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New Zealand Tax Measures Receive Royal Assent

by Mary Swire,, Hong Kong

09 November 2012

A series of New Zealand tax reforms have received Royal Assent, paving the way for changes to data administration, tax compliance and withholding taxes. The changes are made by the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act.

Included in the legislation are reforms to the tax filing system which will require salary and wage earners who select a favourable year for a tax 'square-up', (a year-end tax reconciliation procedure) to also have their tax obligations squared-up for each of the previous four years as well. Also introduced are powers for the Commissioner to accept applications from data storage providers to store their clients’ business records offshore.

The KiwiSaver employer and employee contribution rates will rise from 2% of gross salary and wages to 3%, and eligibility for the in-work tax credit will be extended to unpaid shareholder-employees in a close company producing gross income.

Amendments will be made to the goods and services tax (GST) regime, designed to deal with technical matters resulting from rules introduced last year to prevent “phoenix” fraud schemes. The over-taxation of interests in controlled foreign companies will be relieved by better aligning the tax treatment of income and related deductions.

The legislation also clarifies the tax treatment of profit distribution plans and increases the minimum tax equity requirement for foreign-owned banks. The non-resident film renters tax is to be replaced with non-resident withholding tax. Finally, earthquake-related measures are included which address the tax treatment of damaged or destroyed assets and insurance pay-outs.

TAGS: compliance | tax | business | tax compliance | interest | banking | insurance | employees | goods and services tax (GST) | offshore | controlled foreign corporations (CFC) | legislation | withholding tax | New Zealand | tax reform | services

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