Inland Revenue undertook some integrity checks prior to making payments under the various COVID-19 support payments and Small Business Cashflow Loan Scheme, but now that the dust has settled, Inland Revenue has undertaken some post-payment verification reviews. Taxpayers will be contacted where Inland Revenue has identified that some of the eligibility criteria may not have been satisfied and the taxpayer will be asked to re-confirm eligibility or to declare an error has been made and take steps to rectify it.

You can find further details about the COVID Support Payment and Resurgence Support Payment on our website, details of the eligibility criteria for the Small Business Cashflow Loan Scheme are available here.

If you have concerns about your eligibility for any payments received, please contact your usual Deloitte adviser to discuss these concerns further before making a declaration.

The FBT Stewardship Review revealed that Inland Revenue was planning to undertake an educational campaign to raise awareness of how FBT operates and the common errors Inland Revenue sees. SME and Micro businesses who are registered for FBT should expect to receive a letter in October.

The common errors which Inland Revenue call out are:

• Incorrectly treating a motor vehicle as being exempt from FBT under the work-related vehicle exemption.
• Not completing the FBT return correctly, including not including the taxable value of benefits provided.
• Calculating the GST adjustment based on the amount of FBT payable rather than the taxable value of the fringe benefits, and not correctly adjusting for benefits that don’t include GST.
• The different treatment which can apply to benefits provided to shareholder-employees.
• Over or understating employee contributions towards fringe benefits, and therefore incorrectly calculating the taxable value of a fringe benefit.
• Understating FBT by incorrectly completing the complex alternative rate FBT calculations.

We commonly see a number of other FBT errors, you can read about these in our previous Alert article.

Later this month Inland Revenue will begin contacting businesses to let them know about recent and upcoming changes to invoicing and recordkeeping rules. Overall, these changes are designed to relax previous prescriptive documentation requirements and to help facilitate businesses to move into e-invoicing.

As a generalisation, anyone who is currently issuing tax invoices, credit notes, etc that comply with the current rules, will also satisfy the requirements under the rules which apply from 1 April 2023. However, the key issue is that accounts payable processes will need to adapt to recognise and accept “taxable supply information” from suppliers who have moved to the new rules.

For more information about what is changing you can refer to our previous Alert article or read Inland Revenue’s guidance.

Larger multinational businesses will be used to receiving regular questionnaires from Inland Revenue, and the latest request for information is expected to be issued this month. Inland Revenue’s latest campaign will be focusing on transfer pricing documentation. Selected taxpayers will be asked to provide a copy of existing transfer pricing documentation, which will be reviewed by Inland Revenue before determining whether more in-depth review work is required. Copies of documentation will be due to Inland Revenue by late November.

While there is no explicit statutory requirement to prepare or file New Zealand transfer pricing documentation, the burden of proof is on the taxpayer and therefore documentation is (in effect) required. Inland Revenue has previously stated that a failure to prepare adequate transfer pricing documentation can result in a 40% shortfall penalty for gross carelessness if there are problems with associated party transactions. You can find more information about transfer pricing documentation in our previous Alert article.

Please contact your usual Deloitte advisor if you would like to discuss any of the topics in this article.