Hon Peter Dunne
Minister of Revenue
Media Release
Annex: Recommended application date changes
MEDIA RELEASE
Dunne: tax reform application dates should be deferred
Revenue Minister Peter Dunne is in favour of deferring the application date of a number of forthcoming tax reforms, many of which come into force on 1 April, although the bill is not expected to pass into law before August.
The changes are part of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill, introduced last July and currently under consideration by Parliament's Finance and Expenditure Committee.
"As 1 April approaches, many business people and their tax advisors are becoming increasingly concerned about the problems of working in accordance with complex tax reforms that have still to be enacted.
"My view is that it's simply not realistic to stick to all the application dates as originally proposed, and that Parliament should consider deferring the application dates of those large reforms that are particularly problematic for compliance with and administration of the new rules.
"The application dates of most concern are those for the reforms relating to our international tax rules, the taxation of the life insurance business, definitions of associated persons, and payroll giving for charitable donations.
"There are practical problems here. For example, provisional taxpayers who get it wrong in second guessing the final form of the changes to the international tax rules may well face penalties and interest for their mistakes.
"Likewise, employers who want to get payroll giving under way on 1 April will find they have no legislative basis on which to make charitable donations from their employees' pay.
"I have therefore written a letter to the chairman of the select committee, outlining my concerns and asking the committee to give serious consideration to a number of deferments, in whole or in part, of application dates in the bill.
"I am announcing my recommendations today to give greater certainty to affected businesses, although it is the select committee that will recommend any changes to the proposed legislation.
"For the international tax changes, I have recommended that the application date remain at the 2009-10 income year only for taxpayers who have balance dates on or after 30 June, the date of the bill is expected to be reported back to Parliament. For all others, the application date would be the 2010-11 income year.
"For the reform of the rules on taxing the life insurance business, I have recommended that the application date of the new rules be deferred until a date to be determined following further discussion with the industry.
"For the changes to the associated person rules, I have recommended a one-year deferment, to the 2010-11 income year, except for the land provisions, which would be deferred from 1 April 2009 to the date of enactment.
"For payroll giving, a change keenly awaited by charities but requiring changes to employers’ payroll systems, I have recommended that the application date be deferred from 1 April 2009 to three months after enactment.
"I have also recommended deferrals of the application dates of a number of other, smaller changes, many of which are taxpayer-friendly or which simply clarify the rules. For example, changes to rules on provisional tax pooling would be deferred from 1 April to the date of enactment," Mr Dunne said.
Ends
Attached: Recommended application date changes
Mark Stewart | Press Secretary | Office of Hon Peter Dunne
Cell +64 21 243 6985 |
Annex: Recommended application date changes
This document is also available in these formats:
Application date in current bill | Recommended application date (where changes are recommended these are shown in bold) |
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MAJOR REFORMS |
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International tax changes |
Income year 2009-10 |
2009-10 income year only for balance dates on or after 30 June; 2010-11 income year for other taxpayers |
Life insurance business |
Applies to life insurance products sold after 1 April 2009 New rules for life insurance business and changes to PIE rules apply from first income year from 1 April 2009 |
The new rules for life insurance products and life insurance business and the changes to the PIE rules to be deferred. Discussions with the industry will help inform judgment on the appropriate implementation date |
Associated persons provisions |
Land provisions (except section CB 11) - land acquired on or after 1 April 2009. For section CB 11 (disposal within ten years of improvement: building business) - land on which improvements are begun on or after 1 April 2009. Other provisions apply from the 2009-10 income year |
For land provisions (except section CB 11) - land acquired on or after the date of the bill's enactment. For section CB 11 (disposal within ten years of improvement: building business) - land on which improvements are begun on or after the date of the bill's enactment Other provisions - from 2010-11 income year |
Payroll giving |
1 April 2009 |
Three months after date of enactment |
TAXPAYER-FRIENDLY, TECHNICAL AND OTHER MEASURES |
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GST and remedial amendments Deferring GST and loyalty points until redemption Zero rate exported second-hand goods (scrap metal) Public Authorities and GST- confirms that Parliamentary service and Office of Clerk are required to charge GST |
Date of enactment for GST on loyalty points Date of enactment for second-hand goods 1 April 1986 for amendments relating to Parliamentary service 1 August 1988 for amendments relating to Office of the Clerk |
No change recommended No change recommended No change recommended No change recommended |
KiwiSaver amendments |
Range from 1 July 2007 to date of assent |
The amendment to section 13 of the KiwiSaver Act will have a date of assent application rather than 1 October 2008 |
Niue development |
This is an Order-making power. Currently, the Bill states that the provision is treated as coming into force on 1 April 2008, but this is meaningless because the Order still cannot be made before enactment |
Change commencement to the date of the Royal assent |
Non-disclosure right to discovery |
Applies to challenges commenced after date of assent |
No change recommended |
Offshore portfolio share investment funds |
1 October 2007 PIE amendments (Inc land owning PIEs) 1 April 2007 or 1 April 2008 offshore portfolio amendments |
No change recommended |
Petroleum mining |
Amendments to remove 'disincentives', applying to expenditure incurred on or after 1 April 2008 Remedial amendment to 'correct' an anti-avoidance provision - applies from 1 December 2007 |
No change recommended |
Portfolio investment entity rules |
1 April 2009 for rewrite provisions Remedial amendments generally apply from 1 October 2007 |
Change application date for rewrite provisions to 1 April 2010 |
R&D tax credit rules |
2008-09 income year |
No change recommended |
Recognised seasonal workers |
1 April 2009 |
Change application date for tax rate change to date of assent Other changes apply from 1 April 2009 |
Reimbursement and honoraria paid to volunteers |
Applies to reimbursements received by volunteers on and after 1 April 2009; and to honoraria paid on and after 1 April 2009 |
No change recommended |
Relocation payments and overtime meal allowances |
2002-03 income year |
No change recommended |
Tax depreciation rules |
Application dates range from 1 April 1993 and from the 1993-94 and subsequent income years through to 1 April 2008 and from the 2008-09 and subsequent income years. The other amendments add two categories to the list of depreciable land improvements. |
No change recommended |
Tax recovery arrangements |
1 April 2008 |
No change recommended |
Tax pooling rules |
Date of assent for transferring funds Other provisions 1 April 2008 |
Recommend changing application date to date of assent for all provisions |
Charitable donee status |
2008-09 tax year |
No change recommended |
Films |
1 July 2008 |
Officials and Ministers agreed in August 2008 that the application date be changed to 1 January 2010. This revised date for implementation remains appropriate |
Transitional ICA penalties |
Not part of the bill as introduced |
It is recommended that transitional ICA penalties should only apply to dividends paid out after the earlier of:
This will fully address points raised in submissions |
Banking continuity |
1 April 2008 |
No change recommended |
Emissions trading |
1 January 2009 |
No change recommended |
General insurance |
Applies from first year taxpayer adopts IFRS or 2009-10 income year. |
No change recommended |
BASE MAINTENANCE MEASURES |
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Stapled stock (supplementary order paper) |
Applies to debt securities stapled to a share on and after 25 February 2008 |
No change recommended |
Ring fencing of expenditure incurred by overseas branches of petroleum mining companies |
Applies to expenditure incurred on or after 4 March 2008 |
No change recommended |