Taxation Planning

Covid-related employee costs clarified

Inland Revenue has sought to clarify the deductibility of employee-related costs incurred due to the Covid-19 pandemic. We share more here.

Is it a ‘New Build’? The new legislation summarised

The residential bright line period has increased from 5 to 10 years with a denial of interest deductibility for residential investment properties. The new legislation is complex and difficult to interpret because it has been written with numerous potential fact scenarios in mind.

Don’t get caught by an Inland Revenue scam

Savvy scammers know that Kiwis expect to receive correspondence from Inland Revenue over the next few months. Beware emails or texts that appear to have come from IR to con you out of money.

Record-keeping requirements simplified - learn what’s required

New legislation was passed at the end of March to improve and modernise GST invoicing and record-keeping requirements. Learn what’s involved with TSIs, SCIs and more.

Taxation of capital - does NZ have a capital gains tax?

Inland Revenue released a government discussion document that contains a proposal that represents a further erosion of the principle that New Zealand does not tax capital gains. What’s proposed if you sell shares in a company?

Clamp down on top tax rate avoidance by Inland Revenue

Do you earn more than $180,000 in taxable income? Inland Revenue is proposing changes that will make it much tougher to avoid paying the full 39 percent top tax rate.

Common error – claiming GST on FBT

For those of you who prepare and file FBT returns on behalf of a GST-registered employer, you will be familiar with the GST on FBT adjustment that forms part of the FBT return. But are you clear on the rules?

Tax due diligence when buying or selling

For many business owners, a break over summer is an opportunity to evaluate their future strategy and consider whether it is time to exit, or conversely, grow by purchasing someone else’s business. Whether buying or selling, it is a demanding exercise.

Purchase price allocation now in effect

After over a year of consultation, the purchase price allocation legislation is now in effect. The purpose of the legislation is to ensure vendors and purchasers allocate consistent prices to business assets for tax purposes when selling and buying assets.

Time to count up the Fringe Benefit Tax on Christmas traditions

For employers, the Christmas period is a time to splurge a little (or a lot) on your staff. This may include a Christmas party, taking the team out for lunch or providing Christmas gifts but you could also be liable to pay Fringe Benefit Tax (FBT) on those perks. 

GST warranty on real estate transactions

Care needs to be taken when completing a land sale. With the surge in property valuations and property development activity, an incorrect GST declaration could prove to be a costly mistake.

Reimbursement for use of telcos

‘Telecommunications usage plans’ is Inland Revenue speak for your telephone and internet connections. IR has created rules for reimbursing employees. This includes shareholder employees. We share more.

Where is this going – 2020 tax changes made under urgency?

In December last year tax changes were made under urgency without the usual consultation process. Fast forward one year and three things have happened.

New tax legislation

In September 2021, the Government introduced a Bill that contained over 100 tax amendments. We share a few of the changes of note.

Latest on Property Tax Rules

On Tuesday 28 September, the Government released the draft legislation outlining the details of the policy limiting the deductibility of interest costs for residential property investments.

The ‘ute’ – Kiwi icon or tax dodge

It now appears Inland Revenue may be directed to crack down on the application of FBT to utes and enforce the view that they may not qualify as a work-related vehicle. While on the other hand, the Government is incentivising the purchase of electric vehicles.

Cryptocurrencies – Are they on your radar?

Inland Revenue has released various forms of guidance on the topic of ‘crypto-assets’, which encompasses cryptocurrencies. This guidance is varied and somewhat contradictory. In general, crypto-assets are treated as a form of property for tax purposes.

‘New builds’ discussion document

Inland Revenue’s “Design of the interest limitation rule and additional bright-line rules” document provides clarification on the proposed rules and seeks feedback on certain elements regarding the tax deductibility of interest on residential investment properties and the extension of the bright-line period to 10 years. 

Self-employed and your meals

If you’re self-employed as a sole-trader, you have a greater degree of flexibility and control of your business affairs but you may be disadvantaged in how income and expenditure is calculated compared to a company. Tax deductible meal allowance for one.

Paying tax on your shares

Investing on a share platforms like Sharesies or Hatch? Should you be worried about paying tax on your dividends or when you sell? We have some tips.

Surprise tax bill? Six possible reasons

Did you, or someone you know, get a tax bill they weren’t expecting? Inland Revenue has released a list of six possible reasons. We can help you figure out which one might apply, or why your bill isn’t what you expected.

Fees on utes - Three things you need to know

EV feebates will hit utes the hardest – three things you should know if you’re in the market for a new ute for your business.

Paying Inland Revenue correctly

With Inland Revenue no longer accepting cheques, more taxpayers are moving to online banking to pay their tax bills – and this has been a learning curve for many.

Residential property investors feeling the hurt of new reforms

While most of us can accept the Government’s intentions of tipping the balance away from speculators and back towards first home buyers, the new property tax changes are going to hurt ordinary New Zealanders, mum and dad investors, and in reality, tenants themselves as the cost of providing rental stock rises to investors.  We share more here.

COVID-19’s latest victim: tax loss carry forward rules

During the early days of the COVID-19 pandemic, the Government relaxed rules relating to carrying forward tax losses. The thinking being businesses requiring new capital investment would not forfeit tax losses. This change is now law.

Need help with your tax payments?

Tax pooling is a way to pay provisional tax by either chipping away at what you owe in instalments or deferring the whole amount to a payment date that suits you, without incurring Inland Revenue late payment penalties or interest.

Business interruption due to Covid-19

Inland Revenue has set out a ‘draft’ view on to what extent businesses can claim tax deductions for expenditure incurred while impacted by Covid-19. Your comment is welcomed – the deadline is 28 May.

The 39 percent rate change

The top personal marginal tax rate increases to 39 percent on income over $180,000 with effect from 1 April 2021. Businesses should consider what the flow-on effects are and forward plan to ensure they are not caught off guard.

Reimbursing employee working from home costs

Here’s how you should be treating employee reimbursements for tax for those working from home this year

How to treat employee accommodation for tax purposes

The treatment of employee accommodation (and taxable allowances) can be confusing. We share some insights to clarify the tax obligations.

Election outcome and tax policies

Labour has ruled out a capital gains tax and an increase in fuel taxes but is prepared to introduce a Digital Services Tax to target multinational digital businesses who have taken advantage of tax structuring options.

Healthy Homes costs deductions

We share IR guidance on the deductibility of costs to bring residential rentals up to new legislative standards.

FBT on vehicles during lockdown

You wouldn’t be blamed for assuming FBT wouldn’t apply to motor vehicles during the recent Level 4 lockdown period. Right?

Tax changes in response to Covid-19

In addition to the tax loss carry-back scheme, the New Zealand Government has introduced various tax changes to assist businesses and individuals to get through COVID-19.

How carry back of tax losses can help you through COVID-19

As part of the Government’s Covid-19 response, on 30 April 2020 legislation was passed under urgency that allows tax losses to be offset against income derived in a previous year, thereby enabling the taxpayer to obtain a refund comprising prior year income tax paid. This temporary tax loss carry-back scheme is available to most taxpayers, e.g. trusts, companies and individuals.

Tax relief packages for SMEs

The Government has announced (April 15) a further set of tax proposals to help businesses manage the impacts of COVID-19.  In summary:

Binding rulings for small businesses

Inland Revenue has recognised the system of binding rulings doesn’t work for small businesses because it’s too expensive.

Common Reporting Standard (CRS) explained

You might have been contacted by your bank to fill in a form enquiring about your CRS status. In simple terms, CRS stands for Common Reporting Standard.

Dire implications for late tax payments

If you pay your provisional tax one day late you come out of what is called the Safe Harbour scheme.

Tax changes worth noting

There have been several tax changes recently. Some of the important ones are listed here:

Wage subsidy is not part of sales

If you’ve received a wage subsidy, don’t treat it as being part of sales.

Can you steal GST?

Whether a price includes GST or not is important to know for the price of a product. In the case between New Zealand Police and Genesis Pure, ‘GST’ became the difference between a maximum penalty of seven years in jail, or one.

Tax: a brief history

Tax is often quoted as being unfair. However, a review of taxes from historic periods can highlight how ‘sensible’ our current system is.

GST on loan repayments

GST is deducted on goods and services that are acquired for use in making taxable supplies. A recent High Court decision is a timely reminder that understanding the legal form of a transaction is important for applying the correct GST treatment.

Global tax – paying a fair share

A series of legislative changes have been implemented over the past few years as part of the Government’s focus on ensuring multi-national corporations pay their fair share of tax.

Changes to donation tax credits

The Income Tax Act 2007 requires a donation to be a “…gift of money of $5 or more…”, but what does this phrase mean? Confusion arises because monetary gifts can take various forms. A dispute on the issue has been making its way through the Courts.

The benefits of creating a holding company

Looking to protect the long-term future of your business and investments? We’ll help you create a new holding company and establish a robust group structure that safeguards your profits.

Court case – tax avoidance arrangement

While all taxpayers are entitled to arrange their affairs in a tax efficient manner, tax should not be the main motive for a transaction with no commercial substance. Two recent (connected) cases at the Taxation Review Authority demonstrate why.

US tax rules - ‘only in America!’

You may think New Zealand’s tax rules are difficult to follow. The following unusual yet permitted deductions in the US may change your mind.

Residential bright-line – what’s the ‘intention’?

The Income Tax Act 2007 has long contained provisions to tax the sale of property (or other assets) acquired with the intention of disposal. However, ‘intention’ is a subjective concept and has been difficult for Inland Revenue to police. Hence, the bright-line test.

GST on land - Holdaway v Ellwood

It is common for disagreements to arise between taxpayers and Inland Revenue on the GST treatment of land transactions, but less common for these disputes to arise between a vendor and purchaser.

Tax Working Group – no major changes for NZ taxes

The Tax Working Group (TWG) released its long-awaited Final Report (the Report) on 21 February 2019, following a 13-month review during which the Group received over 7,000 public submissions. 

Turn rental loss into profit and save tax

As you will probably know, 31 March 2019 (or equivalent balance date) is the last year you will be able to offset losses on rental properties against other income.

Tax Working Group Interim Report

The Labour Government established the Tax Working Group (the Group) in January 2018 to review the existing New Zealand tax framework and to provide recommendations for improvements to the fairness, balance and structure of the tax system over the next 10 years.