Updated guidance on tax relief for adverse or emergency events
Inland Revenue has updated its website to show the range of relief and support available for customers affected by adverse or emergency events.
Did the cyclones impact your 2022 tax return?
On 3 March 2023, Inland Revenue announced they will delay asking for outstanding 2022 income tax returns until 31 May 2023 to account for the impacts of the cyclones and flooding. This applies nationwide and impacted businesses and tax agents do not need to inform Inland Revenue to take advantage of the extension. Returns should have been filed by 31 March if you were not impacted.
On 8 March 2023, Inland Revenue announced there will be no late filing penalties for those affected by the flood events if returns are filed by 31 May 2023. The time bar for late-filed income tax returns will be 31 March 2028 (not 31 March 2027).
Standard Practice Statement: Disputes Process
On 3 March 2023, Inland Revenue issued a new Standard Practice Statement: SPS 23/01 Disputes Process. This Statement sets out the taxpayer’s and Commissioner’s rights and responsibilities when either party commences a dispute in respect of an assessment, adjustment to an assessment, or other disputable decision. The Statement applies from 24 February 2023.
Determination: Amortisation Rates for Landfill Cell Construction Expenditure
On 7 March 2023, IR issued DET 23/01 Amortisation Rates for Landfill Cell Construction Expenditure which applies to taxpayers who have incurred landfill cell construction expenditure in an income year starting on or after 1 April 2022 and meet the criteria under s DB 46 of the Income Tax Act 2007. This replaces DET 05/02.
The taxpayer can elect either of the new rates used to amortise landfill cell construction:
a) 63.5% (straight-line equivalent); or
b) 63.5% (diminishing value depreciation rate).
Draft ‘Questions We’ve Been Asked’
On 7 March 2023, Inland Revenue published the draft QWBA PUB00356 GST – Registered members of unregistered unincorporated bodies. The deadline for comment is 18 April 2023.
Public Rulings: Income Tax – Cryptoassets and employees
On 13 March 2023, Inland Revenue reissued four expired public rulings as draft rulings:
- PUB00447 1 Income tax salary and wages paid in cryptoassets
This ruling considers when employee remuneration paid in cryptoassets will be a “PAYE income payment”. The Commissioner’s view is that for tax purposes the concepts of salary and wages are wide enough to encompass some regular payments in cryptoassets, therefore they are PAYE income under s RD 3 of the Income Tax Act 2007. This view is unchanged from the prior ruling.
- PUB00447 2 Income tax – bonuses paid in Cryptoassets
This ruling considers when a bonus or an incentive paid in cryptoassets will be a “PAYE income payment”. The Commissioner’s view is that an amount of cryptoasset paid to an employee in connection with their employment as an agreed deduction from an incentive or bonus payment will be a ‘bonus’. This view is unchanged.
- PUB00447 3 Income tax – employer-issued cryptoassets provided to an employee
This ruling considers when cryptoassets issued by an employer are subject to conditions that the employee must satisfy to become entitled to the cryptoassets will be considered a fringe benefit. The Commissioner’s view is that a fringe benefit is provided when an employee becomes entitled to cryptoassets if they fulfil a condition. This view is unchanged.
- PUB00447 4 Income tax – application of the employee share scheme rules to employer-issued cryptoassets provided to an employee
This ruling considers when the provision of cryptoassets to an employee will constitute an employee share scheme (ESS) in respect of which an employee derives a taxable benefit that is employee income. The Commissioner’s view is that the ESS rules will apply in circumstances where an employer issues cryptoassets to employees in connection with their employment and the cryptoassets provide an interest in the capital of the company, the employer does not require the employees to pay market value and the provision of the cryptoassets is not an exempt ESS. This view is unchanged.
The new replacement rulings will apply indefinitely. The deadline for consultation is 20 April 2023.
Inland Revenue Toolbox Campaign
From 13 March to 30 June 2023, Inland Revenue is running its ‘Tax Toolbox’ advertising campaign. IR will target construction customers (and their agents) who have overdue returns and/or debt to raise awareness, educate, and encourage voluntary disclosures where appropriate.
Eligibility for Cost of Living payment
On 13 March 2023, Inland Revenue extended the final date to be considered for the Cost of Living payment from 31 March 2023 to 31 May 2023 to help those affected by the recent weather events.
Public Rulings: Investing into a US limited liability company – New Zealand consequences
On 15 March 2023, Inland Revenue reissued five public rulings for comment:
- BR Pub 23/AA: Income tax — Dividends derived by New Zealand resident investor in a United States limited liability company that is a foreign investment fund, where the total cost of all the investor’s attributing interests is $50,000 or less
- BR Pub 23/BB: Income tax — Foreign investment fund income and dividends derived by a New Zealand resident investor in a United States limited liability company
- BR Pub 23/CC: Income tax — Attributed foreign investment fund income and dividends derived by a New Zealand resident investor in a United States limited liability company
- BR Pub 23/DD: Income tax — Attributed controlled foreign company income and dividends derived by a New Zealand resident investor in a United States limited liability company
- BR Pub 23/EE: Income tax — Dividends derived by a New Zealand resident investor in a United States limited liability company that is either a non-attributing active foreign investment fund or a non-attributing active controlled foreign company.
The rulings set out the income tax treatment and availability of foreign tax credits or other forms of double taxation relief for NZ investors in a US limited liability company (US LLC) that is taxed on a fiscally transparent basis as a partnership in the US, but as a foreign company in New Zealand. The Rulings demonstrate the respective tax treatments where the interest in the US LLC is classified as under the foreign investment fund (FIF) threshold, a FIF or a controlled foreign company (CFC); where different FIF methods are used and where there is a non-attributing active FIF or CFC.
The commentary has been expanded in places with new examples added. The Commissioner’s conclusions remain unchanged from the 2020 rulings; however, the text has been modified slightly. The earlier rulings expire on 25 June 2023 and the new rulings will apply from 26 June 2023 to 25 June 2028.
The deadline for consultation is 26 April 2023.
Employee Share Scheme (ESS) Campaign 2023
From 16 March 2023, Inland Revenue will issue around 1,400 letters to employees who have received an ESS benefit from an employer and may now have a tax obligation. Employers are required to report ESS benefits to Inland Revenue with the option to not deduct PAYE tax. Employers have provided this information to Inland Revenue for the 2019-2022 income years.
Statement: Technical Issues Escalation Policy
On 20 March 2023, the Commissioner released a statement on Inland Revenue’s Escalation Policy (CS 23/01). The policy intends to ensure Inland Revenue staff apply the Commissioner’s view of the law consistently and outlines the process for a view to be reconsidered if a staff member thinks it is incorrect. CS 23/01 does not set out rights for customers to have issues reconsidered by Inland Revenue.
Determination: Tax treatment of reimbursing payments made to employees
On 27 March 2023, Inland Revenue released Determination EE004 Tax treatment of reimbursing payments made to employees who work from home and/or payments made for an employee’s use of personal telecommunications tools and/or usage plans in their employment.
The Determination sets out the extent to which a payment, made by an employer to an employee, to reimburse the additional expenditure that employees may face when they work from home and/or use their personal tools and usage plans is able to be treated as exempt income to the employee.
This determination is not binding on employers or employees, but, in any case, the requirements for exempt income must met under section CW 17(2) of the Income Tax Act 2007.
The determination applies from 1 April 2023 and replaces Determination EE003.
Determination: Participating jurisdiction for the CRS applied standard
On 31 March 2023, New Zealand’s Common Reporting Standards regulations were amended to add Jamaica, the Marshall Islands, and Niue as participating jurisdictions for reporting periods beginning on or after 1 April 2023. Inland Revenue has issued Determination AE 23/01 announcing these changes.
Tax Information Bulletin Vol 35 No 2 March 2023
Inland Revenue has published a Tax Information Bulletin for March 2023.
