Rewrite amendment

Issue: Rewrite amendments relating to use of foreign balance dates

Clauses 57 and 176

Submission

(Ernst & Young)

The proposed amendments should be revised or deleted as they do not appear to make any substantive difference to section EG 1 as currently enacted and they do not appear to relate to either of the related submissions to the Rewrite Advisory Panel.

Comment

The election under section EG 1 allows a taxpayer to adopt a simpler method for returning foreign-sourced income for compliance cost reasons.

The amendment to section EG 1(6) ensures that this election is not available for a person whose net foreign-sourced income is more than $100,000 in any income year. The current law restricts the application of the election to income years falling after the year in which the election is made. The amendment reflects the Rewrite Advisory Panel’s recommendation on that submission.

We note that the second submission to the Rewrite Advisory Panel on this provision was declined by the Panel, and that no amendment is therefore required.

Recommendation

That the submission be declined.

Issue: Tax Administration Act 1994: Cross-references to sections 108 and 109

Clauses 135 to 145

Submission

(Corporate Taxpayers Group, Deloitte)

The amendments contained in the bill do not actually result in the relevant provisions within the Tax Administration Act linking into section 108. We recommend that each of clauses 135 to 145 of the bill be amended and a cross-reference to section 108 added.

Comment

The submission is requesting that the time-bar referred to in section 108 be extended to apply to tax types, for which the time-bar does not currently apply. The time-bar prevents the Commissioner from making an amended assessment to increase the income tax payable more than four years after the previous assessment.

The amendment is a simple correction of cross-referencing from each of the provisions in clauses 135 to 145 of the bill, into section 108 or 109, as appropriate.

Recommendation

That the submission be declined.

Submission

(New Zealand Institute of Chartered Accountants)

We support the intention of the proposal.

That the drafting of each of clauses 135 to 145 of the bill should be reviewed to ensure the intended effect is achieved.

Comment

Officials note the support for the amendments, and agree that the drafting should be reviewed.

Recommendation

That the support for the amendments be noted.

That the submission to review the drafting be accepted.