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Other policy matters
The legislation deals with the income tax treatment of transactions in emissions units outside the forestry sector. The amendments ensure that the tax treatment of emissions units is clear, that income and expenditure are recognised appropriately, and that unintended distortions do not arise.
Under the new rules, certain debt securities stapled to shares are to be treated as shares for most tax purposes.
The amendments change the tax treatment of the net cost of films that receive grants from the new Screen Production Incentive Fund (SPIF).
Movements in a general insurer’s outstanding claims reserve (OCR), as determined by applying International Financial Reporting Standard (IFRS) 4, can now be claimed as a deduction for income tax. The amendment responds to uncertainty about the tax treatment of the OCR following the adoption of IFRS 4.
There have been a number of changes made to the petroleum mining tax rules. Deductions for expenditure on petroleum mining undertaken through a branch in another country will only be allowed to be allocated against income from petroleum mining operations outside of New Zealand.
New section IC 13 allows the 66% common ownership threshold for loss grouping to be varied by Order in Council in relation to Niue development projects. This power has been introduced with a view to assisting in the development of the Niuean economy.
A number of amendments have been made to the provisional tax pooling rules.
The bill contains several remedial amendments to the legislation to ensure the correct amount of tax is deducted from migrant non-resident seasonal workers during the year.
The Taxation (Business Taxation and Remedial Matters) Act 2007 introduced a number of changes to the penalty rules in the Tax Administration Act. The following amendments clarify the practice and policy intent of the earlier amendments.
Donee status entitles individual donors to a tax credit of 33⅓% of the amount donated to these organisations. Companies and Māori authorities may claim a deduction from their net income for amounts donated.
An amendment has been made to the Tax Administration Act 1994 to allow the right of non-disclosure to apply to discovery and similar processes that occur during litigation.
Minor changes have been made to ensure that amendments made in the Taxation (Business Taxation and Remedial Matters) Act 2007 work as intended.
Section 173D of the Tax Administration Act 1994 has been amended, by the inclusion of a new subsection (2), to clarify that charges associated with foreign unpaid tax may be collected under New Zealand’s tax recovery arrangements.
A remedial amendment has been made to section CW 12 of the Income Tax Act 2007 to ensure consistency with changes previously made to the equivalent section in the predecessor Act, the Income Tax Act 2004.
The Income Tax Act 2007 has been amended to provide an exemption from income tax for reimbursement payments to volunteers. The rules also clarify the tax treatment of honoraria paid to volunteers.
Changes have been made to the Goods and Services Tax Act 1985 to allow certain loyalty programme operators to defer the imposition of GST until the redemption of loyalty points to ensure that GST is being paid at the correct rate.
Changes have been made to the Goods and Services Tax Act 1985 to allow, in certain circumstances, exported second-hand goods to be zero-rated when a registered person has claimed a second-hand goods input tax deduction.
Changes have been made to the Goods and Services Tax Act 1985 to confirm that the Office of the Clerk of the House of Representatives and the Parliamentary Service have an obligation to charge GST on the activities they undertake.
Section YC 18B ensures that shareholder continuity is preserved for certain restructuring arrangements that result in no change of economic ownership in a group of companies.
The Taxation (Business Taxation and Remedial Matters) Act 2007 introduced changes to the taxation of income and expenditure on financial arrangements (the accrual rules) for taxpayers who have adopted new international financial reporting standards (IFRSs).
The residential mortgage-backed securities (RMBS) scheme established by the Reserve Bank of New Zealand (RBNZ) in 2008 requires registered banks to set up a bankruptcy remote third party (SPV), which can be either a company or a trust. All the major banks have set up RMBS structures, and some may have drawn down RBNZ monies.
Amendments have been made to update the provisions relating to disasters. The amendments were part of a Supplementary Order Paper, which, among other measures, extended and simplified the range of circumstances under which Inland Revenue can offer relief from use-of-money interest when taxpayers are physically impeded by a disaster or similar event, from paying their tax on time.