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Snapshot of recent developments

Tax Alert - September 2023

Tax legislation and policy announcements

UOMI rates increased on 29 August 2023

On 24 July 2023, theTaxation (Use of Money Interest Rates) Amendment Regulations (No 2) 2023 were passed. The regulations increased, from 29 August 2023, the taxpayer’s paying rate from 10.39% to 10.91% and the CIR’s paying rate from 3.53% to 4.67%. Inland Revenue has released a special report on these regulations.

FBT interest rate for employment-related loans increases

On 3 August 2023, the Income Tax (Fringe Benefit Tax, Interest on Loans) Amendment Regulations (No 2) 2023 were passed, increasing the FBT interest rate from 7.89% to 8.41%. The new rate will apply for the quarter beginning 1 October 2023 and for subsequent quarters. Inland Revenue has released a special report on these regulations.

Emissions Trading Scheme settings updated

On 25 July 2023, Minister of Climate Change Hon James Shaw announced the Government’s annual decision on unit limits and price control settings for the NZ ETS for 2023-2028. Changes included raising the trigger prices for cost containment reserve, raising the auction reserve price, and reducing the number of carbon units available for auction.

Oral submissions on Taxation (Annual Rates for 2022-23, Multinational Tax and Remedial Matters) Bill deferred until after election

On 2 August 2023, the Finance and Expenditure Committee advised oral submitters on the May tax bill that, in line with past practice, submissions will not be heard until after the election. Written submissions on the Bill are available on the Parliament website.

Government to remove bright-line test for Cyclone buyout properties

On 23 August 2023, the Government announced that a legislative amendment will be made to ensure the bright-line test will not be applied to flood-affected properties bought by the Government or local authorities.

Taxation Principles Reporting Act 2023 passed into law

After being passed through its final stages under urgency, on 30 August 2023 the Taxation Principles Reporting Act 2023 received Royal assent. The Act requires the Commissioner of Inland Revenue to publish annual reports against a schedule of defined tax system principles. The Act came into force the day after it received Royal assent with the Commissioner’s first report being due at the end of 2023.

Inland Revenue statements and guidance

Tax Information Bulletin, Vol 35, No 7, August 2023

On 31 July 2023, Inland Revenue published Tax Information Bulletin Vol 35, No 7 for August 2023.

Interpretation Statements on GST Grouping

On 7 August 2023, Inland Revenue published two draft interpretation statements on GST grouping.

GST – Who can group register? clarifies the Commissioner’s position on the GST treatment of groups of companies, mixed groups, and non-residents under section 55 of the Goods and Services Tax Act 1985. GST Grouping for Companies explains the consequences of GST grouping for companies.

The deadline for comment on both items is 14 September 2023.

Income tax: Income – when gifts are assessable income

On 7 August 2023, Inland Revenue published a draft Interpretation Statement Income tax: Income – when gifts are assessable income. A gift is not usually subject to income tax. Inland Revenue have released this interpretation statement and it considers the circumstances in which a gift is subject to income tax in the recipient's hands. The statement applies both to monetary gifts and to non-monetary gifts that are convertible to money.

The deadline for comment is 18 September 2023.

Interpretation Statement: Taxation of Trusts

On 7 August 2023, Inland Revenue published the draft interpretation statement Taxation of Trusts and accompanying reading guide. The draft explains the taxation of trusts under the rules in the Income Tax Act 2007 and acts as a general guide on how income derived by trusts and beneficiaries is taxed. The item also sets out the obligations imposed on settlors, trustees, and beneficiaries.

The deadline for comment is 13 October 2023.

ED00249: Amortisation Rates for Listed Horticultural Plants

On 17 August 2023, Inland Revenue issued ED00249 which sets out the proposed amortisation rates (based on diminishing values) for listed horticultural plants. The Determination applies from the 1 April 2023 and subsequent income years and replaces DET 05/01 (issued May 2005).

The deadline for comment is 28 September 2023.

OECD updates

How does corporate taxation affect business investment?

On 19 July 2023, the Economics Department of the OECD released working papers including looking at how corporate taxation affects business investment.

Modest recovery in Asia-Pacific tax revenues as the after-effects of Covid-19 weigh on tourism

On 25 July 2023, as part of the Revenue Statistics in Asia and the Pacific 2023 report, the OECD announced that tax-to-GDP ratios remained below pre-pandemic levels in a majority of Asia-Pacific countries in 2021.

R&D working papers

On 27 July 2023, the OECD Centre for Tax Policy and Administration released two working papers:

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

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