Determination - National Average Market Values of Specified Livestock Determination 2022
On 27 May 2022, Inland Revenue published NAMV 2022 - National Average Market Values of Specified Livestock Determination 2022. Section EC 15 of the Income Tax Act 2007 requires the Commissioner of Inland Revenue to make a determination declaring the national average market values (NAMV) for an income year for each class of specified livestock set out in schedule 17 of the ITA 2007. The determination published in May each year is now available providing a chart of the average market value per head of every type and class of livestock.
Public Ruling - Charitable and Other Donee Organisations and FBT
On 31 May 2022, Inland Revenue published BR PUB 22/06 - Fringe Benefit Tax – Charitable and Other Donee Organisations and Fringe Benefit Tax. This Ruling considers when benefits provided by charitable organisations to their employees may be excluded from being treated as fringe benefits. Accompanying diagrams in this fact sheet summarises how the FBT exclusion applies to qualifying organisations.
Public Ruling – GST – Importers and input tax deductions
On 8 June 2022, Inland Revenue published BR Pub 22/07- Goods and Services Tax – Importers and input tax deductions. This Public Ruling explains when an importer who accounts for GST on an invoice basis can claim an input tax deduction on GST collected by the New Zealand Customs Service (Customs). It also explains what documentation importers can use as an invoice to support the input tax deduction and associated record-keeping requirements.
The Commissioner of Inland Revenue considers that an electronic import entry is an invoice once the entry has been passed. Further, the following documents are invoices when issued:
- Deferred Payment Statements issued to an importer;
- Cash statements;
- And manual invoices/statements.
A registered person who claims an input tax deduction based on one of the above types of invoices must keep the invoice as well as evidence of the imported goods to meet their record-keeping obligations.
This ruling replaces BR Pub 06/03 and applies to input tax deductions for GST collected by Customs on goods imported on and following 9 July 2022 for an indefinite period.
QWBA – GST – Customs brokers and GST levied by Customs
On 8 June 2022, Inland Revenue published QB 22/03 - GST – Customs brokers and GST levied by Customs. The question considered was whether customs brokers can treat GST they pay to the New Zealand Customs Service (Customs) on behalf of their importer clients as part of their taxable activity. The short answer is no.
The GST a customs broker pays to Customs on behalf of an importer client relates to the importer's taxable activity, not the customs broker’s taxable activity. First, the customs broker cannot claim an input tax deduction for GST they pay to Customs on behalf of the importer client. This is because the customs broker did not acquire the imported goods for use in their own taxable activity. Second, the customs broker also cannot issue any documentation (e.g. a tax invoice) claiming to charge GST when they ask the importer to reimburse them for the GST they have paid to Customs. This is because the request for reimbursement is not a request for payment for a taxable supply the customs broker has made.
QWBA – GST – Importers and recalculated GST
On 8 June 2022, Inland Revenue published QB 22/04 - GST – Importers and recalculated GST. The question considered was whether an importer who overpays GST to the New Zealand Customs Service (Customs) can claim an input tax deduction for the whole of the GST paid. The short answer is yes.
Customs are prevented from refunding overpaid GST where the importer is a registered person who can claim an input tax deduction. Therefore, the proper mechanism for obtaining a refund of overpaid GST where the importer is a registered person is to claim an input tax deduction for the whole of the GST paid to Customs.
Question We’ve Been Asked - GST – Does zero-rating apply to certain services that airport operators supply to international airline operators?
On 16 June 2022, the Inland Revenue published QB 22/05 - GST – Does zero-rating apply to certain services that airport operators supply to international airline operators? The QWBA discusses the GST treatment of garbage disposal, lighting and security, aircraft parking and terminal services that airport operators supply to international airline operators. The QWBA concludes that the services are standard-rated, not zero-rated.
Draft Interpretation Statement– Cash basis persons under the financial arrangements rules
On 2 March 2022, the Inland Revenue (IR) published a draft interpretation statement. Due to submissions on that draft, on 20 June 2022, the IR republished PUB00396 - Cash basis persons under the financial arrangements rules and Fact Sheet IS 22/XX FS Cash basis persons under the financial arrangements rules for public consultation. The major differences between the original draft IS and the new draft IS are:
- IR have now calculated the income and expenditure threshold on an accrual basis.
- IR have corrected minor errors in Examples 5, 6 and 7.
- IR have incorporated calculations directly into the statement and will not publish a worksheet.
- IR have revised the presentation of Examples 5, 6 and 7.
This draft IS answers a specific question that arose from IS 12/07 Income tax – Application of the financial arrangements rules to foreign currency loans used to finance foreign residential rental property. While IS 20/07 explains who qualifies as a cash basis person, the details of the cash basis adjustment calculation was beyond its scope. This IS revisits the meaning of a cash basis person, covers how to do a cash basis adjustment and provides worded examples. The deadline for comment on this republished statement is 15 July 2022.
COVID-19 Variation: R&D loss tax credits
On 27 June 2022, the Inland Revenue published COV 22/18 COVID-19 Variation – Variation in relation to s 70C of the Tax Administration Act 1994 to extend deadline for filing statements in relation to R&D loss tax credits. For a statement in relation to R&D loss tax credits and R&D repayment tax for the 2021 tax year under section 70C of the TAA94, the date by which that statement must be filed is extended to include a statement filed with the Commissioner of Inland Revenue on or before 31 August 2022. The variation only applies to persons that has had difficulty filing the statements on time because of circumstances arising either from the imposition of COVID-19 response measures or because of COVID-19. The variation also applies where a person has filed their statement late in reliance on the Commissioner’s advice that, due to the likely impact of COVID-19, no penalties will apply to the late filing of income tax returns that are furnished by 31 March 2022.
Draft QWBA – Interest deductibility where amount not determined at balance date
On 28 June 2022, IR published PUB00415 - Can a close company deduct interest on a shareholder advance where the amount is not known until after balance date? The proposed answer to this QWBA is yes. In this QWBA, it is proposed that a close company can make such deductions if it has a legal obligation to pay the interest on the shareholder advance based on a previously agreed formula or method. The company must have the legal obligation, including a method of calculating the liability, before its balance date, which is usually 31 March. Companies need to keep records of the method they used to determine the amount of interest owing and of the legal obligation to pay the interest. Deadline for comment is on 9 August 2022.
Discussion Document – Income Tax – Government payments to businesses (grants and subsidies)
On 30 June 2022, IR published IRRUIP16 - Income Tax – Government payments to businesses (grants and subsidies). This Issues Paper considers when and how the government grant provisions in the Income Tax Act 2007 may apply to grants and subsidies received by businesses. Where the government grant provisions apply, a grant or subsidy paid by a local or public authority to a business is excluded income and the expense funded by the grant is non-deductible. The deadline for comment is on 11 August 2022.
Draft QWBA – GST and directors' fees and board members' fees
On 1 July 2022, IR published PUB00424 - Goods and Services Tax – Directors’ Fees. This draft ruling considers the application of GST in relation to the payment of fees to a director of a company. This applies to the engagement, occupation, or employment of a person as a director (the Director) of a company (the Company). The engagement may be by direct contract between the Director and the Company. Alternatively, the Director may be engaged as a director of the Company under an agreement between the Company and:
- a third party (the Third Party);
- the Director’s employer (the Employer);
- ora partnership of which the Director is a partner (the Partnership)
The flowchart found in this fact sheet summarises when a director or a board member is required to return GST on their fees. The deadline for comment is on 17 August 2022.
