Drafting issues
Income Tax Act
In 2007, around 3,500 pages of the New Zealand tax legislation were enacted. This legislation included the Income Tax Act 2007. At 2,800 pages, this Act represented the fourth and final stage of the project begun in 1994 to rewrite the income tax law in plain language style.
As an inevitable consequence of the rewriting process there has been a temporary but large increase in the number of remedial amendments necessary to maintain the tax law in sound working order. This increase is in part because very few remedial amendments have been enacted since December 2007. Of the remedial amendments proposed below, approximately 115 are typically of a minor nature and intended to correct matters such as incorrect numbering and cross-references, printing errors, incorrect terminology used, punctuation issues, and omitted words.
Other amendments are of a less clerical nature, and arise both as rewrite issues, including submissions to the Rewrite Advisory Panel, and as clarification of policy in business as usual drafting. These 160 or so amendments affect provisions in the Income Tax Act 2007, Income Tax Act 2004, Tax Administration Act 1994, KiwiSaver Act 2006, Stamp and Cheque Duties Act among others. Of these, 30 issues were referred to the Rewrite Advisory Panel for resolution.
In addition to the 119 remedial amendments included in the bill at introduction, officials recommend that the Committee proposes the inclusion of about 150 further remedial amendments, the need for which has been discovered since introduction of this bill, and which include the items referred to the Rewrite Advisory Panel.
Amending Acts passed after this bill introduced
Several Acts that amend tax Acts have been enacted since the bill was introduced to Parliament. They include the Climate Change Response (Emissions Trading) Amendment Act 2008, the Taxation (Urgent Measures and Annual Rates) Act 2008, and the Taxation (Business Tax Measures) Act 2009. Numbering and cross-references in the bill need to be adjusted to take into account the changes made by those Acts. Officials recommend that the Committee proposes the inclusion of such amendments.
The schedule of amendments follows.
Schedule of remedial amendments
Recommendation
That the following submissions be accepted.
| Section | Description of issue / proposed resolution | Comment |
|---|---|---|
| INCOME TAX ACT 2007 | ||
| BE 1 | Replace “PAYE payments” with “PAYE income payment” in all places it appears, including defined terms list. In subsection (5) replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. |
Improves consistency of language. Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| CC 8B | Insert section CC 8B. | A clarification arising from a recommendation of the Rewrite Advisory Panel. This amendment provides that disposals and redemptions of a commercial bill is income of a non-resident if the disposal or redemption is sourced in New Zealand and the non-resident is not subject to the financial arrangement rules in relation to the commercial bill. |
| CD 5 | Insert subsection (2B) to refer to cancellation or repurchase of shares. | A clarification arising from a recommendation of the Rewrite Advisory Panel. The section now provides that consideration paid by a company to a shareholder because of a cancellation of shares or a repurchase of a company’s shares is a transfer of value. |
| CD 25(4) | Insert reference to “amount distributed on acquisition”. | Corrects an unintended change in law recommended by the Rewrite Advisory Panel. This amendment clarifies that ASC should only be reduced by the amount paid for the shares held as treasury stock for more than 12 months or cancelled within 12 months (subject to the amount paid for the shares not exceeding the ASC per share calculated under the ordering rule). |
| CE 1 | Insert in new subsection (2), the words “living premises”. | This amendment clarifies that a benefit provided to an employee by way of accommodation includes a wide range of living arrangements provided by the employer. |
| CS 1 | In subsection (1)(a)(i), replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. Replace subsection (7)(b). |
Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| CS 2 | In subsections (2), (3) and (10), replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| CS 6(1)(d) | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| CS 7(2)–(5) | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| CW 9 | Amend section CW 9 to ensure that it does not exempt foreign dividends derived from non-attributing portfolio FIFs. | This corrects an unintended change in law in the 2007 Act relating to the international tax reforms for certain types of dividends. |
| CX 13(2) | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| CX 28 | Replace the term “board” with the term “accommodation”. | This amendment provides drafting consistency with the amendment to section CE 1 for benefits provided by way of accommodation to employees. |
| DB 3(4) | Insert in subsection (4) that section DB 3 overrides the capital limitation in section DA 2. | A clarification arising from a recommendation of the Rewrite Advisory Panel that improves readability. |
| DB 53(1) | Amend subsection (1) to provide that paragraphs (1)(a) and (1)(b) are alternatives. | A clarification arising from minor items referred to the Rewrite Advisory Panel. Corrects an unintended change in law. |
| DC 7 | In subsections (1) and (1B), replace “contribution” with “superannuation contribution”. | Improves readability. |
| DC 13(5)(d) | Replace subsection (5)(d). | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. This amendment clarifies that the prohibition against dealing with dividends arising from an employee share purchase scheme applies to the trustee of the scheme. |
| DS 4(5) | Replace “subpart YB (Associated persons and nominees)” with “the provisions of subpart YB (Associated persons and nominees)”. | Improves readability. |
| DT 2(1)(b) | Replace “subpart YB (Associated persons and nominees)” with “the provisions of subpart YB (Associated persons and nominees)”. | Improves readability. |
| DU 12(3)(b) | Replace subsection (3)(b). | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. The amendment ensures that the provision refers to the aggregate amount of exploration and development expenditure incurred by the mining company reduced by the current year’s exploration and development expenditures. |
| EE 21(5) to (8) | Amend section EE 21 to clarify that its application is restricted to the pool of depreciable property and that it does not apply to any individual item in the pool of depreciable property. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| EE 55 | Remove reference to “items”, consequential to the amendment to section EE 21(5) to (8). | This amendment provides drafting consistency with the correction of an unintended change in law in section EE 21 (see previous item), as recommended by the Rewrite Advisory Panel. |
| EF 2 | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation contribution”). |
| EW 31(9)(a) | Amend subsection (9)(a) to ensure that the base price adjustment calculation for a cash basis holder of a financial arrangement refers to all income derived under the financial arrangement. This amendment ensures the cash basis holder includes cash basis income in the base price adjustment calculation. |
A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| EX 1(2)(a) | Replace “foreign investment vehicle” with “foreign PIE equivalent”. | Improves readability. |
| EX 32(9)(d) | Replace “investors by the trust” with “investors to the trust”. | Corrects a drafting error. |
| EX 65(5)(b) | Replace “sections EX 34 to EX 43” with “sections EX 31 to EX 43”. | Corrects cross-references. |
| EY 11 | In subsections (7) and (11), replace “contribution” with “superannuation contribution”. | Improves readability. |
| EZ 38(6) | Replace “EZ 41(8)(ii)” with “subsection (8)(ii)”. | Corrects a cross-reference. |
| FA 2 | Consolidate subsections (3) and (4) in new subsection (4). In subsection (6), insert an exclusion for convertible notes. |
A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| FB 9 | Clarify that the application of section FB 9 is restricted to financial arrangements that come within the criteria set out in section EW 10(6). | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| FC 4 | Amend section FC 4 to clarify that the relief under the provision applies if a charity is to be a beneficiary of the deceased person’s estate. Amend section FC 4 to ensure that the rollover relief does not apply to a transmission of property of an estate to an administrator or executor of the estate. |
The clarification regarding charities is a clarification arising from minor items referred to the Rewrite Advisory Panel. The amendment to the scope of the rollover relief is a remedial measure to restore the original policy intention. This amendment is prospective. |
| FE 4 | Amend section FE 4 to correct the cross-referencing to operative provisions and to consequentially clarify the definition of “reporting bank”. | Corrects cross-references and improves readability. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| FE 6(3)(a) | After sections “DB 6 to DB 8” insert “(which relate to deductions for interest expenditure)”. | Improves readability. A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| FE 36(3) | Amend subsection (3) to clarify where the requirements are not conjunctive. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| FM 31 | Amend section FM 31 to restore the 2004 Act’s tax treatment for grandparented consolidated companies. | A clarification arising from minor items referred to in the Rewrite Advisory Panel. |
| FN 8 | Amend section FN 8 to clarify that a New Zealand-resident company that is a member of a trans-Tasman imputation group is deemed to be part of a resident imputation subgroup. | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| FO 16 | Insert subsection to clarify that the amalgamating company does not derive income or have a deduction on transfers of depreciable property in a resident’s restricted amalgamation. | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| GB 32 | In compare note, replace “GC 15(1)-(3)” with “GC 15”, and correspondingly amend schedule 52. | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| HA 9(2) | Replace “order in Council” with “Order in Council”. | Corrects a typographical error. |
| HA 11(5) | In subsection (5), clarify that it has the same outcome as the corresponding provision in the 2004 Act. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| HA 16 | In section HA 16, clarify that it has the same outcome as the corresponding provision in the 2004 Act. | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| HC 7(2) | Replace “section HC 33” with “section HC 35”. | Corrects a cross-reference. |
| HC 27 | Amend section HC 27 to ensure that a person who satisfies the requirements of the section cannot be a settlor. | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| HC 35(4)(a) | Restore the threshold that applied in the 2004 Act. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| HL 29(11)(a)(i) | Replace “late” with “later”. | Corrects a drafting error arising from minor items referred to the Rewrite Advisory Panel. |
| HR 8 | Amend subsections (1)–(3) to clarify that a transitional resident is not treated as a non-resident generally for the purposes of the Act. Amend subsection (4) to permit a person to choose not to be a transitional resident, and also insert subsection (7) to provide for this election mechanism. |
A clarification arising from minor items referred to the Rewrite Advisory Panel. Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| IA 7(5) | Amend subsection (5) to clarify that the ring-fencing provisions in subpart IQ that apply to an attributed CFC net loss do not include the provisions that determine the surplus amount of an attributed CFC net loss referred to in section IQ 2(3). | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| IA 8(1)(a) | Repeal subsection (1)(a), non-resident entertainer. | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| ID 3 | Replace subsection (1) to clarify that, for the purposes of the section, a loss company that is a member of a consolidated group and the companies in the consolidated group must satisfy the commonality rules during the period the loss company meets the requirements to carry the loss forward. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| IP 1(1)(a) | Amend section IP 1 to ensure that the part-year rules apply as intended when a company enters a group or leaves a group during the year | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| IQ 2(3) | In subsection (3), clarify that if the maximum amount allowed to be subtracted from net income exceeds the ring-fenced income limitation, the excess amount is converted to an ordinary net loss to carry forward. | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| IQ 3 | In subsection (2), clarify that, when applying ring-fencing to FIF net losses, if the maximum amount allowed to be subtracted from the person’s net income exceeds the ring-fenced income limitation, the excess amount is converted to an ordinary net loss to carry forward. | This amendment clarifies how the surplus amount for FIF net losses referred to in section IA 2(4)(f) is determined. |
| IQ 5(3) | In subsection (3), clarify that, when applying ring-fencing to FIF net losses, if the maximum amount allowed to be subtracted from the person’s net income exceeds the ring-fenced income limitation, the excess amount is converted to an ordinary net loss to carry forward. | This amendment clarifies how the surplus amount for FIF net losses referred to in section IA 2(4)(f) is determined for group companies. |
| LB 4 | Amend section LB 4 to clarify that the tax credit arising under subparts MD and ME (Working for Families and the Minimum Family Tax Credit, respectively) is reduced by the amount of any instalments of the tax credit due in the current year that have been used to repay an overpayment of subpart MD or ME credits in earlier years. | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| LB 7(4)(b) | Replace “schedule 4, part H” with “schedule 4, part I”, and clarify that the provision applies to a person who has not provided an IR number, or has a special tax rate certificate in relation to the schedular payment. | This amendment clarifies the operation of the rule for persons who have not provided an IR number to the payer and to persons who have a special tax rate certificate in relation to the schedular payment. The amendment also corrects a cross-reference. |
| LC 4(4) | In subsection (4), in the formula, replace “0.020” with “0.20”. | Corrects a drafting error arising from minor items referred to the Rewrite Advisory Panel. |
| LJ 1 | Relocate subsection (3) as section LJ 2(6)–(7). Add subsection (6) to clarify the relationship with section YD 5. |
Improves readability. A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| LJ 2 | Replace subsection (2) to clarify the maximum foreign tax credit allowed. Add subsections (6)–(7), see section LJ 1. |
This amendment clarifies that the maximum foreign tax credit allowed cannot exceed the amount of New Zealand tax payable as calculated under section LJ 5. This amendment improves readability in relation to determining the foreign tax credit allowed for a person who derives income from a FIF that is not income under the FIF rules. |
| LJ 3 | Replace section LJ 3. | This amendment clarifies the nature of foreign income tax. |
| LJ 5 | Amend subsections (5) and (6) to restore the outcome under the corresponding provisions of the 2004 Act. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| LJ 7 | Replace section LJ 7. | Improves readability. This clarification arises from minor items referred to the Rewrite Advisory Panel. |
| LK 1 | Amend section LK 1, insert an equivalent to section LC 1(3A), LC 4(1), (10), and section (11) of the Income Tax Act 2004. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| LK 2(2)(b) | Amend the definition of “tax paid” in section LK 2(2)(b) to omit “in relation to the person’s attributed CFC income”. | A clarification arising from minor items referred to the Rewrite Advisory Panel. The amendment ensures that the calculation in section LK 2(1) apportions the total tax borne by the CFC based on the income interest of the person holding the attributed income interest. |
| LP 4 | Insert in the additional requirement, that before calculating a market value interest, a market value circumstance must exist. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| MA 7 | In definition of “full-time earner” replace subsection (1)(a) with subsection (1), and replace cross-references in subsection (2). | Corrects cross-references. |
| MB 4 | Replace subsection (1) to refer to major shareholder, and treatment of dividends. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| MC 5(1) | Replace “the person referred to in section MC 2 and child referred to in section MC 4” with “the person referred to in section MC 2 or the child referred to in section MC 4”. | A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| MC 6 | Omit paragraph (b)(ii). | A policy change that ensures that a person in receipt of a veteran’s pension is not excluded from receiving the in-work tax credit, parental tax credit or minimum family tax credit. |
| MC 8 | Insert subsection (2). | This amendment clarifies the relationship between section MC 8 and MD 6. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| MC 10 | In subsection (4), replace “subsection 2” with “subsection (3)”. | Corrects a cross-reference. |
| MD 6 | Insert new subsection (2). | This amendment clarifies the relationship between sections MC 8 and MD 6. A clarification arising from minor items referred to the Rewrite Advisory Panel. |
| MD 7 | In subsection (1), replace “subsection (1)” with “subsections (2) and (3). | Corrects a cross-reference. |
| MD 9 | Insert in subsection (2)(a) the qualification that a person who derives “qualifying” income will not fail to satisfy the requirements of section MD 9 if that person also derives income that excludes a person from eligibility for the in-work tax credit. Amend subsection (3) to provide a list of PAYE income (other than that referred to in section MD 8) that also may exclude a person from eligibility for the in-work tax credit. |
Improves readability. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. This is to clarify that recipients of parental leave payments are not precluded from entitlement to in-work payment. |
| MD 10 | In subsection (3)(d)(ii), replace “paragraph (a)” with “paragraph (i)”. | Corrects a cross-reference. |
| ME 3 | Replace the formula in subsection (2), and consequentially amend the meaning of “adjusted income” in section ME 3(3)(a)(i). | Corrects a drafting error in the formula. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| MF 5 | Replace subsection (2) to refer to tax year. | Corrects a drafting error relating to the extent of the joint and several liability imposed under the section. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| MF 6 | Replace section MF 6. | This amendment corrects an unintended change in law. The amendment restores the effect of section MD 1(3A) of the 2004 Act under which the Commissioner could apply a current year instalment of a Working for Families tax credit to pay an earlier year’s overpayment of instalments of a Working for Families tax credit. This is a clarification arising from items referred to the Rewrite Advisory Panel. |
| MK 13(1)(a) | Replace “section MK 12(1)(b) and (c)” with “section MK 12(1)(c) and (d)”. | Corrects cross-references. |
| MZ 3 | Add new section MZ 3 to incorporate section KD 1(1)(e)(i) and (vi) of the Income Tax Act 2004. | This amendment corrects an unintended change in law. Section KD 1(e)(i) and (iv) of the 2004 Act excluded refunds of income equalisation (and adverse event) deposits from the calculation of the Family Scheme income on which the Working for Families tax credits are based. This rule was intended to apply until the end of the 2009–10 income year and was inadvertently omitted from the 2007 Act. This amendment restores the provision. |
| OA 8 | Amend paragraph (b) to more closely correspond to the outcome under section HG 13(6) of the Income Tax Act 2004. | Improves readability. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| OB 1, OB 2 | Omit section OB 1(1)(a)(i) and (3); amend section OB 2(1), defined term list. | The section as drafted prevents Australian companies that are not NZ residents from being an Australian ICA company. The amendment corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| OB 2 | Amend section OB 2 to reflect section ME 1A of the Income Tax Act 2004, as inserted by section 155 of the Taxation (Business Taxation and Remedial Matters) Act 2007. | This amendment corrects the 2007 Act to reflect the policy change made by section 155 of the Taxation (Business Taxation and Remedial Matters) Act 2007. |
| OB 34(4) | Amend subsections (4) and (5) to more clearly correspond to sections ME 5(2)(ea) and (eb) of the 2004 Act. | This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| OB 39 | In subsection (1), omit the reference to CTR companies. | Corrects a drafting error. |
| OB 61 | Repeal subsection (7). | Improves readability. This amendment is to remove an unnecessary provision, as the subject matter is relocated to section OP 6 (see later in this report). |
| OB 71 | Amend subsections (1), (4), (5), (9) to remove the presumption that the ICA must have a debit balance. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| OD 1(2) | Replace “a tax year” with “a tax year as set out in section OD 3(2)”. | Improves readability. |
| OD 3 | Amend section OD 3 to ensure that the CTR account must be maintained from the start of the imputation year in which election is made. | Corrects a drafting error to ensure the provision correctly reflects the effect given by section MI 2(1)–(3) of the 2004 Act. |
| OD 16 | Amend subsection (3)(b) to refer to 34 percentage points. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| Table O6, row 2 | Amend the table in row 2 to refer to a CTR credit attached to dividend paid. | Ensures the table is consistent with the text of section OD 10. |
| OP 6 | Insert new subsections to reflect the effect of sections ME 14(3B) to ME 14(6) of the 2004 Act, and consequentially update table O2 to reflect the insertion of the new provisions. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| OP 44(6) to (8) | Insert new subsections to reflect the effect of section ME 14(1A), of the 2004 Act and consequentially amend table 20 to reflect the insertion of the new subsections. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| OP 78 | Replace “has” with “maintain”. | Improves readability. |
| RA 5(a) | Insert subsection (2) to clarify the time at which the amount of tax is to be withheld. | Improves readability. |
| RA 5(c) | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RA 6 | Insert subsection (4) to clarify the time at which the amount of tax is to be withheld. | Improves readability. |
| RA 10(1)(a) | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RA 15 | Clarify the tax types to which each paragraph is to apply. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. A savings provision protects the position of taxpayers who have adopted a tax position based on the words of the 2007 Act, as enacted. |
| RA 20 | Insert new subsection (2). | The amendment clarifies that in a resident’s amalgamation for the purpose of determining whether the amalgamated company comes within the threshold for monthly PAYE returns is met, the amalgamated company is treated as having paid the PAYE that was paid by the amalgamating company in the prior income year. |
| RA 23(2) | Replace “An amount of tax for an employer’s superannuation contribution” with “ESCT”. | Improves drafting consistency. |
| RA 21(4) | Replace “subsection (2)” with “subsection (3)”. | Corrects a cross-reference. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| RA 23(2) | Omit subsection (2) as it refers to repealed Tax Administration Act provisions. | This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| RB 3 | Amend subsection (2), (h) replaced with (f). | Corrects a cross-reference, as recommended by the Rewrite Advisory Panel. |
| RC 34 | Replace subsections (2) to (6) to update terminology. | Improves readability. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| RD 3 | Amend subsections (3) and (4). | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. This amendment is to ensure the provision has the same effect as section OB 2(2) of the Income Tax Act 2004 (application of the PAYE rules to shareholder employees of close companies). |
| RD 5(1)(b)(ii) | Replace “subsections (2) to (7)” with “subsections (2) to (8)”. | Corrects a cross-reference. |
| RD 5(6)(a) | Add subsection to refer to accommodation benefits provided in relation to employment treated as income under section CE 1(1)(c). | This amendment is consequential to amendments to section CE 1(1)(c). It arises from minor items referred to the Rewrite Advisory Panel. |
| RD 11 | Add subsection to incorporate regulation 6(3) of Withholding Payments Regulations. | Corrects an unintended change in law. |
| RD 13(1)(a) | After “salary or wages”, insert “referred to in section RA 5(1)(a)”. | Corrects a cross-reference. |
| RD 17 | In subsection (1), omit “the sum of the extra pay”. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. This amendment ensures the extra pay is not included twice in the calculation in section RD 17. |
| RD 22(3) | Replace subsection (3) with subsections (3) and (3B). | This amendment clarifies that the threshold for a “small business option” for PAYE purposes is based on the aggregate of PAYE and ESCT paid in the prior periods. The amendment is also consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RD 54 | Insert in compare note “GC 15(3), (4)”. | Improves readability. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| RD 60(1)(a) | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RD 61(1)(a), (6) | Subsection (1)(a): Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. Subsection (6): Replace “referred to in subsection (1)” with “withheld under section RA 5(1)(a) and (c)”. |
Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). Improves drafting consistency. |
| RD 65 | Amend subsections (1), (2), (3), (4), (7), and (11) to define “employers’ superannuation cash contribution”. | The amendment in subsection (1) ensures that section RD 65 applies only to employer superannuation contributions made in cash. The other subsections are consequentially amended. |
| RD 67 | In the opening words for section RD 69, replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. Replace paragraph (a) with “(a) if the employer chooses under section RD 69(1), the amount determined under schedule 1, part D, clause 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits); or”. |
Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). Improves drafting consistency. |
| RD 68 | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. Add subsection 2. |
Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). Improves readability. |
| RD 69 | Replace the heading with “Choosing different rates for employer’s superannuation cash contributions”. In subsection (1), replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. |
Improves drafting consistency. Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RD 70 | In subsection (1), replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RD 71 | In paragraph (a), replace “an amount of tax” with “an amount of tax withheld”. In paragraph (c), replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. |
Improves drafting consistency. Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RE 2 | In subsection (1), omit “resident in New Zealand”. In subsection (3)(c), omit “paid to a person resident in New Zealand who is acting as agent or nominee of a non-resident”. |
Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. These amendments ensure that the RWT rules apply to interest paid in New Zealand. |
| RE 3 | Replace subsection (1)(a), (b) with a new subsection (1)(a). | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. This amendment clarifies that a person paying resident passive income to a holder of a certificate of exemption is not required to withhold RWT from that payment. |
| RE 11 and RE 12 | Amend section RE 11(3), RE 12(3)(a) to correct the cross-references to schedule 1. | Corrects cross-references, as recommended by the Rewrite Advisory Panel. |
| RF 2 | Replace subsection (2)(b) and in subsection (2)(c), replace “section CX 56” with “section CX 56C”. In subsection (5), after “investment society dividends”, insert “or a royalty”. |
The amendments to section RF 2(2) correct cross-references. The amendment to section RF 2(5) corrects an unintended change in law, as recommended by the Rewrite Advisory Panel, to ensure that certain royalties paid to non-residents are subject to NRWT. A savings provision protects taxpayers who have relied on the provisions of the 2007 Act as enacted. |
| RF 9 | In subsection (1), replace “section RF 8(1)(d) to (f)” with “sections RF 8 and RF 10”. | Corrects a cross-reference. |
| RF 10 | In subsection (2), replace formula (removing brackets). After subsection (5), insert subsection (5B). |
Improves readability. The amendment to section RF 10(5) corrects an unintended change in law, as recommended by the Rewrite Advisory Panel, to ensure that to the extent a non-cash dividend derived by a non-resident is fully imputed, that dividend has a zero rate of NRWT. |
| RF 12 | Replace section RF 12. | The amendment corrects an unintended change in law, as recommended by the Rewrite Advisory Panel, to ensure that certain interest payments have a zero rate of NRWT. |
| RF 12B | Insert section RF 12B. | Improves readability. This section contains provisions relocated from section RF 12 relating to interest jointly derived by non-residents. |
| RF 12C | Insert section RF 12C. | The amendment to section RF 12 corrects an unintended change in law, as recommended by the Rewrite Advisory Panel, to ensure that payments made by a New Zealand branch of a life insurer that has elected to be treated as a company for New Zealand’s income tax purposes bears a zero rate of NRWT. |
| RG 5 | Amend subsection (2) to replace “section RF 2(5) and (6)” with “RG 4”. | Corrects cross-references. |
| RG 6 | Amend subsection (3)(a) to replace “section RF 2(5) and (6)” with “RG 4”. | Corrects cross-references. |
| RG 7 | Amend subsection (2)(b), to replace “section 32M of the Tax Administration Act 1994” with “section RG 6”. | Corrects cross-references. |
| RM 10 | Amend subsection (1) to indicate that section LB 4 may adjust the amount of the credit. | This amendment is consequential on the correction to sections LB 4 and MD 6. |
| RP 6 | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RP 7 | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RP 11 | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RP 13 | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| RZ 3(3) | Insert “the year before” after “residual income tax”. | Corrects a drafting error. This is a clarification arising from minor items referred to the Rewrite Advisory Panel. |
| RZ 4(1)(c) | After “2007–08 income year” insert “or an earlier income year”. | Corrects a drafting error to reflect the corresponding provision in the 2004 Act. |
| YA 1 “accommodation” |
Insert new definition for “accommodation”. | This amendment is consequential to the amendment for section CE 1(1)(c). |
| YA 1 “agricultural, horticultural, or viticultural company” |
Replace “in schedule 4, part C” with “in the definition of horticultural contract work in schedule 4, part C”. | This amendment corrects an unintended change in law, as recommended by the Rewrite Advisory Panel to ensure that the rule applies only to those companies performing the listed activities. |
| YA 1 “consolidated FDPA group” |
Replace “FDPA” with “FDP”. | Corrects a drafting error. This arises from minor items referred to the Rewrite Advisory Panel. |
| YA 1 “employee” |
In paragraph (c)(ii), insert reference to schedule 4, parts A and I. | This amendment corrects an unintended change in law, as recommended by the Rewrite Advisory Panel to ensure that FBT rules operate as intended. |
| YA 1 “employee’s superannuation accumulation” |
Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| YA 1 “employer” |
In paragraph (c)(i), replace “RD 5(1)(b)(iii), (2),” with “RD 5(1)(b)(iii), (3)”. NB: As introduced this was listed as “employee”. This term has been replaced by “employer”. |
This amendment corrects an unintended change in law, as recommended by the Rewrite Advisory Panel to ensure that FBT rules operate as intended. |
| YA 1 “employer monthly schedule” |
Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| YA 1 “employer sourced superannuation savings” | Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| YA 1 “employer’s superannuation contribution” |
Replace the definition with: “employer’s superannuation cash contribution”as defined in section RD 65(1) (Employer’s superannuation cash contributions); and “employer’s superannuation contribution” means a superannuation contribution made by an employer for the benefit of 1 or more of their employees. | The amendment clarifies the distinction between employers’ superannuation contributions made in cash and non-cash contributions. These distinctions are important for the operation of the KiwiSaver and ESCT rules. |
| YA 1 “ESCT” |
Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| YA 1 “ESCT rate threshold amount” |
Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| YA 1 “fully imputed” |
Insert definition. | Improves readability. |
| YA 1 “income from employment” |
Insert paragraph (d), expand definition to include excluded income for purposes of section DA 2(4) | This amendment clarifies that expenditure incurred by an employee in relation to a fringe benefit is subject to the employment limitation in section DA 2. |
| YA 1 “lease” |
In paragraph (f)(i), replace “(c)” with “(d)”. | Corrects a cross-reference. |
| YA 1 “member credit contribution” |
Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| YA 1 “non-resident entertainer” |
Replace paragraphs (b) and (c) by the following: “(b) undertakes a Part F activity”. | This amendment ensures that this definition refers to the new definition of “Part F activity”. |
| YA 1 “Part F activity” |
Insert the definition of “Part F activity”. | This amendment inserts an index entry referring to the location of the definition of “Part F activity”. |
| YA 1 “PAYE income payment form” |
Replace “employer’s superannuation contribution” with “employer’s cash superannuation contribution”. | Consequential on amendment to section RD 65(1) (definition of “employer’s superannuation cash contribution”). |
| YA 1 “schedular income” |
In paragraph (f), replace “RE 4(4)” with “RF 2(3)”. | Corrects a cross-reference as recommended by the Rewrite Advisory Panel. |
| YA 1 “secured amounts” |
Insert definition for “secured amounts” as defined in section HG 11(12). | This amendment inserts the index entry for the term “secured amounts” that was inserted into the 2007 Act by section 19 of the Taxation (Limited Partnerships) Act 2008 but not referenced in section YA 1. |
| YA 1 “trading stock” |
In paragraph (b), insert a reference to section EB 24. Replace paragraph (c) to clarify the relationship of section GC 1(3) with the general definition of trading stock. |
This amendment clarifies the relationship of the definition of “trading stock” to sections EB 24 and GC 1(3). These amendments arise from minor items referred to the Rewrite Advisory Panel. |
| YB 21 “compare note” |
Replace “OD 9” with “HH 1(1), OD 9”. | Corrects a cross-reference. |
| YC 4 “compare note” |
Replace “OD 4(4)” with “OD 4(3)(d), (4)”. | Corrects a cross-reference. |
| YC 6(4) | Replace “section YC 19” with “section YC 20”. | Corrects a cross-reference. |
| YD 3 | In subsection (4)(b), replace “head” with “head office”. | Corrects a drafting error. |
| YD 4 “compare note” |
Replace “section OE 1(4)” with “subsections FB 2(2), OE 1(4)”. | Corrects a cross-reference. |
| YZ 2 | Insert section YZ 2. | This amendment re-enacts the effect of savings provisions from the 2004 Act (section YA 5B). |
| Schedule 4, Part C, clause 1 | Repeal paragraph (e) and replace definition of “horticultural contract work” with “cultivation contract work”. | This amendment includes a minor policy change to include schedular payments for horticultural work on fruit trees within the PAYE rules. |
| Schedule 4, Part F | Amend definition of “schedular entertainment activities” by inserting a new definition of “Part F activity”. | Improves readability by distinguishing the circumstances under which the rule applies to a resident and a non-resident. |
| Schedule 5, clause 3(c) | Replace clause 3. | Improves readability. |
| Schedule 20, clause 1 | Insert “preparation” after “applies”. | Corrects an unintended change in law as recommended by the Rewrite Advisory Panel. |
| Schedule 20, clause 2 | For clause 2, column 2, replace “6” with “45” in the second column. | Corrects an unintended change in law as recommended by the Rewrite Advisory Panel. |
| Schedule 25 | Part B heading: replace with “Foreign entities to which the FIF exemptions do not apply”. Shoulder references insert “EX 31”, “EX 32”, “EX 39”, “EZ 32”. |
Improves readability. |
| Schedule 51 | Add entry for section MC 6, omission of veteran’s pension. | This amendment reflects the policy change made for section MC 6, to be effective from the commencement of the 2007 Act. |
| Schedule 52 | Part A, item GC 15(1)-(3), column 2: replace “GC 15(1)-(3)” with “GC 15”. Part B, item GB 32, column 2: replace “GC 15(1)-(3)” with “GC 15”. |
Corrects cross-references. |
| Schedule 52 | Part A, item GC 15(3), (4), column 2: add “RD 54”. Part B, item RD 54, column 2: replace “ND 1S” with “GC 15(3), (4), ND 1S”. |
Corrects cross-references. |
| Schedule 52 | Part A, item HH(1)-(4), (8), (10): add “YB 21”. Part B, item YB 21: insert “HH 1(1)” before “OD 9”. |
Corrects cross-references. |
| Schedule 52 | Part A, item KD 3(1): add “qualifying person”. Part B, item KD 3(1): add “qualifying person”. |
Corrects cross-references. |
| Schedule 52 | Part A, column 1: replace “OD 4(4)” with “OD 4(3)(d), (4)”. Part B, item YC 4, column 2: replace “OD 4(4)” with “OD 4(3)(d), (4)”. |
Corrects cross-references. |
| Schedule 52 | Part B, item IC 7, column 2: replace “IG 2(2), (11)” with “IG 2(2)(d), (11)”. | Corrects cross-references. |
| INCOME TAX ACT 2004 | ||
| CC 8B | Insert section CC 8B. | A clarification arising from a recommendation of the Rewrite Advisory Panel. This amendment provides that disposals and redemptions of a commercial bill is income of a non-resident if the disposal or redemption is sourced in New Zealand and the non-resident is not subject to the financial arrangement rules in relation to the commercial bill. |
| CD 4 | Insert subsection (2B). | A clarification arising from a recommendation of the Rewrite Advisory Panel. The section now provides that consideration paid by a company to a shareholder because of a cancellation of shares or a repurchase of a company’s shares is a transfer of value. |
| CD 17(4) | Insert reference to “amount distributed on acquisition”. | A correction of an unintended change in law as recommended by the Rewrite Advisory Panel. This amendment clarifies that ASC should only be reduced by the amount paid for the shares held as treasury stock for more than 12 months or cancelled within 12 months (subject to the amount paid for the shares not exceeding the ASC per share calculated under the ordering rule). |
| CE 1 | Insert in new subsection (2) the words “living premises”. | This amendment matches the change to section CE 1 of the 2007 Act. |
| CF 1(2) | Repeal paragraph (f) and subsequent paragraphs and replace (f) and (g). | Improves readability. |
| CW 33 | Omit “associated person” from the defined terms list. | Improves drafting consistency. |
| CX 24 | Replace the term “board” with the term “accommodation”. | This amendment matches the change in section CS 28 of the 2007 Act. |
| CX 41 | In subsection (1)(d)(i), insert after the words “for which they would be allowed a deduction”, the words “before the application of section DF 1”. | Improves readability. |
| DB 3 | Insert in subsection (4) that section DB 3 overrides the capital limitation in section DA 2. | A clarification arising from a recommendation of the Rewrite Advisory Panel that improves readability. |
| DC 12(5)(d) | Replace subsection (5)(d). | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. This amendment clarifies that the prohibition against dealing with dividends arising from an employee share purchase scheme applies to the trustee of the scheme. |
| DU 12 | Replace subsection (3)(b). | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. ;The amendment ensures that the provision refers to the aggregate amount of exploration and development expenditure incurred by the mining company reduced by the current year’s exploration and development expenditures. |
| EE 21 | Amend to clarify that application is restricted to the pool of depreciable property and that it does not apply to any individual item in the pool of depreciable property. | Corrects an unintended change in law, as recommended by the Rewrite Advisory Panel. |
| EE 46 | Remove reference to “items”, consequential to the amendment to section EE 21(5) to (8). | This amendment provides drafting consistency with the correction of an unintended change in law in section EE 21 (see previous item), as recommended by the Rewrite Advisory Panel. |
| OB 1 “accommodation” | Insert new definition for “accommodation”. | This amendment matches the change for section YA 1 of the 2007 Act. |
| OB 1 “income interest” (b) |
Replace “EX 14” with “EX 8”. | Corrects a cross-reference. |
| OB 1 “portfolio investor rate” |
(a): replace “33%” with “30%”. (b): add provision that definition applies only if investor has abided by request to provide tax file number (see also 31B of the TAA 1994). |
This amendment is part of the reform that permits the Commissioner to override a rate incorrectly selected by an investor. The exercise of this discretion would result in the default portfolio investor rate of 30% applying. |
| TAX ADMINISTRATION ACT 1994 | ||
| 3 | Replace definition of “late filing penalty”. | Corrects a cross-reference. |
| New Part 2B | Insert new Part 2B after section 15B. | This amendment inserts Part 2B to reinsert the inoperative amendment in schedule 50 of the Income Tax Act 2007. |
| 24P | Replace “sections 24B, 24H, and 24I” with “section RD 22 of the Income Tax Act 2007 and sections 24B, 24H, 24I, and 24L”. | Corrects cross-references. |
| 32A | Replace the term “employer’s superannuation contribution” with “employer’s superannuation cash contribution”. | The amendment is consequential to the amendment of section RD 65(1) of the 2007 Act, and is to provide drafting consistency. |
| 32B | Replace the term “employer’s superannuation contribution” with “employer’s superannuation cash contribution”. | The amendment is consequential to the amendment of section RD 65(1) of the 2007 Act, and is to provide drafting consistency. |
| 36A(2) | Replace “certificate” with “payment form”. | Drafting consistency, arising from minor items referred to the Rewrite Advisory Panel. |
| 68C(2) | In the opening words, replace “section KJ 1 of the Income Tax Act 2004” with “section MK 1(1) of the Income Tax Act 2007”. In subsection (2)(b), replace “meets the requirements of section KJ 2(d)” with “resides mainly in New Zealand”. In subsection (2)(c), replace “section KJ 2(a) to (c), (e) and (f)” with “section MK 2(1)(a) to (c), (d)(i) and (ii)”. |
Corrects cross-references. Improves readability. Corrects cross-references. |
| 80KLB | Insert new section 80KLB. | The new section re-enacts the effect of section MD 1(3A) of the 2004 Act that granted the Commissioner the power to recover overpaid tax credit. This corrects an inadvertent omission of a provision from the 2007 Act. |
| 85G | In subsection (1)(c), omit “of that Act”. | Improves readability. |
| 120KD | In the example, in the line “Three interest start dates apply”, replace “29 April,” with “8 May,”. | Corrects an incorrect date. |
| 139AA(1)(a) | Replace “RD 23(2)” with “RD 22(2)”. | Corrects a cross-reference. |
| 141B(8) | Replace “subsection (2)(b)” with “subsection (2)”. | Corrects a cross-reference. |
| 141J | Repeal subsection (3). | This amendment ensures that other penalties may be reduced under other provisions of the Tax Administration Act. |
| 156A(1) | Replace paragraphs (a) and (b), and insert new paragraph (c). | This amendment adds the non-electronic late filing penalty to the list of penalties to which the rule applies, and replaces the term “in respect of” with “for” to improve drafting consistency. |
| 225A(2)(b)(iii) and (iv) | Omit “under that Act”. | Removes an incorrect reference. |
| TAXATION REVIEW AUTHORITIES ACT 1994 | ||
| 16(3)(b) | Replace “section 22” with “sections 22 or 22B”. | Corrects cross-references. |
| KIWISAVER ACT 2006 | ||
| 4 “Crown contribution” (b) |
Replace “section KJ 1 of the Income Tax Act 2004” with “section MK 1 of the Income Tax Act 2007”. Replace “section KJ 5(2)” with “section MK 5”. |
Corrects cross-references. |
| 14(1)(d) | Replace “section OE 1(5) of the Income Tax Act 2004” with “section YD 1(7) of the Income Tax Act 2007”. | Corrects a cross-reference. |
| 57(1)(d) | Replace “paragraph (h) of the definition of complying fund rules in section OB 1 of the Income Tax Act 2004” with “schedule 28, clauses 4(a) and 5(a) of the Income Tax Act 2007”. | Corrects cross-references. |
| 128A | Replace “section KJ 1 of the Income Tax Act 2004” with “section MK 1 of the Income Tax Act 2007”. | Corrects a cross-reference. |
| 128C(1) | Replace “paragraph (cc) of the definition of complying fund rules in section YA 1 of the Income Tax Act 2007” with “schedule 28, clause 2(c) of the Income Tax Act 2007”. | Corrects a cross-reference. |
| Schedule 1 | In clause 14(1), replace “section KJ 1 of the Income Tax Act 2004” with “section MK 1 of the Income Tax Act 2007”. In clause 17(1), replace “section KJ 1 of the Income Tax Act 2004” with “section MK 1 of the Income Tax Act 2007”. In clause 17(1)(a), replace “Income Tax Act 2004” with “Income Tax Act 2007”. In clause 17(1)(c), replace “the number of included days under section KJ 3 of the Income Tax Act 2004 is wrong” with “they have got the time for which the member meets the requirements of section MK 2 of the Income Tax Act 2007 wrong”. |
Corrects cross-references and terminology. |
| STAMP AND CHEQUE DUTIES ACT 1971 | ||
| 86F | In the definition of “paid and payment”: replace “paragraph (c)” with “paragraph (a)”. | Corrects a cross-reference. |