Tax bill has something for everyone

By Robyn Walker

Compared with other areas of law, tax is an area which is always evolving. In New Zealand it can largely be guaranteed that there will be at least two tax bills put before Parliament in any given year - an “annual rates bill” and a “budget bill”. The Taxation (Annual Rates for 2024-25, Emergency Response and Remedial Matters) Bill (“the Bill”) is the latest annual rates bill to land, having been tabled in Parliament on 26 August 2024, read a first time on 29 August and referred to the Finance and Expenditure Select Committee (“FEC”) for scrutiny. The FEC have called for public submissions and have set a due date for comment of 9 October. The FEC have a due date to complete its review of the Bill of 28 February 2025. This will allow time for the Bill to complete its remaining Parliamentary processes before being enacted by 31 March 2025.

The Bill itself is less controversial that some of its predecessors as it largely contains taxpayer friendly measures aimed at reducing compliance costs and increasing productivity. For this reason, all Government parties and the Labour Party also voted in favour of the Bill at the first reading, while the Green Party and Darleen Tana voted against the Bill (Te Pati Māori were not present to cast a vote).

During its first reading the Bill was described as a “sensible, common-sense bill” and that is fairly accurate. However, it is also worth noting that the Bill is long, containing over 200 clauses and coming with over 200 pages of commentary. So, interested parties will have their work cut out to review the entire bill prior to the submission due date.

Aside from setting the annual rates of tax (which are unchanged from Budget 2024), the Bill is made up of a handful of substantive policy changes, and then a large number of “remedial” changes (which are largely designed to ensure the legislation works as intended) and an even larger list of “maintenance amendments” (which are largely cross referencing and other minor corrections).

The policy changes in the Bill are proposals to:

• introduce a mechanism that would allow response measures to be activated through an Order in Council when an emergency event occurs

• incorporate the Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard proposal into New Zealand law

• Allow a New Zealand borrower paying interest to a foreign lender who did not register a security for approved issuer levy (AIL) on time to retrospectively register the security in certain circumstances

• Address issues that affect the transfer of pension funds to New Zealand

• Increase thresholds relating to exempt employee share schemes to recognise the effect of past inflation and provide a buffer against future inflation

• Allow for the one-off sharing of IRD numbers and contact information between Inland Revenue and the Ministry of Business, Innovation and Employment to encourage uptake of the New Zealand Business Number by unincorporated entities

• Allow young people aged under 16 to enrol in KiwiSaver with the agreement of one parent or guardian

• Grant six New Zealand charities overseas donee status.
  

The remedial items contained in the Bill which might be of interest include:

• A number of tidy-ups related to the new GST rules for platforms

• Tidying up several matters related to the 39% trustee tax rate change

• Clarifying several aspects of the partnership rules, including ensuring that RWT-exemptions and the AIL regime can be used as intended

• Tidy-ups to ensure the bright-line test for property sales works correctly

• Extending the due date for R&D tax incentive general approvals

• Providing a PAYE exempt for employer-funded flu vaccinations (to mirror the outcome under the FBT rules).
  

For more information on the Bill, or to learn more about making a submission, please contact your usual Deloitte advisor.