Tax simplification in practice: three years of incremental reform

Digital nomads: exemption from tax for individuals temporarily in New Zealand and working for a foreign employer, or who are self-employed.

Foreign Investment Fund rules: introduction of the “revenue account method” to reduce the negative impact of the FIF rules on new migrants and returning New Zealanders. 

Thin capitalisation rules for infrastructure investment: an exemption from the thin capitalisation rules for qualifying infrastructure projects financed by third party debt.

GST and joint ventures: an amendment to allow the GST treatment of joint ventures to match historic treatment following a contrary Inland Revenue interpretation.

Employee share scheme deferral regime: allowing employers and employees to elect to defer the taxing point under an employee share scheme until there is a liquidity event.

Income tax exemption for the sale of residential solar power: introducing a tax exemption to remove the need to otherwise pay tax on amounts received from selling solar power into the grid.

Income tax debt pilot using tax pooling industry: introducing a new temporary option for historic income tax debt to be repaid using tax pooling funds.

GST record-keeping requirements: removing the need for businesses selling goods valued at more than $1,000 to end consumers to collect purchaser details.

Gift cards and FBT: amending the law to ensure gift cards are subject to FBT (but also allowing employers to choose to pay PAYE if they prefer) after an Inland Revenue interpretation indicating that PAYE applied. 

FBT vs PAYE: amending the law to make it easier for an employer to choose to pay tax through FBT rather than PAYE when reimbursing employees.

FBT and personal protective equipment: amending the law to ensure that FBT does not apply to protective clothing such as hard hats.

Financial arrangement rules: increasing thresholds to allow more taxpayers to use the simpler ‘cash basis person’ rules and repealing the need to undertake deferral calculations.

Alignment of contractor definition: amending tax law to ensure that specified contractors under the Employment Relations Act are also contractors for tax purposes.

Investment boost: ability to claim an upfront 20% investment boost deduction on the cost of new assets. 

Emergency response rules: creation of a set of tax concessions which can be easily switched on and off in the event of emergencies.

Approved Issuer Levy: allowing securities to be retrospectively registered when minor historical errors have prevented the AIL regime from applying.

Overseas pensions: addressing issues that affect the transfer of pension funds to New Zealand.

Exempt employee share schemes: increased thresholds to allow higher values of shares to be offered to employees.

Wide range of remedial GST changes: 23 changes were made to tidy up minor issues with the GST Act.

Health and safety benefits: introducing an exemption from PAYE for health and safety benefits to match the FBT exemption. This makes it easier for employers when trying to provide benefits like flu injections.

Bright-line test: a number of amendments to ensure the bright-line test works as intended.

Research and development: extending the due date for RDTI general approvals.

Personal income tax changes: the Budget contained the first substantive changes to personal tax thresholds for many years.

Research and Development Tax Incentive error correction: a change to allow the Inland Revenue to accept an RDTI application when it was made in the wrong taxpayer name.

Restoring interest deductibility: the rules which denied interest deductions for landlords were repealed.

Bright-line test changed to 2 years: the bright-line test was simplified by returning it to be for a two-year period rather than a 10-year period. 

Donated trading stock: an amendment was made to trading stock rules to ensure that when businesses donate stock (for example to charities) it does not create an income tax liability for the donor.