Snapshot of Recent Developments

Tax legislation and Policy Announcements

Taxation Review Authorities Act 1994 amended

On 23 September 2024, the Statutes Amendment Bill was introduced into Parliament. Part 39 of the Omnibus Bill amends section 22 of the Taxation Review Authorities Act 1994. This section empowers a Taxation Review Authority to order that costs be paid to the Crown in certain cases.

Information Release – 2024-25 Annual Rates Bill

On 30 September 2024, Inland Revenue issued an information release for items included in the Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Bill:

• Information Release – Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Bill
• Information Release – Qualifying recognised overseas pension schemes
  

Information Release – Tax Administration (Direct Credit of FamilyBoost Tax Credit) Order 2024

On 4 October 2024, Inland Revenue issued an information release for items relating to the Tax Administration (Direct Credit of FamilyBoost Tax Credit) Order 2024.

Information Release – Revenue Portfolio (Budget 2024)

On 7 October 2024, Treasury published its information release package for the Revenue Portfolio for Budget 2024.

OIA release: Charities and not-for-profits overview

On 16 October 2024, in response to an Official Information Act request, Inland Revenue released a redacted overview on the Charities and Not-for-profit organisations provided to the Minister of Revenue to share with other Ministers (all discussion on future policy work has been redacted).

Inland Revenue Statements and Guidance

Inland Revenue: Public guidance customer survey 2024

The Tax Counsel Office and Inland Revenue’s Technical Standards Group have released their triennial survey, which can be found here. The survey helps Inland Revenue understand what is working well and what can be improved and takes less than 10 minutes to complete.

Draft Question We’ve Been Asked: Bright-line rollover relief application to transfers of residential land between associated persons

On 26 September 2024, Inland Revenue issued PUB00489: How do the bright-line rollover relief provisions apply to transfers of residential land between associated persons?

This “question we’ve been asked” explains how the bright-line test and rollover relief provisions apply to transfers of residential land between associated persons on or after 1 July 2024. It considers the effect of rollover relief and sets out the criteria that need to be met for rollover relief to apply.

Inland Revenue: FamilyBoost for taxpayers with income from schedular payments

On 1 October 2024, Inland Revenue announced changes in how FamilyBoost income for taxpayers who receive schedular payments is calculated as the current legislation does not work as intended for taxpayers with schedular payments. A remedial law change is planned to come into effect on or before 1 April 2025, until then Inland Revenue will use an exemption under s6E of the Tax Administration Act 1994 to change the calculation.

Tax Information Bulletin: Volume 36 Number 9 October 2024

On 1 October 2024, Inland Revenue issued TIB Vol 36, No 9, October 2024 which covers:

New legislation

• LI 2024/189 Tax Administration (GST Adjustment Rules) Modification Order 2024

Rulings

• BR Prd 24/02 and BR Prd 24/03: WorkRide Limited

Interpretation statement

• IS 24/07: Deductions for parties to employee share schemes

Commissioner’s statement

• CS 24/02: Withholding obligations arising in relation to transfer pricing arrangements
  

Question we’ve been asked

• QB 24/5: Do supplies of standing timber and other unsevered crops wholly or partly consist of land for the compulsory zero-rating rules?
  

Technical decision summary

• TDS 24/17: Deductibility of bonus payments

Case summary

• CSUM 24/06: High Court issues a 28-day temporary halt of Commissioner’s bankruptcy proceedings pending payment of sum

Draft Commissioner of Inland Revenue statement: Deduction notices

On 4 October 2024, Inland Revenue issued draft standard practice statement ED0245: Deduction notices. The draft guidance explains the Commissioner of Inland Revenue’s power to issue a deduction notice to recover outstanding amounts of tax from a third party and provides guidance on how the Commissioner will uses such notices. It will replace SPS 21/01.

Inland Revenue: Southland region and Clutha district medium-scale adverse effect

On 15 October 2024, following the declaration of a medium-scale adverse event for the entire Southland region and Clutha district as a result of challenging spring weather and recent significant rainfall, Inland Revenue made a ‘class of case’ determination for the Income Equalisation Scheme to allow:

• late deposits for the 2024 year until 1 May 2025
• early withdrawals if the deposit was made prior to the Ministerial announcement on 4 October 2024.
  

Inland Revenue: Inland Revenue Annual Report 2023-24

On 16 October 2024, Inland Revenue published its annual report. Total tax revenue for 2024 was $115.4b, up from $104.5b in 2023. Of the 2024 tax revenue, 51% was from individuals tax, 25% from GST, 16% from corporate tax and 8% from other tax revenue.

Inland Revenue: 2024 Child support payments – Receiving carers

On 18 October 2024, Inland Revenue confirmed that child support recipients should receive payments from Inland Revenue by the 21st of each month unless the 20th falls on a weekend.

Inland Revenue: Ransomware attacks

On 22 October 2024, Inland Revenue said they have seen a rise in ransomware attacks targeting accounting firms. As part of these attacks, Inland Revenue have seen taxpayers have their myIR accounts compromised. To safeguard against ransomware, Inland Revenue advise:

• ensure that all software is up to date.
• implement strong backup protocols.
• educate staff to recognise phishing attempts — often the entry point for ransomware.
• using the 2-step verification process and regularly testing security systems can also help reduce the risk.
  

Draft Interpretation Statement: Using the cost method to determine Foreign Investment Fund income

On 22 October 2024, Inland Revenue issued draft interpretation statement PUB00458: Income tax – Using the cost method to determine foreign investment fund (FIF) income. The statement explains when a New Zealand resident investor can choose to apply the cost method to calculate their FIF income on shares held in foreign companies. It includes some examples on when an independent valuation may be required to apply the cost method and how the cost method can be applied.

Inland Revenue: Registration for digital platform information

On 29 October 2024, Inland Revenue announced that platform operators (also known as online marketplace operators) who must collect and report information about sellers on their platforms can now register for a Digital Platform Information account in myIR.

Inland Revenue: Changes to credit and debit card payments

On 30 October 2024, Inland Revenue announced it is changing its third-party vendor used for credit and debit card payments. From 1 November, you can no longer make online card payments using the Inland Revenue website without logging in.

Inland Revenue: Anonymous information leads to Inland Revenue visits

On 31 October 2024, Inland Revenue announced that Inland Revenue staff are making unannounced visits to hundreds of businesses not believed to be meeting their tax obligations as employers. The businesses visited have been identified from the list of nearly 7,000 anonymous tipoffs the Inland Revenue receive each year.

Tax Information Bulletin: Volume 36, Number 10 November 2024

On 1 November 2024, Inland Revenue issued TIB Vol 36, No 10, November 2024 which covers:

New legislation

• SL 2024/172 Tax Administration (Direct Credit of FamilyBoost Tax Credit) Order 2024
  

Interpretation statement

• IS 24/08: Charities – Business income exemption

Technical decision summary

• TDS 24/18: Restructuring a group of companies
  

Inland Revenue: IR6 Estate or trust returns

On 4 November 2024, Inland Revenue announced they have become aware of an issue affecting IR6 Estate or trust income tax returns. The issue affects returns that include the allocation of income to beneficiaries and have been filed through gateway services. Please send Inland Revenue a myIR web message to correct the figures if you encounter this issue.

Interpretation Statement: Overdrawn shareholder loan account balances

On 5 November 2024, Inland Revenue issued Interpretation Statement 24/09: Income tax – Overdrawn shareholder loan account balances and an accompanying fact sheet. It discusses common tax issues associated with overdrawn shareholder loan accounts held in New Zealand resident close companies.

Inland Revenue: Media briefing - Use of custom audience lists

On 5 November 2024, Inland Revenue announced the findings of its review into the use of custom audience lists on social media. Inland Revenue announced that due to public concern it will no longer use custom audience lists to reach taxpayers.

Public Guidance work programme (November 2024)

On 6 November 2024, the updated Public Guidance work programme was issued.

Inland Revenue: Filing returns and attachments in myIR

On 12 November 2024, Inland Revenue announced that returns are often filed in myIR with invoices or financial statements attached as ‘correspondence’. Return processing can be improved if the right attachment options are used when filing different types of returns.

Inland Revenue: Non-individual IRD number applications

On 12 November 2024, Inland Revenue advised that when applying for a non-individual's IRD, either online or using the IR596, the street address of the place of business (question 5 on the IR596) must be provided. This should be the physical location of the business, not the director’s residential address or the tax agent’s or any other intermediary’s street address. When providing the postal address (question 6 on the IR596), this should be the postal address for the business and not the address of the tax agent or any other intermediary.

Inland Revenue: Focus on overseas student loan and child support debt

On 13 November 2024, Inland Revenue announced it is increasing efforts to gather child support and student loan debt owed by Kiwis living overseas.

Inland Revenue: Land and GST Overview

On 18 November 2024, Inland Revenue’s Tax Technical website released a new Land and GST Overview section which complies relevant published guidance documents on one page.

Technical Decision Summary: Restructuring a group of companies (Private Ruling)

On 10 October 2024, Inland Revenue issued TDS 24/18: Restructuring a group of companies. The main issue was whether an amalgamation is a “liquidation” as defined in section YA 1 of the Income Tax Act 2007. The removal of Hold Co from the New Zealand Register of Companies under the Companies Act 1993 on amalgamation of Hold Co and Sub 1, was a “liquidation” as defined in section YA 1, being the “removal of the company from the register of companies under the Companies Act.

Technical Decision Summary: Income Tax and GST deductions (Adjudication)

On 15 October 2024, Inland Revenue issued TDS 24/19: Income Tax and GST deductions. The Taxpayer was found to have been a resident of New Zealand until their date of departure and was not entitled to deduct expenses incurred outside of New Zealand from the date of departure. The Taxpayer was also not entitled to input tax deductions for a specific period. The Taxpayer was also liable for shortfall penalties of not taking reasonable care, reduced for previous compliance behaviour.

Technical Decision Summary: Permanent establishment (Private ruling)

On 12 November 2024, Inland Revenue published TDS 24/20: Permanent establishment. It was determined that the arrangement did not result in overseas resident company being “resident in New Zealand”. It also did not create a “permanent establishment.” As such, there was no assessable income in New Zealand.

Deloitte Global Perspectives

Deloitte US: Tax policy implications of a Donald Trump presidency

Deloitte US has issued a publication outlining the tax implications of a Donald Trump presidency. There is a particular focus on the future of the Tax Cuts and Jobs Act of 2017.

OECD Updates

Model Competent Authority Agreement published

On 26 September 2024, the OECD/G20 Inclusive Framework published a Model Competent Authority Agreement (MCAA) to facilitate the implementation of its political commitment on Amount B of Pillar One.

Tax Policy Reforms 2024

On 30 September 2024, the OECD published Tax Policy Reforms 2024. It describes the tax reforms implemented in 2023 across 90 jurisdictions, including all OECD countries.

Tax arbitrage through closely held businesses

On 7 October 2024, the OECD issued a working paper exploring tax arbitrage incentives and behaviours in OECD countries, and their implications for tax systems more broadly.

OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank Governors (G20 Brazil, October 2024)

On 24 October 2024, the OECD published the OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank Governors.

Tax Administration 2024

On 13 November 2024, the OECD published its twelfth edition of the OECD’s Tax Administration Series.

Pricing Greenhouse Gas Emissions 2024

On 14 November 2024, the OECD published Pricing Greenhouse Gas Emissions 2024: Gearing Up to Bring Emissions Down.

Note: The items covered here include only those items not covered in other articles in this issue of Tax Alert.