GST - definition of a resident

On 3 September 2021, Inland Revenue released the finalised interpretation statement IS 21/07 - GST - definition of a resident. This statement provides guidance on how to determine whether a person is a resident for GST purposes. The Commissioner’s position has remained unchanged from the draft statement.

Determining the cost price of bloodstock

On 9 September 2021, Inland Revenue published QB 21/09 - How to determine the cost price of bloodstock. This statement notes that when valuing bloodstock for tax purposes, the overarching principle is that, wherever possible, actual cost should be used as the basis of valuation. Where the actual cost is not known with certainty, a consistent means of establishing the cost price of the bloodstock is still required.

Foreign Investment Fund determination

On 10 September 2021, Inland Revenue issued Determination FDR 2021/03 - A type of attributing interest in a foreign investment fund (FIF) for which a person may not use the fair dividend rate method (The Daintree Core Income Trust – New Zealand Dollar class of units). This determination notes that any investment by a New Zealand resident investor in the NZD class units of the Daintree Core Income Trust, to which none of the exemptions in s EX 29 to 43 of the Income Tax Act 2007 apply, is a type of attributing interest for which the investor may not use the fair dividend rate method to calculate FIF income from the interest.

Elections not to depreciate commercial buildings

On 24 September 2021, Inland Revenue released consultation document ED0233 - Elections not to depreciate commercial buildings. This draft Questions We’ve Been Asked states that if the taxpayer made an election in writing prior to the 2012 income year to treat commercial building as not being depreciable property, this election is irrevocable and they are bound by this election until the building is disposed of. If such election was not made, the taxpayer must continue to depreciate the commercial building at the rate set by the Commissioner. Further, if a taxpayer did not make an election and has never claimed a depreciation in respect of their commercial building, they may make a retrospective election not to depreciate that building. The draft also states that an election to not claim depreciation under this section is not effective if taxpayers have simply not claimed a depreciation deduction in one’s tax accounts as this does not provide sufficient notice. A retrospective election will apply from the date the building was acquired. Submissions close on 5 November 2021.

Land sale rules consultation

On 28 September 2021, Inland Revenue released draft Interpretation Statement PUB00411 - Income tax - application of the land sale rules to changes to co-ownership, subdivisions, and changes of trustees. The Commissioner clarifies her position on whether, and if so to what extent, the land sale rules in the Income Tax Act 2007 apply to changes to co-ownership, subdivisions of land, and changes of trustees. In particular, the Commissioner has explained the types of transactions that involve a “disposal” of land, for the purposes of the land sale rules. If there is a “disposal”, and it is for less than market value consideration, the Income Tax Act 2007 may deem the person who disposed of the land to have derived an amount equal to the market value of the land at the time of the disposal. The draft statement is accompanied by two fact sheets that summarise the conclusions in the draft interpretation statement in relation to changes to co-ownership and subdivisions of land. Submissions close on 9 November 2021.

Tax issues for content creators

On 28 September 2021, Inland Revenue published finalised Interpretation Statement IS 21/08 - Content creators - tax issues, along with a fact sheet. The Commissioner’s interpretation has remained unchanged from the draft version. This statement provides guidance to taxpayers and tax agents to help online gamers, streamers, bloggers, influencers, artists, makers and other online content creators to understand and meet their income tax obligations. It expands on the previously published QB 17/05 – Income tax – whether YouTube receipts are taxable as covered in our May Tax Alert.

An extra week to file and pay GST and income tax

On 1 October 2021, Inland Revenue issued a media release informing taxpayers of an extra week to file and pay GST and income tax currently due on 28 October 2021 until 4 November 2021. Ministers have agreed to the extra week and will give effect to that decision through an Order in Council. This is in response to Inland Revenue's systems shutting down for their final Business Transformation release from 21 October (3pm) until the start of business on 28 October, including their contact centre and myIR secure services.

Update on ATO draft royalties and software ruling

As mentioned in our August Tax Alert, the ATO previously released draft ruling TR 2021/D4 - Income tax: royalties - character of receipts in respect of software for consultation. In response to community feedback the draft ruling will be updated to provide clarity of the ATO’s view on the application of Australia’s double tax agreements to relevant cases and the circumstances where the final ruling will apply before its date of issue. The draft ruling will also be updated to include amended and new examples. Included will be an example where a receipt requires apportionment. A further draft ruling will be published before completion in early 2022.

US Tax Reform

The tax reform proposed by Congress is still a work-in-progress. The corporate income tax rate is proposed to increase from 21% to 26.5% for income over US$5million. Directionally, the US tax burden will increase, although not as high as Biden Administration's original proposal. Deloitte US tax@hand has recently published the following two articles in relation to the tax reform if you are interested in following this development.

• Ways and Means Committee approves budget reconciliation tax package
• Deloitte Tax materials on budget reconciliation available

Global Tax Reform

Our latest Deloitte Global Perspective article discusses the key takeaways from Pillar One & Two, broad timeframes ahead, as well as the three actions tax leaders can take now to prepare for the tax reform.

Euromoney’s 2021 Transfer Pricing Expert Guide recognises Deloitte leaders

Euromoney’s 2021 Transfer Pricing Expert Guide has acknowledged 150 Deloitte leaders across 56 jurisdictions for their leadership in transfer pricing, including Bart de Gouw and Melanie Meyer from Deloitte New Zealand. Nomination of the leaders in Euromoney’s guide focuses on various aspects of a leader’s work, their contribution, along with client and peer feedback. This clear recognition cements the Global Transfer Pricing practice’s eminence and leadership, where Deloitte professionals have responded with agility to varied client needs arising from the pandemic.

Deloitte Global Tax Survey - Beyond BEPS

The full report from Deloitte’s eighth annual global survey on the OECD’s BEPS initiative and beyond was released recently. The latest survey asked tax and finance managers and executives from across the globe about topics that were high on their agenda in 2021, including the Pillar 1 / Pillar 2 project, digital taxation, tax transparency, tax governance, US tax proposals, progress of BEPS related measures as well as impact of COVID-19 pandemic and the support and relief measures enacted by local governments. The survey result suggests the impact of the BEPS project and other tax reform initiatives will continue to be felt throughout 2021 and 2022, particularly as more measures become embedded into local laws. As governments seek to finance large deficits, the impact of the COVID-19 pandemic is expected to continue, likely leading to increased taxes and tax disputes.

Deloitte Global Impact Report

Deloitte’s 2021 Impact Report was released on 10 September 2021. It covers tax and governance as well as other areas such as business, environmental and social. Deloitte has also written an article on tax governance in this month’s tax alert.

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