Legislation introduced in the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill received Royal assent on 2 November 2012. The resulting Act is available here. The following are some of the main features of the new legislation.
- The new legislation increases the KiwiSaver employer and employee contribution rates from 2% of gross salary and wages to 3%.
- The new Act allows the Commissioner to accept applications from data storage providers to store their clients’ business records offshore.
- A change is made to the tax returns filing system and once it comes into force, will require salary and wage earners who select a favourable year for a tax square-up, to also have their tax obligations squared-up for each of the previous four years as well.
- The new legislation extends eligibility for the in-work tax credit to unpaid shareholder-employees in a close company producing gross income.
- The tax treatment of profit distribution plans is clarified.
- The new legislation increases the minimum tax equity requirement for foreign-owned banks.
- A number of GST-related changes which largely deal with technical matters resulting from rules introduced last year to prevent “phoenix” fraud schemes are included in the Act.
- Non-resident film renters tax is replaced with non-resident withholding tax.
- Earthquake-related measures are included to address the tax treatment of damaged or destroyed assets and insurance pay-outs.
- Changes have been made to relieve over-taxation of interests in controlled foreign companies by better aligning the tax treatment of income and related deductions.
Special reports on the Canterbury earthquakes measures and changes to the controlled foreign company rules are available here. Full coverage of the new Act will be published in the December edition of the Tax Information Bulletin.