Snapshot of recent developments
Tax Alerts - December 2023
Inland Revenue statements and guidance
Interpretation statement: Unit title body corporates
On 24 October 2023, Inland Revenue published IS 23/08 and accompanying fact sheets FS 1 and FS 2.
The interpretation statement explains the consequences of registering for GST for a unit title body corporate (UTBC) and the GST treatment of transactions with its members and third parties.
The item confirms a UTBC is a separate legal person to its members and, despite having a taxable activity, is generally not liable to register for GST because the value of supplies made to its members is not counted towards the $60,000 GST registration threshold. However, UTBCs can choose to register, and the GST treatment of different transactions for registered UTBCs is also set out.
QWBA re-issued: FIF calculation methods in cases of non-compliance
On 26 October 2023, Inland Revenue re-issued PUB00443 which explains that a person does have a choice of methods to calculate FIF income even if they fail to declare the income in a tax return and later file a voluntary disclosure or fail to file a tax return by the due date and later provide one including the income.
Inland Revenue changed its position from the original consultation document released in late 2022. The new item sets out that if the Commissioner issues a default assessment due to a person not filing a return, it will usually be based on the default calculation method. A person will need to file a return to challenge the assessment but can choose from the available methods in calculating the amount of FIF income to include.
The closing date for submissions is 7 December 2023.
Interpretation statement: R&D loss tax credits
On 27 October 2023, Inland Revenue issued IS 23/09 which provides guidance on who is eligible for R&D loss tax credits, and should be read alongside existing web guidance and this 2016 article (p 19).
Changes from the draft statement include clarifying the Commissioner’s position on contractors who had been a member of an R&D group for part of the year, clarifying the Commissioner’s position on deductions for expenditure on R&D allocated to a different income year, and adding an example to illustrate the treatment of a government co-funded R&D project.
The finalised statement sets out when companies are eligible to claim the credit, what their obligations are once eligible, the wage intensity calculation, when companies incur eligible R&D expenditure, treatment of losses, and “loss recovery events”.
Tax Information Bulletin Vol 35 No 10
On 1 November 2023, Inland Revenue released the November 2023 TIB (Vol 35, No 10).
Interpretation statement: Deductibility of holding costs for land
On 3 November 2023, Inland Revenue published IS 23/10 and the accompanying fact sheet which sets out the deductibility of land “holding costs”.
Changes from the draft statement include expanding the definition of “land holding costs” to include costs “such as” repairs and maintenance and body corporate levies as well as confirming that holding costs for land held on capital account are deductible from the time a binding contract for the sale of land is entered into if the sale will be taxed.
Inland Revenue weekend calling unavailable from 25 November 2023
On 14 November 2023, Inland Revenue announced that weekend calling will no longer be available, in line with other government agencies. This takes effect from Saturday 25 November 2023.
Global tax news
Australia: New interest limitation rules from 1 July 2023
After more than a year since the Australian Government formally announced its intention to introduce new interest limitation rules to replace the thin capitalisation regime, and almost six months after the general commencement date for the new rules, the new rules have now (almost) been finalised. The new regime applies to general class investors and is operative for years of income starting on or after 1 July 2023, whilst the new “debt deduction creation rules” (DDCR or debt creation rules) will be first operative for years of income starting on or after 1 July 2024. The latest on these new rules is summarised by Deloitte Australia here.
Austrian Federal Council approves protocol to tax treaty with New Zealand
On 8 November 2023, the Austrian Federal Council approved the amending protocol, signed on 12 September 2023, to the Austria - New Zealand Income and Capital Tax Treaty (2006).
Global tax reform is coming – and CEO’s need to be ready
Deloitte Insights has published an article on the coming international Pillar Two tax reform which is set to go into effect in 2024. The article looks to understand the global tax reform scope and impact, how organisations can prepare and why C-suite executives well beyond the CFO should be engaged in their organisation’s response.
OECD updates
OECD invites public input on proposed changes to Commentary on Article 5
Article 5 of the OECD Model Tax Convention on Income and on Capital deals with the definition of permanent establishment. A working party has developed an alternative provision on activities in connection with the exploration and exploitation of extractible natural resources, together with related commentary.
This public discussion draft includes proposals for changes to the Commentary on Article 5.
The OECD invites interested parties to send their comments on this discussion draft before 4 January 2024 by email to taxtreaties@oecd.org in Word format. All comments should be addressed to the Tax Treaties and International Co-operation Unit, OECD Centre for Tax Policy and Administration.
Please note that all written comments received will be made publicly available.
Webinar recording: MLC to implement Amount A of Pillar One
On 27 October 2023, the OECD presented a technical webinar on the key features of the MLC followed by a Q&A session. The recording is available here.
MLC Amount A fact sheets
The OECD has released fact sheets on Amount A of the Two Pillar solution which provide a step-by-step overview of the process to apply the MLC at market jurisdiction level.
New toolkits on mineral transfer pricing
On 6 November 2023, new toolkits for determining the price of minerals were published.
Global Forum publishes eight new peer review reports on transparency and EOIR
On 8 November 2023, the OECD announced that the Global Forum has published new peer review reports on transparency and exchange of information on request (EOIR) for six of its members (Latvia, Mauritania, Pakistan, Poland, Serbia and Thailand), and two supplementary reports (Botswana and Dominica).
More than half of the Global Forum members have now been fully reviewed. The ratings assigned are generally very good, with 88% of the jurisdictions obtaining satisfactory overall ratings.
OECD launch Corporate Tax Statistics and working paper on Effective Tax Rates
On 21 November 2023, the OECD released Corporate Tax Statistics 2023 which provides comprehensive insight into corporate tax systems around the world. The publication also includes a new working paper on the effective tax rates of multinational enterprises.
Model reporting rules for digital platforms: FAQs updated
The OECD has updated the FAQs for the Model Reporting Rules for Digital Platforms.
Note: The items covered here include only those items not covered in other articles in this issue of Tax Alert.
December 2023 - Tax Alerts
