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Are you ready for the tax changes taking effect from 1 April 2017?

April 26, 2017

1 April 2017 heralds some important changes for taxpayers and their advisers. Most of the changes are business friendly and are designed to reduce compliance costs. The changes are contained in the recently enacted Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act.

The following list of changes has been extracted from the 2017 New Zealand Master Tax Guide.

  • The current residual income tax limit of $50,000 before use of money interest is imposed will be increased to $60,000, and this safe-harbour rule will be extended to non-individual taxpayers.
  • Use of money interest will be removed for the first two provisional tax instalments for all taxpayers who use the standard (uplift) method to calculate and pay provisional tax.
  • Contractors subject to the schedular payment rules will be able to elect their own withholding rate. The schedular payment rules will be extended to contractors that work for labour-hire firms. Contractors not covered by the schedular payment rules will be able to opt in to the rules with the consent of their payer.
  • The 1% incremental late payment penalty will be removed from GST, provisional tax, income tax and working for families tax credit overpayments.
  • The Commissioner will be able to disclose tax debt information for the most serious cases of non-compliance to credit reporting agencies, and provide information to the Registrar of Companies in certain circumstances.
  • The self-correction threshold for minor errors will be increased from $500 to $1,000.
  • The threshold for annual FBT returns will be increased from $500,000 to $1,000,000 of PAYE/ESCT.
  • The motor vehicle expenditure rules in subpart DE of the Income Tax Act 2007 will be extended to allow certain close companies to use the rules as an alternative to paying FBT.
  • A simplified method for the calculation of deductions for premises and vehicles that are used for dual purposes is being introduced.
  • RWT exemption certificates will not need to be renewed annually.

Not sure how these changes may affect you – call us and discuss with your accountant.

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