Audio and visual transcript
Other changes coming in 2022.
Social products, GST, KiwiSaver and other changes.
The information in this presentation is current as at 23 March 2022.
There is no audio for this slide.
Other changes coming in 2022.
- Social products
- Other changes.
Kia ora e te whānau.
Welcome to this presentation where I’ll introduce some of the changes Inland Revenue is making this year.
Last year, the Minister of Revenue introduced the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill.
The Bill includes an assortment of proposed changes which are expected to take effect on or before the 1st of April 2022. There are also a number of other legislative changes which come into effect from April too. In total there will be more than 100 policy and remedial changes – we’re calling these the 2022 Annual Changes.
Now, in this presentation I’ll be covering the upcoming changes for social products, GST, KiwiSaver, and some other tax products.
Title: Te tautoko tamariki me Working for Families.
Child support and Working for Families.
Let’s start by taking a look at the changes coming for our social products - child support and working for families.
Title: Policy changes.
The Child Support Amendment Act was passed in March 2021.
The Act aims to simplify penalty rules, increase compliance, and provide more certainty for child support customers.
Some changes have already gone live. The remaining changes are being introduced from 1 April 2022 and include changes to:
- Definition of income
- Child expenditure calculations
There are several changes coming into effect for child support. The changes include a combination of new policy and proposed remedial changes.
The Child Support Amendment Act was passed in March 2021. The Act aims to simplify penalty rules, increase compliance, and provide more certainty for child support customers.
Some of the changes have already gone live on the 1st of April 2021 and on the 26th of October 2021 in line with our last Business Transformation release – information on these changes can be found on our website. The remaining changes are being introduced from 1 April 2022.
Changes to definition of income.
Investment income will now be included in child support income for salary and wage customers. This means they will have their interest or dividends earned included in their child support income.
Child support will move to a 'net' income base – net income is gross income less any allowable deductions. This excludes any losses you have to bring forward from a previous year.
Child expenditure calculations.
The use of the mixed age expenditure table will be repealed. Instead, the expenditure table used for each child will be based on their appropriate age bracket.
Inland Revenue will have the discretion to modify child expenditure calculations in exceptional circumstances such as in situations where complex care arrangements for children in the same calculation are not adequately accounted for by the usual method.
With these changes when a person joins the child support scheme, an estimation can be backdated to the start of the assessment if received on or before the 28th day after notification of the assessment.
If a customer submits a second re-estimation for a previous year within the first 28, days Inland Revenue will have the ability to decline this
The end of year reconciliation rules for estimations have been updated, and a reconciliation period will be introduced for estimations. Income used in the square-up will reflect the income received during the reconciliation period. This means when a person estimates more than once, each of their estimations will be squared up separately to reflect the income received in the period to which the estimate applied.
Title: Remedial changes.
The Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill includes several proposed remedial changes for child support.
These changes are expected to be passed on or before 31 March 2022.
Included are changes to the estimations, time bar and offsetting provisions.
The Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill includes several proposed changes for child support. These changes are expected to be passed on or before the 31st of March 2022.
These proposed changes mean:
- customers will be required to provide proof when advising of existing circumstances in the first 28 days after the notification of their assessments
- there is an adjustment to the time bar provision introduced by the Child Support Amendment Act that restricts child support reassessments to a 4-year period from the beginning of the relevant child support period
- further evidence will be required from a customer when applying for a temporary exemption under the long-term injury or illness category - to show they can’t engage in paid work due to the long term illness or injury
- debt offsetting will be extended to voluntary agreements.
Title: Rate changes
Family tax credit
Eldest child - $5,878
Additional child - $4,745
Eldest child - $6,642
Additional child - $5,412
Best Start tax credit
Minimum family tax credit
Income abatement rate
There will be increases to the family tax credit, Best Start tax credit and minimum family tax credit annual entitlement rates.
For Family tax credit.
The annual entitlement for the eldest child is increasing from $5,878 to $6,642.
The annual entitlement for any additional dependent child is increasing from $4,745 to $5,412.
This will result in an increase of up to $14 per week for the eldest child and up to $12 per week for any subsequent children.
The Best Start tax credit entitlement is increasing from $3,120 to $3,388 per year. This means an increase from $60 to approximately $65 per week, per eligible child.
The amount that minimum family tax credit tops up a family’s after tax annual income to is increasing from $31,096 to $32,864.
The income abatement rate that applies to the family tax credit and in-work tax credit entitlement is increasing from 25% to 27%.
Notice of entitlements which show customers what they will receive for the new year, starting 1 April 2022, were sent to customers in late February.
Title: Tāke Hokohoko.
Goods and Services Tax.
The next topic we’ll be covering today is GST.
There are several changes proposed for GST. The changes include a combination of new policy and remedial changes.
These changes have been proposed by the Government and are expected come into effect on or before 1 April 2022.
The key changes can be grouped into 5 main topics, each of which we will be covering at a high-level today. Group rule changes, importing and exporting, cryptoassets, invoicing and record keeping, and other.
Title: Group rule changes.
There will be more legislative certainty for the treatment of GST groups.
- Intra-group supplies
- Information requirements
- Joint and several liability provisions
- Membership start dates
The changes aim to provide more legislative certainty for the treatment of GST groups.
With these changes, GST groups will be treated as if they were a single registered entity for all activities carried out by any member of the group for supplies made to third parties. The changes include a range of clarifications which allow for easier compliance.
An addition to the group legislation will outline the types of intra-group supplies that must be accounted for in a group's GST return. If a provision is not listed in this section, it does not need to be accounted for in the group's GST return.
Currently each group member is required to issue and keep record for all taxable supplies. The upcoming changes mean that the group may choose that supply information can be issued or retained by the representative member, a nominated company, or the supplying member itself. If it is kept by a nominated company (under the administration category), Inland Revenue will need to be notified.
When a company leaves a GST group, Inland Revenue could allow the joint and several liability obligation to be suspended for the departing company if all of the following points are satisfied.
The assessment is a reassessment made after the date the company leaves the group.
The amount is an increased amount.
It is considered the removal of joint and several liability will not significantly prejudice the recovery of the increased assessment.
This aligns with the joint and several liabilities of a consolidated group for income tax purposes.
The final change for GST groups, relates to the start date for a member that is newly incorporated. Newly incorporated group members can join either at the start of the next GST period or when the company is incorporated - removing the requirement for part period returns from members who are yet to join a group.
Before we move on to the changes for importing and exporting, I would just like to highlight that there will be no change to how representative members are treated. They will continue to be treated as carrying on all activities for the group and they will continue to act on behalf of the group in regards to elections, giving notices, keeping records, and accounting for the group, and, there have been no changes to the eligibility requirements to form a GST group.
Title: Importing and exporting.
Businesses who deliver goods to NZ residents who then export the good outside the country to non-residents will be able to zero-rate the supply.
The domestic leg of the transport of goods that are being exported or imported can be zero-rated.
There are 2 key GST changes for importing and exporting.
The first change will mean if you're a business who delivers goods to New Zealand residents who then export the good outside the country to non-residents, then you'll be able to zero rate the supply. All other existing requirements for the goods to be zero-rated will still be in place and must be met.
The second change will allow the domestic leg of the transport of goods to be zero-rated when provided by a sub-contracted arrangement, whether they are being exported or imported. This brings the treatment in-line with when both the domestic and international legs are carried out by the same supplier.
A cryptoasset is defined as a digital representation of value that exists in a distributed ledger (such as a blockchain) and is secured cryptographically to record the ownership and transactions involving crypto assets.
Fungible cryptoassets will be excluded from GST.
Non-fungible tokens will remain subject to GST if supplied by a registered person.
GST will continue to apply to supplies of goods and services which are bought using crypto assets.
Note: The relevant law changes will apply retrospectively from 1 January 2009.
That brings us to cryptoassets.
A definition for cryptoassets will be added to the Income Tax Act and GST Act.
A cryptoasset will be defined as a digital representation of value that exists in a distributed ledger, such as a blockchain, and is secured cryptographically to record the ownership and transactions involving cryptoassets.
As a result, fungible cryptoassets will be excluded from GST.
The relevant law changes will apply retrospectively from the 1st of January 2009, to precede the launch of the first cryptocurrency.
The definition excludes non-fungible tokens which will remain subject to GST if supplied by a registered person.
GST will continue to apply to supplies of goods and services which are brought using cryptoassets.
Cryptoassets that are economically equivalent to debt arrangements will still be taxed under the financial arrangement rules.
GST-registered businesses that raise funds through the issue of cryptoassets with features similar to debt or equity securities, will be able to claim input tax credits on their capital-raising costs.
More information is available on the Inland Revenue website. Just search using the term 'cryptoassets.'
Title: Invoicing and record keeping.
Changes being passed to modernise the GST rules for invoicing and record keeping.
Proposed changes will not mean that business will have to stop using their existing systems.
Note: The relevant changes will not come into effect until 1 April 2023.
Now, some of you may have heard that there are also changes being passed which aim to modernise the GST rules for invoicing and record keeping.
These changes will not be coming into effect until April 2023.
These changes seek to update the GST requirements for documentation, to allow for more flexibility in the way that the required GST information is shared between suppliers and their customers.
We’ll provide more information on these changes prior to them coming into effect.
In the meantime, I’d just like to highlight that these changes will not mean that business will have to stop using their existing systems, rather the changes are intended to provide business with more flexibility in an increasingly digital world.
Title: GST changes for mixed taxable use.
Wash up calculations - Goods and services that have had a complete change of use for longer than 2 years and have been subject to a full wash up will not require annual adjustments.
Apportionment agreements - Any registered person will be able to agree to an apportionment method with Inland Revenue.
Disposal of mixed-use assets - The cap will be removed on most deductions.
First, let’s take a look at the GST changes when it comes to making adjustments for taxable and non-taxable use.
Wash up calculations.
Currently, a registered person is required to continue to perform annual adjustments for goods and services that have had a complete change of use and have been subject to a 'wash up'. A wash up calculation is applied when there has been a change to a hundred percent taxable or a hundred percent non-taxable use of an asset for 2 adjustment periods. This amendment will provide clarification that a customer will become exempt from performing annual adjustments for goods and services that have had a complete change of use for longer than 2 years and have been subject to a full wash up.
While in practise this restriction has often not been applied, there is currently a rule which prevents most businesses with a turnover of less than $24 million from agreeing to a customised GST apportionment method with Inland Revenue. With the proposed changes, any registered person will be able to agree an apportionment method with Inland Revenue.
Disposal of mixed-use assets.
When a GST registered person disposes of an asset used for both taxable and non-taxable activities, they can claim an additional input tax deduction in respect of their non-taxable use of the asset. Currently, this deduction is capped at the GST fraction of the purchase price paid when they acquired the asset. The changes will remove the cap on most deductions. The cap will remain in place for land disposed of by property developers as an increase in the value of land is directly related to their taxable activity.
Title: Other GST changes.
Second-hand goods - Input tax credit for second-hand goods acquired from an associated person in certain situations.
Change basis for calculations - Customers can request to change the basis for calculating GST for a taxable period to match their internal accounting cycle.
An amendment will allow for an input tax credit for second-hand goods acquired from an associated person in the following situations.
If the associated supplier has supplied the second-hand goods from a non-associated person then an input tax deduction would be allowed that would be equal to the tax fraction of that earlier purchase price from the non-associated person.
If the associated supplier has purchased second-hand goods from an associated person then an input tax deduction would be allowed only if an earlier supply with a non-associated person can be identified after the 1st of October 1986. In this situation, the input tax deduction allowed would be equal to the tax fraction of that earlier purchase price from the non-associated person.
Change basis for calculations.
Also, customers will be able to request to change the basis for calculating GST for a taxable period to match their internal accounting cycle.
This amendment will allow for a registered person to apply to Inland Revenue to be able to use their accounting cycle as the basis for calculating GST payable for a taxable period. This change is intended to support customers that have, for example a 4-week-4-week-5-week accounting cycle. This will work by assigning each cycle to the existing 1 month, 2 month or 6-monthly GST filing periods.
Title: Poua he Oranga.
Now let’s take a look at the changes that are coming in for KiwiSaver. From the 1st of April 2022, changes are coming to simplify KiwiSaver for members and employers.
Title: KiwiSaver Employee Contributions.
New ways for employees to request contribution rate changes: myIR and their KiwiSaver scheme provider.
You will receive a list of contribution rate changes sent weekly.
Employers are not required to make a contribution rate change more than once every 3 months.
There are changes coming to simplify KiwiSaver for employees and employers. This includes new ways to change your KiwiSaver contribution rate.
KiwiSaver members who make contributions through deductions from their salaries and wages will have more ways to request changes to their contribution rate.
In addition to requesting a contribution rate through their employer, or ployers, they will be able to request a change to the contribution rate through their myIR account, or by contacting their KiwiSaver scheme provider.
We will send employers a letter with a consolidated list of contribution rate changes that we receive from employees and scheme providers on a weekly basis.
Employees can submit as many rate changes as they like. If they submit multiple in one week, we will only send employers the latest request received for the week.
I’d just like to add, that employers are not required to make a change more than once every 3 months unless they have agreed to a shorter timeframe.
Please note that if an employee is on a savings suspension, they can only choose a new rate directly with their employers.
Employees will be able to see their current contribution rate in myIR. If you get any questions, the current contribution rate shown in myIR is calculated based on the information provided in the last Employment Information, or EI, return, ie their total earnings and their KSE contributions.
Title: Returning employer contributions.
Another change that’s coming for KiwiSaver is that if an employee has opted out of KiwiSaver or an invalid or incorrect enrolment, any employer contributions made will be refunded or offset against any amount outstanding.
The amount may be offset against debt if they have money owing, as prior to the legislation change, the employer contribution would be refunded to the employer even if they had debt.
A letter will still be sent advising which employer contributions and for which employee have been returned to the employer account. These amounts will be offset against any amount outstanding or any balance remaining refunded.
Title: Ētahi atu panonitanga.
Now we’ll look at some of the other changes coming this year. As I mentioned earlier, there’s quite an assortment so we’ve got a bit of a list to get through.
Title: Relief of use of money interest extension.
Extend the relief of use of money interest (UOMI) to 8 April 2024.
If you are unable to pay your tax on time because you have been significantly adversely impacted by COVID-19, you can ask us to remit penalties and interest.
The relief of use of money interest, or UOMI, is being extended. We will be able to remit penalties and interest for tax payments that were due on or after 14th of February 2020 up until the 8th of April 2024, including provisional tax.
If you have already notified Inland Revenue that you are impacted by COVID-19, you won’t need to do anything.
If you become significantly adversely impacted by COVID-19, you can notify Inland Revenue through myIR or other regular communication channels.
Title: Provisional tax: Safe harbour.
Requirement for customers to pay in full and on time will be removed.
UOMI will be charged for unpaid amounts after the terminal tax due date.
Existing qualification requirements and late payment penalties will still apply.
Also, the requirement to pay provisional tax instalments in full and on time will be removed for customers using the safe harbour option.
Use-of-money interest, or UOMI, will only be charged if an amount remains unpaid after the terminal tax due date.
All other existing qualifications will remain and late payment penalties will still apply.
Also, billing will still occur based on the information we hold including reminder notices and alerts in myIR.
Title: Amending employment information.
You will no longer be able to amend employment information if it has been 4 years since the return was filed.
Changes can still be made for student loan and/or child support deductions.
You should also know that you will no longer be able to amend employment information, IR348, returns in myIR or gateway filing, if it has been 4 years since the return was filed.
You can still request changes outside the 4 years to be made for student loan and ors child support deductions using the Employment information amendments, IR344.
Title: Rate changes.
ACC earners levy (GST included)
Minimum threshold for ACC earners levy
Maximum threshold for ACC earners levy
Student loan repayment threshold
Student loan interest rate
Student loan: Late re-payment interest rate
Student loan: Reduced late payment interest rate
Next, there are some rates changes to be aware that will take effect from the 1st of April 2022.
The ACC earners levy, GST included, will increase to $1.46. Also, the ACC Earners' levy deducted will increase to earnings up to a minimum of [$]42,465 and a maximum of [$]136,544.
New student loan changes will apply for the period ending the 31st of March 2023.
The student loan repayment threshold will increase from [$]20,280 to [$]21,268.
The student loan interest rate for overseas-based borrowers [customers] will decrease from 3% to 2.8%.
The late re-payment interest rate will decrease from 7% to 6.8%.
The reduced late payment interest rate will decrease from 5% to 4.8%.
Title: Local authorities taxation.
- Treat dividends as exempt income.
- No longer allow:
- deductions for charitable or other public benefit gifts made to donee organisations
- converting unused imputation credits to a tax loss.
- Limit deductions for finance costs incurred on loans, borrowings and base price adjustments.
- Ensure no credit for a consolidated group’s imputation credit account (ICA) for imputation credits to a dividend derived by a local authority.
There will be several changes for local authority dividends and deductions.
These amendments will improve the integrity of local government taxation and include the following.
Treat dividends derived by a local authority from a wholly-owned council-controlled organisation, CCO, port company and energy company as exempt income.
Local authorities would no longer be allowed a deduction for charitable or other public benefit gifts made to donee organisations.
Local authorities would no longer be permitted to convert unused imputation credits to a tax loss.
Ensure that a local authority’s deductions for finance costs, including finance costs relating to financial derivatives such as interest rate hedges, would be limited to finance costs incurred on, loans made to a council-controlled trading organisation, or CCTO, borrowings to acquire shares in a group company that is a CCTO, and base price adjustments for financial arrangements involving CCTOs.
Ensure that a credit would not arise to a consolidated group’s imputation credit account, or ICA, for imputation credits attached to a dividend derived by a local authority.
A new page on the Inland Revenue website called 'Income tax for local authorities' with more information will be available by 1 April.
Title: Other legislative changes.
The definition of an election day worker will be extended.
The overseas donee list will be updated.
And to finish off today’s presentation, here are some other legislative changes that may be of interest to you.
The definition of an election day worker will be extended to allow for the tax code to be used for all election day-related work. For example, advance voting work.
Since you can claim tax credits for donations over $5 that you make to approved charities and organisations, you may want to know that the overseas donee list will be updated. The organisations that will be added take effect starting the 1st April 2021 and those removed will take effect from the 1st of April 2022.
Title: Kaitakawaenga Māori.
Kaitakawaenga Māori have been in place since 1990.
We deliver in a whānau, hapū and iwi-centric way.
We consider our Māori customers in all areas of our work.
We understand that for many our whānau, engaging with us, Te Tari Taake Inland Revenue, is best done kanohi ki te kanohi, face-to-face. For those whānau who need it, our Kaitakawaenga Māori deliver Inland Revenue services in a whānau, hapū and iwi centric way to ensure our Māori customers have the tools to self-manage your tax affairs whether you are an individual, or in business.
Our Kaitakawaenga Māori advisors can provide one-to-one tax advice and information, provide tax training and seminars to Māori groups, provide tax agencies at resource centres or marae, supply information booklets on a range of different tax obligations.
For more information on our Kaitakawaenga Māori service and other resources visit our Māori landing page www.ird.govt.nz/maori
If you need assistance, best done kanohi ki te kanohi, I would encourage you to go to our website and request our Kaitakawaenga Māori to make contact, and support you.
Title: Kia Ora.
You can view our other webinars at www.ird.govt.nz/2022-changes
If you have any questions about our webinars, please send them through to [email protected]
That brings us to the end of our presentation. If you want to find out more about the upcoming 2022 changes, you can view our other webinars at www.ird.govt.nz/2022-changes
Changes coming in 2022
If you have any questions about our webinars, please send them to [email protected]
Thank you for taking time out of your day to listen to our presentation joining us, ka kite anō.