Remedial matters
Amendments have been made to various Acts and tax rules.
Amendments to the Goods and Services Tax Act 1985
A technical change to the formula in section 20C of the Goods and Services Tax Act 1985 has been made to ensure it produces the correct amount.
Amendments to the life insurance taxation rules granting transitional relief
A number of changes have been made to the new rules for taxing life insurance business that were enacted as part of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009.
Portfolio class land loss
Amendments have been made to clarify that land-owning portfolio investment entities (PIEs) that invest offshore can allocate tax losses that arise from foreign exchange contracts to their investors.
New Zealand screen production incentive
Amendments have been made to the Income Tax Act 2007 to provide that the tax treatment of expenditure on a film does not depend on whether the film receives a New Zealand screen production incentive.
Tax treatment of payments to public office holders
The Income Tax Act 2007 has been amended to clarify the tax treatment of payments made to certain public office holders.
IFRS further remedial: Anti-arbitrage rules for certain methods
The Act makes a remedial amendment to the anti-arbitrage rules for IFRS taxpayers. Each of the above sections has had a new sub-paragraph added to them to ensure they fully implement the original policy for use of the relevant methods.
Financial arrangements subject to Determinations G22 and G22A
On 26 September 2006 Determination G22 was replaced with Determination G22A. The stated purpose of the replacement was to deny artificial deductions on certain optional convertible notes (OCNs) that were being claimed by New Zealand subsidiaries of overseas companies. Many of these arrangements are currently the subject of litigation between Inland Revenue and the taxpayers concerned.
Financial institution special purpose vehicles
The Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 inserted sections HR 9 and HR 10 into the Income Tax Act 2007 to deal with the tax treatment of registered banks' residential mortgage backed securities (RMBS) special purpose vehicles (SPVs) (see Tax Information Bulletin Vol. 21, No. 8, October/November 2009, pages 131-132). Those rules removed the tax impediments to banks using the Reserve Bank's (RBNZ) RMBS liquidity facility.
Remedial amendments to portfolio investment entity tax rates
Amendments have been made to Table 1 of schedule 6 of the Income Tax Act 2007 to ensure that the prescribed investor rates (PIRs) and income thresholds for New Zealand resident natural person investors are accurate.
Resident withholding tax rate remedials
Resident withholding tax (RWT) rates on interest income were aligned with the current company and individual income tax rates on 1 April 2010. Minor remedial amendments have been made in order to clarify the changes. (Note that the Budget 2010 legislation reduced RWT rates, as a consequence of changes to personal tax rates. These new rates will apply from 1 October.)
Remedial amendments to the PIE rules
A number of remedial amendments have been made to the tax rules for portfolio investment entities (PIEs). These amendments ensure that the rules achieve their intended policy effect.
Remedial amendment to the qualifying company rules
The Act amends the definition of non-dividend income in section YA 1 so that it does not include foreign investment fund income calculated under the FDR method. As such, income derived under the FDR rules no longer counts towards the limit on foreign non-dividend income for qualifying companies.
Use-of-money on Kiwisaver refunds
Inland Revenue pays use-of-money interest (UOMI) on money refunded to KiwiSaver member - for example, a member’s personal contributions if they subsequently opt out.
Unclassified fringe benefits
Sections CX 17(4) of the Income Tax Act 2007 and CX 16(4) of the Income Tax Act 2004 have been amended retrospectively, with an appropriate savings provision, to prevent a company from electing to treat any benefit provided to a shareholder-employee as a dividend.
Date published: 05 Nov 2010
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