiming interest deductions for tax purposes. You have until 26 November to submit your views on the proposals.
Review of compliance and penalty legislation begins
The post-implementation review of the new compliance and penalty legislation, enacted in 1997, gets under way this month. The scope of the review is being determined, and opportunities for public consultation will be built into the review process. The manager of the review is Keith Taylor.
R & D investment review begins
The review of investment in research and development has begun. It will involve setting up a working group to report to the Government by 31 March on several issues relating to research and development, one of which is its tax treatment in New Zealand and other countries. The working group will be convened by the Ministry of Commerce and will include people from government departments and the private sector.
GST review proceeds
Consultation continues on submissions received on proposals set out in the discussion document GST: A Review, released in March. The next step is to finalise the proposals for reform.
Review of taxation of Māori authorities continues
A discussion document originally scheduled for October is to be deferred until June next year to allow more time for consultation in the review of the way Māori authority income is taxed.
Review of trading stock valuation rules for nursery plants to begin
As part of the recent reform of the trading stock tax rules, the valuation rules for nursery plants will be reviewed. The first stage of the review, scheduled to begin next month, will be to consult with growers and their representatives on ways nursery stock can be valued.
Last tax legislation of the year enacted
The Taxation (Annual Rates and Remedial Matters) Bill was passed early last month. The new legislation features in the October Tax Information Bulletin.
Student loan scheme legislation introduced
The Student Loan Scheme Amendment Bill (No.6), introduced on 5 October, completes the transfer of the administration of student loans from the Ministry of Education to Work and Income NZ from January next year. It also clarifies the enforceability of loan contracts entered into by students under the age of 18. Inland Revenue remains responsible for collecting student loan repayments.
Tax issues for shareholders in migrating companies to be clarified
In light of Brierley's proposed move to Bermuda, the Government has announced it will introduce legislation to clarify how the foreign investment fund rules apply to shareholders in companies that migrate to countries affected by those rules. For tax purposes, the cost of shares will be their market value on the day the company migrates.
Clarification of accrual rule change to be recommended
We are to recommend the clarification of section EH 18, inserted into the Income Tax 1994 by the enactment of the Taxation (Accrual Rules and Other Remedial Matters) Act 1999. It has been suggested that the new section might not be interpreted to apply to "Division 1" financial arrangements.
Welcome to the Policy Advice Division web site. Each month we hope to have a brief update from one of the units in the division about what it is doing. I am starting this off with a brief comment on the things I am involved with in October.
You would think that with the general election in November, it would be a period in which policy staff could take things easy. Obviously, with the focus on the elections, the Government and Parliament are not focused on implementing changes to tax laws. In this more political environment public service policy advisers are not as heavily involved in advising on policy matters, although Ministers continue to require advice on many issues. It is also a time to prepare for the post-election period and to complete tasks for which there has not been time during the earlier part of the year.
In October I will be negotiating new double tax agreements with Russia and Japan. These are both large economies of considerable importance to New Zealand. Double tax agreements should be to the advantage of New Zealand business. I will also be working on a number of policy issues that have been announced. They include the rewrite of the Income Tax Act, the GST review, tax simplification, and review of investment in research and development.
Policy Advice Division
Inland Revenue Department