Contents
Making Tax Simpler – employment income information
- Overview
- Repeal of the payroll subsidy and the listed PAYE intermediary status
- Payday provision of employment income information
- Implementation dates
- Employers (and PAYE intermediaries) to file digitally within two working days of payday (online group)
- Reporting ad hoc irregular and other unusual payments
- Consequential changes to employer reporting of employee share scheme benefit information
- Issue: Support for the proposals
- Issue: Frequency of employee share scheme benefit information reporting
- Issue: Length of deferral of the recognition of ESS benefits 18
- Issue: Clarification as to how the deferral of the recognition of benefits will be treated if the deferral bridges the end of the tax year
- Employers able to file non-digitally
- Issue: Requirement to provide information within seven working days of payday
- Issue: Definition of payroll software
- Issue: Support for electronic filing threshold
- Issue: Electronic filing threshold should remain at $100,000 of PAYE and ESCT
- Issue: Electronic exempt group and new employers group
- Issue: Extending the six month period to file paper returns
- Issue: Timeframe for employment income information reporting by employees
- New and departing employee information
- Issue: Support for proposal
- Issue: New and departing employees – contact details
- Issue: Departing employee information
- Issue: Date of birth and contact information
- Issue: Consolidation and simplification of new employee information
- Issue: Providing a timely response on new employees
- Issue: Using employee-provided information to make deductions if validation has not occurred before the first payday
- Issue: Employer must have access to the same information that Inland Revenue holds
- Issue: Notification when employer ceases to employ
- Employment income information – error correction and adjustment mechanisms
- Tax codes and PAYE record keeping
- Remittance of PAYE and related deductions
- Penalties
- Issue: Late filing and non-electronic filing penalties to remain monthly
- Issue: Maximum penalty for non-electronic filing
- Issue: Shorten the period for resetting the good behaviour penalty reduction in section 141FB of the Tax Administration Act 1994
- Issue: Focus during the period of transition to the new rules should be on education
- Employee share scheme transitional provisions
- Other matters raised
- Issue: Accelerating the transfer of KiwiSaver contributions
- Issue: Information sharing with other Government agencies
- Issue: Employer should not become an intermediary/messenger between Inland Revenue and the employee
- Issue: Implementation of proposed rules
- Issue: Voluntary payday reporting from 1 April 2018 limited to payday reporting via digital systems
- Issue: Declaration of entitlement to work in New Zealand
- Issue: Employers reporting information for special tax codes or special tax rates
- Issue: Record keeping requirements for employment income information
- Issue: Schedular payment drafting
- Issue: Employment income information – transitional provisions
- Issue: Definition of KiwiSaver status
- Issue: Reporting of employment income information: other particulars as required by the Commissioner
Making Tax Simpler – investment income information
- Overview
- Investment income information generally
- Issue: General support for amendments to investment income information
- Issue: The costs and benefits of monthly reporting
- Issue: Support for application date of investment income provisions
- Issue: Application date for provision of investment income information should be deferred
- Issue: Engagement and partnership between Inland Revenue and investment providers
- Measures to reduce compliance costs
- Issue: Provision of information that is not easily accessible
- Issue: Optionality for provision of combined or separate information
- Issue: Flexibility to provide cumulative or month by month information
- Issue: End-of-year withholding tax certificates
- Issue: Streamlining information reporting
- Issue: Overlap with other investor information collection regimes
- Portfolio investment entities
- Issue: Six monthly reporting of Prescribed Investor Rates (PIRs) by multi-rate Portfolio Investment Entities (PIEs)
- Issue: Advancing the filing deadline from 31 May to 15 May for non-locked in PIEs
- Issue: Further information as required by the Commissioner – PIEs
- Issue: PIE filing due date – incorrect application date
- Error correction
- Issue: Support for error correction proposals and extending them to PIEs
- Issue: Error correction notification
- Issue: Error correction mechanisms
- Issue: Error correction threshold
- Issue: Correction of errors in the following year
- Issue: Error correction mechanism for excess amounts
- Issue: Tax payments arising from an error
- Dividends
- RWT filing deadline (transitional provision)
- RWT-exempt status
- Issue: Provision of information relating to RWT exempt payers
- Issue: RWT-exempt status
- Issue: The information published on the electronic register of RWT-exempt status should be limited
- Issue: The methods for determining RWT-exempt status
- Issue: Tertiary education subsidiaries and RWT-exempt status
- Issue: RWT-exempt status – electronic register
- Financial arrangements
- Electronic filing
- Approved issuer levy
- Joint accounts
- Provision of investment income information by Māori authorities
- Measures to identify taxpayers
- Miscellaneous
- Drafting
Making Tax Simpler – other items
- Exemptions from electronic filing requirements
- Issue: Clarifying the reasons for granting an exemption
- Issue: Specifying the status of the exemptions granted
- Issue: Statement of reasons for exemptions granted
- Issue: Expiry of exemptions after a specific period of time
- Issue: Aligning the non-electronic filing exemption for investment income information
- Tax treatment of advance payments of holiday pay or salary or wages
- Application of legislated rate and threshold changes
- Remedial holiday pay payments
- Penalties and interest amendments
- Issue: Setting a new due date for default assessments, date interest starts and the date an excess credit arises
- Issue: Aligning the due dates for default assessments – application date for clauses 273 and 274
- Issue: Date interest starts and excess tax is available – application date for clauses 263 and 276
- Electronic filing requirements for GST returns
Employee share schemes
- Overview
- General issues
- Issue: Support for reforms
- Issue: Proposals increase complexity and uncertainty
- Issue: The policy framework is fundamentally flawed
- Issue: Employee share schemes are a valuable economic tool and the rules should not discourage their use
- Issue: Proposals result in double taxation
- Issue: Issues with consultation process
- Issue: Additional guidance on share valuation
- Income tax treatment of employees
- Issue: Clarification of terms used in Bill
- Issue: The definition of employee share scheme is too wide
- Issue: The proposals result in tax on capital gains
- Issue: Should impose fringe benefit tax on any downside risk protection
- Issue: The proposals are not a neutral framework for taxing income
- Issue: Future employment conditions should not delay the taxing point
- Issue: Effect of proposals on small and medium enterprises
- Issue: There is a lack of certainty under the proposals
- Issue: There should be an allowance for black-out periods and other sale restrictions
- Issue: Clarification of “bad leaver” exclusion
- Issue: Social policy and compliance cost implications
- Issue: Support for apportionment rule
- Issue: The apportionment rule should be extended to all remuneration
- Deductions for employers
- Issue: Support for the proposal
- Issue: Employer should be able to claim a deduction for actual costs
- Issue: Deduction proposal is practically unworkable
- Issue: Clarification of deduction formula required
- Issue: Bill should confirm that costs of setting up an employee share scheme are deductible
- Issue: Clarification as to timing of deduction
- Issue: Deductions will be fiscally costly to the Government
- Issue: Financial reporting adjustments will be required
- Exempt schemes
- Issue: Support retaining and modernising schemes
- Issue: Support for repeal of the notional 10% interest deduction
- Issue: Support for the increased threshold for amount that can be spent purchasing shares
- Issue: The threshold should be regularly reviewed in future
- Issue: The threshold should be higher
- Issue: There should be no limit on the minimum purchase price if an employee is required to buy shares
- Issue: Share purchase schemes should be renamed “exempt schemes” in the legislation
- Issue: Loans to employee should not have a minimum repayment schedule
- Issue: Can payment by “regular instalment” include regular purchase of parcels of shares?
- Issue: Support the reduction of eligible employees participating from all to 90 percent
- Issue: Support requirement to notify Commissioner of Inland Revenue (CIR) of scheme rather than request CIR approval
- Issue: Support the removal of the trustee requirement
- Issue: Support removing the deduction as the benefit is exempt
- Issue: Do not support removing the deduction for providing exempt benefits
- Issue: Deductions should not be denied from date of introduction of the Bill
- Issue: Period of restriction should be clarified
- Issue: Employers should report annually in respect of exempt schemes
- Issue: Clarification that employees in existing schemes can benefit from increased limits under the new rules
- Issue: Do existing exempt schemes have to notify CIR when grants are made?
- Issue: Deductibility of set-up costs
- Available subscribed capital
- Employee share scheme trusts
- Transitional rules
- Miscellaneous technical issues
Other policy matters
- Annual setting of income tax rates
- Demergers – company splits by listed Australian companies
- Issue: Support for the proposal, with some reservations
- Issue: Proposed demerger rules should also apply to New Zealand companies and other company demergers generally
- Issue: Application date
- Issue: Treatment of ASC
- Issue: Proportion of shareholding requirements
- Issue: Scope of the proposed amendments
- Issue: Technical matters
- Issue: Inland Revenue to provide guidance to taxpayers
- Bank account requirement for IRD numbers
- Petroleum mining decommissioning
- Issue: Replacing spread-back with a refundable credit
- Issue: Removal of link with relinquishing a permit
- Issue: Planning for decommissioning
- Issue: Alignment with current “removal or restoration operations” definition
- Issue: Definition of commercial wells
- Issue: Exploration wells in a mining permit
- Issue: Exploration wells used in the production process
- Issue: Part of an arrangement
- Issue: Geologically contiguous
- Issue: Plugged and abandoned terminology
- Issue: Ongoing monitoring
- Issue: Alignment with royalty regime
- Issue: Shareholder continuity
- Issue: Imputation debits for refund
- Issue: Minor drafting issues
- Issue: Notification requirements
- Recipients of charitable or other public benefit gifts
- Trustee capacity amendments
- Issue: General support for the trustee capacity amendments
- Issue: Application date should be retrospective
- Issue: The two High Court decisions would have been decided the same, even if the proposed amendments were in place
- Issue: Inherent jurisdiction of the courts
- Issue: Location of section YA 5 in the Income Tax Act 2007
- Issue: Drafting of section YA 5 may not achieve policy intent
- Issue: Single notional person
- Issue: Clarify what will happen if there is a change in trustee
- Issue: Definition of “close company”
- Issue: The amendment to section HD 15 should not proceed
- Issue: Clauses 172(5) and 172(35) should be amended
- Issue: Section 2A of the Goods and Services Tax Act 1985 should be rewritten
- Issue: Definitions of “market value interest” and “voting interest” in section 2A(3) of the Goods and Services Tax Act 1985
- Issue: Application to unit trusts
- Issue: Further clarifying amendments
- Issue: Further guidance
- PHARMAC rebates and GST
- Lloyd’s of London – tax simplification
- Extending the financial arrangement reporting method concessions
- Transfer of overpaid tax from AIM taxpayer to shareholders – extension of the agency mechanism
- FBT due date under close company option during the co-existence of two Inland Revenue software platforms
Remedial amendments
- Employee meal allowances and definition of employer’s work place
- PIE remedials
- CFC remedials
- Issue: Insurance business CFC amendment – minor drafting issue
- Issue: Insurance business CFC amendment – extension to New Zealand sourced premiums
- Issue: Insurance business CFC amendment – extension to fee income for administering and managing funds
- Issue: Non-attributing Australian CFCs – Australian unit trusts
- Issue: Foreign tax credits – support for proposal
- Issue: Foreign tax credits – drafting
- Issue: Foreign tax credits – tax paid by other CFCs
- Issue: Foreign tax credits –Australian unit trust CFCs and FIFs
- Issue: Use of part-year accounts for accounting standards method – support for proposal
- Issue: Use of part-year accounts for accounting standards method – extension to the default test and attribution calculations
- Issue: Deductible foreign equity distributions and apportioned funding calculations
- GST remedials
- Trading gains of non-resident investment funds
- Non-exempt charities: taxation of tax exempt accumulations
- Issue: Clarify the definition of “assets”
- Issue: Application of section HR 12 to deregistered entities that are still exempt under section CW 42
- Issue: Application of new section HR 12 to entities wholly or partly tax-exempt under section CW 42
- Issue: Application date of the proposed amendments – savings provision
- Issue: Potential over-taxation of charitable assets where members of a charitable group deregister
- Issue: Disposal of assets by a charitable group for market value
- Issue: Tax on assets held before an entity had tax exempt status
- Consolidated groups and local authorities
- Residential land withholding tax (RLWT) rules – remedial amendment
- Tax rate for extra pays paid to non-resident seasonal workers and employees on non-notified tax codes
- Resident withholding tax and non-cash dividends
- Consolidated group’s imputation credit accounts and use of pre-consolidation imputation credits
- Trustee’s requirement to file income tax returns
- Small amounts of penalties and interest not charged
- Clarify the definition of “provisional tax associate”
- Clarify that taxpayers who have a transitional year can use the concessionary provisions of section 120KBB of the Tax Administration Act 1994
- Remove new provisional taxpayers who have a transitional year from the ability to use the concessionary provisions of section 120KBB of the Tax Administration Act 1994
- Accounting income method and student loans
- Employee tax codes
- Withholding tax treatment of back-dated remedial payments of employment-related entitlements
- Transferring PAYE credits to shareholder-employees
- Closely-held companies remedial amendments
- Aircraft overhaul expenses
- Allocation of resident withholding tax credits by a trustee
- Available capital distribution amount and depreciable assets
- Available capital distribution amount and disregarded FIF income
- Donation tax credits for donations to community housing entities
- Multiple statements and co-existence within START