On Monday the government introduced the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill.
This Bill combines a number of the Government’s recent tax initiatives as part of the tax simplification process, the recent review of foreign trusts and the Government’s commitment to exchanging financial information with overseas jurisdictions.
The Bill offers the first look at the draft legislation for the new accounting income method of paying provisional tax. As indicated this method is initially only available to taxpayers with an annual gross income of $5,000,000 or less. The Bill does contain a number of other limitations which have not previously been covered including:
- The requirement to use an ‘AIM-capable accounting system.’ These must be software based and be approved by the IRD. They must be kept up to date for relevant tax legislation.
- The taxpayers have not been liable in the past 4 years to shortfall penalties
- The taxpayers have not consistently provided inaccurate AIM returns
- The taxpayers have not failed more than twice to provide the information required in the prescribed form
- The IRD can prescribe a class of taxpayer who cannot use AIM
- If you drop out of AIM part way through a year you are deemed to have estimated your provisional tax liability and will be subject to use of money interest
The Bill also contains the provisions to calculate home office expenditure using a square metre rate method as well as use a kilometre rate method for the business use of a motor vehicle in a close company, paying shareholder provisional tax via a close company as well as some amendments to the thresholds for using the annual filing methods for FBT.
Foreign Trust Disclosure
The Bill also introduces some new registration and reporting requirements for Foreign Trusts with a New Zealand resident trustee. Generally these registrations are proposed to be required by 30 June 2017 with annual returns required each year.
As always if you have any questions on any of the changes coming through and wish to discuss how these may affect you or your clients please don’t hesitate to contact one of the tax team here at Polson Higgs.