Employee share scheme reporting
From 1 April 2017, employers are required to disclose the value of share benefits that employees receive under employee share schemes. This requirement applies to shares and share options. The disclosure must be made alongside existing monthly ‘pay-as-you-earn’ (PAYE) reporting requirements. Employers are not required to disclose the specific details of the share scheme benefits provided.
Simplifying tax administration
The government is seeking to modernise tax administration and reduce compliance costs. A number of discussion papers have been released that put forward a number of potential changes that look to simplify tax for businesses and individuals.
A number of the simplification measures were included in the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017. The Act includes the introduction of a new method of calculating and collecting provisional tax, changes to the schedular payment rules, and changes to the use of money interest rules.
The government continues to look at ways to simplify and improve New Zealand’s tax administration and will be releasing more detailed proposals on these areas over the next few years.
Provisional tax changes
From 1 April 2017, new provisional tax rules increase the ‘safe-harbour’ threshold after which Inland Revenue use-of-money interest will apply to 60,000 New Zealand dollars (NZD) of residual income tax.
Further, for taxpayers with income tax liability of less than NZD 60,000 who have paid provisional tax using the standard uplift method, there will be no interest charged by Inland Revenue even if there is an underpayment of tax, provided that the final tax amount outstanding is paid by the terminal tax due date. In relation to taxpayers with an income tax liability of over NZD 60,000 who have paid provisional tax using the standard uplift method, there will be no interest charged by Inland Revenue on the first two instalments of provisional tax even if the actual tax liability is higher. Use of money interest will apply from the third provisional tax due date on any underpayment or overpayment of tax.
New Zealand foreign trust disclosure rules
The Taxation (Business Tax, Exchange of Information, and other Remedial Matters) Act was enacted on 21 February 2017 and requires New Zealand Foreign Trusts (NZFTs) that have one or more New Zealand resident trustees to register with Inland Revenue and file annual returns. NZFTs that existed before or on 21 February 2017 were required to apply for registration by 30 June 2017. NZFTs that were established after 21 February 2017 must apply for registration within 30 days of establishment or the appointment of a foreign resident trustee.
Double taxation agreements (DTAs)
New Zealand is currently negotiating new and updating DTAs with a number of countries, including China, Luxembourg, Norway, Portugal, and the United Kingdom. See Significant developments in the Corporate tax summary for a summary of the effect of the Multilateral Instrument (MLI) on New Zealand’s DTAs.