Application date
The amendments will apply new rulings made from the date of enactment.
Key features
The Tax Administration (Binding Rulings) Regulations 1999 will be amended to provide for a more flexible fee-waiver provision based on what the Commissioner considers is fair and reasonable. The fees for zero-rated supplies of binding rulings will be reduced by the tax fraction of the fee.
Background
Private, product and status binding rulings all incur fees that are based on recovering the cost of providing the ruling. Currently, Inland Revenue may in exceptional circumstances, at the Commissioner’s discretion, waive in whole or in part any fee payable by an applicant. More flexibility is required for the exercise of the waiver. The Regulations will therefore change the requirement to one based on what is fair and reasonable having regard to such factors as the nature of the issue and the skill and experience applied by Inland Revenue staff.
The fees for zero-rated supplies of binding rulings will be reduced by the tax fraction of the fee. Currently, the fees assume a GST rate of 12.5% and do not take into account the fact that binding rulings issued to non-residents outside New Zealand may be zero-rated under the Goods and Services Tax Act 1985. Therefore, any binding ruling issued to a New Zealand resident is in effect cheaper than if that same ruling were supplied to a non-resident. This is because the New Zealand resident, if registered for GST, can generally claim an input tax credit for the GST cost of acquiring the binding ruling. The non-resident, on the other hand, is unlikely to meet the requirements for registration or input tax credit entitlement.