Omnibus Tax Bill introduced

Omnibus Tax Bill introduced

"Omnibus" Adjective:  pertaining to, including, or dealing with numerous objects or items at once: an omnibus bill submitted to a legislature

On 3rd May 2016 the New Zealand Government introduced an Omnibus Tax Bill.  As the definition implies it is a very wide ranging bill covering various topics and as our picture indicates it is very diversified.  The Commentary on the Bill is 222 pages long, the explanatory note on the contents of the Bill is 18 pages long.  Given that we all have better things to do, let's not get bogged down in the dross.  So here are a few highlights for you:

Income tax rates to remain the same for the coming year

Closely Held Companies have multiple changes. Key points to note:

  • What constitutes a Tainted capital gain is significantly narrowed - Important change
  • Shareholder employee PAYE / non-PAYE rules varied
  • Qualifying companies will lose their status if there is a change in control (50%) - Important change
  • Look Through Companies (LTC's) can no longer have charities or Maori authorities as shareholders, the look through count for beneficiaries of trusts is widened on who is included - Important changes
  • LTC's deduction limitation rule is narrowed - Important change
  • LTC's entry tax is varied, as is debt remission rules

Other Income Tax changes including:

  • Resident Withholding Tax changes
  • Non Resident Withholding Tax and Approved Issuer Levy changes including branch allocations
  • Debt remission changes
  • Loss grouping and transfer of imputation credits with loss grouping - Important change
  • Changes to remission, insolvency and bankruptcy rules
  • Introduction of 14 new charities to Schedule 32 approved donees
  • Reducing or removing tainting for the land rules for Council Controlled Organisations

GST changes:

  • Capital raising costs deductible to the extent funds raised to fund a taxable activity - Important change
  • Services in connection with land (land inside NZ and land outside NZ) - Important change
  • Agent and Principal rule changes
  • Reducing instances where land transactions are not zero rated
  • Changes to how mixed exempt/taxable businesses may determine their apportionments
  • Changes to GST grouping rules around Limited Partnerships

Time bar rules extended to ancillary taxes

Remedial amendments - we count 28, which is very disappointing, but not unexpected (as in, "we told you so" when previous legislation was rushed in).

Working for Families Tax Credits changes

Some of these changes will take effect when the Bill receives Royal Assent (bearing in mind it has only just been introduced), others will come in with effect from the start of the 2017/2018 tax year.

If you would like further information on any of these changes and how it may affect you contact us.

Posted: Friday 13 May 2016