Tax Watch: Edition 5, August 2018
Proposed new legislation to make tax simpler for individuals
Draft tax legislation has been introduced into Parliament with the aim of modernising the tax system and making tax simpler and easier for individuals.
The Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Bill (“the Bill”) forms part of Inland Revenue’s wider Business Transformation project. It builds on changes to the collection of employment and investment income information contained in other recent legislation.
The proposed changes will see Inland Revenue calculate the tax position of individuals who earn only employment or investment income. Refunds will be paid out automatically without the need to file a personal tax summary and Inland Revenue will contact individuals to inform them of any outstanding tax to pay.
In addition to the proposed changes for individuals, other flagship measures of the Bill include:
- Changes to the administration of the tax system – including greater discretions and information gathering powers for Inland Revenue, a new short-form process for obtaining a private binding ruling and extension of taxpayers’ ability to correct past errors in a current return.
- Practical changes to assist offshore persons, employees and employers – including changes relating to:
- The ability of offshore persons to obtain an IRD number,
- The definition of “market interest rate” for valuing the fringe benefit taxable value of certain employment related loans, and
- Overpayments of employment income.
- Mid-year entry to AIM – allowing eligible businesses mid-year entry into the accounting income method (“AIM”) of paying provisional tax.
- Reforms to the taxation of trusts – bringing welcome certainty to the tax treatment of foreign trusts and addressing unintended consequences from earlier legislative rewrites.
- Changes to the tax treatment of noise mitigation expenditure – introducing a tax deduction for noise mitigation expenditure.
- Extension of the current securitisation regime – beyond financial institutions to include other corporate securitisations, as well as an extension to the scope of the regime for financial institutions.
Get in touch with us today if you would like more information on how the proposed changes could affect you or your business.