The countdown for the Annual Rates Bill to become an Act is on

By Robyn Walker & Amy Sexton

Earlier this month the Finance and Expenditure Committee (the FEC) issued it’s report which scrutinises the Taxation (Annual Rates for 2024-25, Emergency Response and Remedial Matters) Bill (the Bill). In our September 2024 article we discussed the items in the original Bill which included a number of policy changes as well as remedial items.

We outline some of the key FEC report recommendation areas and their suggested modifications (which are usually accepted by the Government) below:

Generic response to emergency events

• Options for Orders in Council to specific start dates and later dates for end dates for emergency event periods.

Qualifying recognised overseas pension schemes

• Making ‘scheme pays’ optional for KiwiSaver providers.
• Changes to the timing requirements for notification of foreign superannuation withdrawals from “QROPS” to the Inland Revenue.

Approved issuer levy (AIL) retrospective registration

• Remove the two year timeframe for retrospective registration, replacing this with the “duration of the delay in applying for the registration” as a factor that the CIR may consider when determining if the delay is an oversight.
• Expand the CIR’s discretion to allow retrospective registration.
• Add AIL to the list of taxes for which the CIR has the discretion to allow tax pooling to satisfy new liabilities.

New Zealand Business Number information sharing

• Specify the sharing and use of information is limited to specific duties and functions of MBIE.

GST remedials

• Extension of the zero-rating rules to a wider range of temporarily imported goods and commercial vessels.
• Clarify that the limitation on final deduction for non-taxable use of land supplied by a property developer applies only to typical property development activities, and not to retirement villages.

Trust remedials

• Ensure the minor beneficiary rule does not apply to beneficiary income derived from any discretionary trust, provided they otherwise meet the disabled beneficiary trust definition.
• Amend the corporate beneficiary rule to exclude foreign-sourced amounts of beneficiary income derived by a non-resident company if the company does not have a New Zealand resident shareholder.

Partnership remedials

• Remove the requirement for a limited partnership to carry out a ‘taxable activity’ for it to be eligible for RWT exempt status.
• Make it clear the amendments to ‘voting interest’ apply specifically for the purposes of particular associated persons tests.

Land rules remedials

• Amending the bright-line start date on partition to the date the co-owner acquired their first interest in the undivided line.
• Add a savings provision for parties who have relied on a binding ruling in relation to the income-spreading rule on disposal of land to the Crown.

International tax remedials

• Amend the effective date of the amendment that clarifies that the transfer pricing and dividend rules apply concurrently to be the date of the day after the Act receives Royal assent (not retrospectively).

FamilyBoost remedials

• Several remedial amendments to ensure that the FamilyBoost regime is fit for purpose.

Employer-funded flu vaccinations

• Extend the exemption to include reimbursements for all benefits that would qualify for the FBT health and safety exemption if they were non-cash.

Share-lending arrangements

• Making the deferral of income derived from share-lending arrangements to the following income year optional.

This is only a summary of some of the FEC recommendations, as the reported back Bill compromises over 200 clauses. If you have some spare time on your hands, full analysis of the Bill submissions and recommended changes be found in the Inland Revenue’s report to the FEC. However if you are short on time, you can contact your usual Deloitte advisor if you have any questions on the Bill.

The next step before the Bill can become an Act is a second reading where parliament will debate the FECs recommendations and vote on the Bill. We expect the Bill to move quickly between this second reading and the final third reading as the Bill needs to receive Royal Assent by 31 March 2025.