Changes made to the Small Business Cashflow Loan Scheme

On 21 February 2022, the Government announced the following changes were being made to the Small Business Cashflow Loans Scheme to support businesses:

An additional $10,000 can be drawn down for the SBCS base loan with a repayment period of five years, the first two years being interest-free, providing the loan does not default.

Removing the first two years of accrued base interest from all borrowers who have, or will, take out a loan under the scheme. This change will mean interest will only start accruing at the beginning of the third year (previously the loan would only be interest-free if repaid in full within two years).

Extension of the remittance of penalties and interest

Inland Revenue’s ability to remit interest if a business is late paying its tax because they are adversely affected by COVID-19 has been extended. Penalties and interest can be remitted for tax payments due on or after 14 February 2020 up until 24 March 2022 (including provisional tax). This will soon be extended to 7 April 2024. Please contact your usual Deloitte advisor to discuss eligibility if you have any further queries or would like to make a remittance application.

Clean car legislation passed by Parliament

On 17 February 2021, the Land Transport (Clean Vehicles) Amendment Act received Third Reading in Parliament and was enacted on 22 February 2022. The Act amends the Income Tax Act 2007 by inserting a definition of “clean vehicle discount scheme” into the FBT rules to clarify that, for fringe benefit tax purposes, the cost of the vehicle is net of the amount of the any payment under the clean vehicle discount scheme. The amendments to the Income Tax Act 2007 are deemed to have come into force on 1 July 2021.

NZ Customs deferred payment scheme credit limit may increase automatically

From February 2022, NZ Customs has started to automatically increase credit limits for selected importers using the Deferred Payment Scheme. This is to allow Customs to trade more freely, as a result of the global supply chain challenges.

New Zealand signs free trade deal with United Kingdom

The Government has announced that on 28 February 2022, New Zealand signed a high quality, comprehensive free trade agreement with the United Kingdom, one of the world’s largest economies and an important long standing partner.

On day one, 99.5% of current New Zealand trade will enter duty-free, through a combination of tariff elimination and duty-free quotas. Quotas will grow over time and then be removed.

New depreciation rate finder and calculator

Inland Revenue has added a new combined Depreciation rate finder and calculator onto their website to replace the Depreciation claim calculator and the Depreciation rate finder that was removed in October 2021. The new tool can be used to find the depreciation rate and/or calculate depreciation for a business asset.

Australian listed share exemption from the Foreign Investment Fund (FIF) rules tool

Inland Revenue has added a new FIF exemption tool to replace the previous tool that was removed in October 2021. The new tool can be used to check if shares in an Australian company are exempt from the FIF rules.

Support for Taranaki floods

Significant rainfall and flooding affected the Taranaki region over the Waitangi weekend 2022. If this has caused taxpayers to miss a payment, the filing date or they are struggling to deal with tax affairs as a result, they can contact Inland Revenue as they have a range of support available for businesses, individuals and families affected by the floods.

Support for flooding in West Coast region and top of South Island regions

On 13 February 2022, Minister for Rural Communities, Damien O’Connor declared a medium-scale adverse event for the West Coast and top of the South Island regions. To assist farmers and growers, Inland Revenue is exercising discretion to allow early withdrawals from the income equalisation scheme. Inland Revenue also has a range of support in place for affected businesses, individuals and families.

Public consultation on Pillar One and Pillar Two

Pillar One

On 4 February 2022, the OECD released the first stage of public consultation on the “building blocks” for Amount A of Pillar One. The first building block released is the Draft Model Rules for Nexus and Revenue Sourcing, with submission having closed on 18 February 2022. The Draft Model Rules provide the detail necessary to identify the end market for specific categories of transactions, i.e., to identify the jurisdiction in which revenue arises for the purposes of Amount A. The Draft Model Rules constitute a working document reflecting the work undertaken to date and do not yet have the consensus of the OECD Inclusive Framework. The OECD has also published the public comments received.

On 18 February 2022, the OECD released the Pillar One – Amount A: Draft Model Rules for Tax Base Determinations for public consultation, with a submission deadline of 4 March 2022. The tax base rules are designed to calculate the profit (or loss) of a Covered Group that will be used for the Amount A calculation. The tax base is therefore the measure of profit that forms the basis for partial reallocation under Amount A rules. The rules determine that profit (or loss) will be calculated based on the consolidated group financial accounts while making a limited number of book-to-tax adjustments. The rules also include provisions for the carry-forward of losses.

The OECD has also confirmed that a public consultation document for Amount B of Pillar One will be issued in mid-2022, followed by a public consultation event after the comment period.

Pillar Two

A public consultation document on the implementation framework for Pillar Two will be launched soon, with the public consultation event being held in March. The Subject to Tax Rule of Pillar Two draft model provision and commentary will be released in March 2022 with a defined set of questions set for input.