The Government introduced the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (149-1) into Parliament on 8 August 2016. The aim of this legislation is to simplify tax processes, reduce compliance costs for smaller businesses, tighten foreign trust disclosure rules and ensure NZ meets its international obligations in respect of automatic exchange of information.
What does it means for you as a taxpayer?
If you or your business is a provisional taxpayer then the following most popular changes apply from 1 April 2017:
In addition, Information will be able to be shared with the Registrar of Companies for the purposes of enforcing certain serious offences against the Companies Act 1993. From 1 April 2018 paying provisional tax can be made based on your actual income calculated in your accounting software package (like Xero). This means you can pay more regularly and in keeping with your actual income flows.
The proposed changes follow the Government’s April 2016 Inquiry into Foreign Trust Disclosure Rules which was set up to examine and make recommendations regarding disclosure rules and other related matters to ensure that New Zealand’s reputation is maintained.New information disclosure rules are proposed for foreign trusts with a New Zealand-resident trustee. These include requirements for the trust to register with Inland Revenue, file annual returns and pay registration and filing fees. In addition, the register of foreign trusts would be shared with certain New Zealand government agencies. The resident trustee of the foreign trust would need to comply with the registration and filing obligations in order to qualify for the exemption from tax on foreign-sourced amounts.
Automatic Exchange of Information
Under an agreement that NZ has entered into NZ must comply with certain requirements to exchange information with other countries tax departments.
NZ therefore must require NZ financial institutions:
The IRD must then transmit the reported information to applicable countries under tax treaty exchange of information provisions. The exchanged information will be used by the receiving country to verify that its residents have correctly reported their offshore activities and income for tax purposes.
If you have any concerns with this collection and reporting of data either by or to the IRD please contact our Trust and Tax Manager for further information.
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