Tax
Global tax
A series of legislative changes have been implemented over the past few years as part of the Government’s focus on ensuring multi-national corporations pay their fair share of tax. International tax revenue represents approximately 10% of New Zealand’s tax revenue each year. Not only does it need to be preserved, but given international tax practices … Read more
Changes to donation tax credits
A tax credit is able to be claimed on donations made to organisations and charities that are registered on Inland Revenue’s (IRD) list of Donee Organisations. The amount of the credit is one third of the amount of the donation, and is limited to the amount of a person’s taxable income. The claims process is … Read more
GST on loan repayments
The recent High Court decision of Burke v Commissioner of Inland Revenue (2019) is a timely reminder that understanding the legal form of a transaction is important for applying the correct GST treatment. Mr Burke was a GST registered, self-employed contractor, who renovated houses and buildings. In mid-2006, Mr Burke entered into a venture with … Read more
Court case – tax avoidance arrangement
Two recent (connected) cases at the Taxation Review Authority (TRA) demonstrate that unnecessarily complex transactions can raise a red flag for IRD. Both cases related to a taxpayer referred to as Mr Brown, who acquired a 2/3 interest in a joint venture known as the NPN Partnership (NPN) back in 1981. NPN held several residential … Read more
Finicky Bothersome Tiresome (FBT)
Fringe Benefit Tax (FBT) on privately used vehicles is neither new nor rare. However, errors in FBT calculations are common due to the murky and complicated nature of the rules and principles that apply. Generally, FBT is payable when a business-owned vehicle is available for private use by an employee. The availability component of this … Read more
Residential bright line
The Income Tax Act 2007 has long contained provisions to tax the sale of property (or other assets) acquired with the intention of disposal. However, ‘intention’ is a subjective concept and has been difficult for Inland Revenue to police. Hence, the brightline test, (section CB 6A) was introduced as a means to tax profits made … Read more
Saving time and cost with tax
Various tax concessions exist that can save significant time and money, but they are often overlooked. You may want to save this article as a handy reminder to take advantage of these options whenever possible. Business-related legal fees are tax deductible irrespective of whether they are capital in nature, provided the total amount for the … Read more
Tax pooling
Inland Revenue (IRD) charges a high rate of interest on late tax payments (currently 8.22%), and in some circumstances the complexity of the provisional tax regime makes interest charges hard to avoid. Add on late payment penalties, and the cost of meeting your tax obligations starts to feel punitive. Tax pooling was introduced in 2003 … Read more
Tax Working Group
The Tax Working Group (TWG) released its long awaited Final Report (‘the Report’) on 21 February 2019, following a 13 month review during which the Group received over 7,000 public submissions. The report contained 99 recommendations for the Government’s consideration; including the introduction of a broad Capital Gains Tax (‘CGT’). Two months later the coalition … Read more
GST and Land Sales
In 2011 the GST Act was amended to prescribe that a supply of land between two GST registered parties was subject to a rate of 0% if the land was to be used by the purchaser to make taxable supplies and not as a principal place of residence. Given the change reduced the GST rate … Read more
