Industry Advice on Finance, Business & Tax for the New Zealand Market

We look at the Government's draft legislative proposals with respect to limiting the deductibility of interest expense for residential property investments and a number of changes to the bright-line rules.

Today the Prime Minister announced a huge package of policies aimed at increasing housing affordability that includes changes to the bright-line test and interest deductions on investment property.

Reading the 194-page interim report from The Tax Working Group (TWG) - a culmination of months of work reviewing submissions - here are our first impressions...

Listening to the Minister of Finance Grant Robertson in the budget lock-up this morning highlighted to me the importance tax plays. Most people want to pay their fair share of tax, but the complexity of tax continues to evolve where even the simplest of mistakes can cost you dearly in penalties and interest – given the increased funding the Inland Revenue Department will receive you need to ensure you have your tax affairs in order.

2017 marked the first year the Inland Revenue had a dedicated audit team which focused on Fringe Benefit Tax (FBT). While FBT makes up less than 5% of the Government’s tax take, the reviews proved that FBT has now become a staple part of the Inland Revenue audit process and taxpayers need to give the appropriate attention to compliance and the tax positions taken.

Effective KPI reporting is built on transparency, accountability, and comprehensive communication. It can help businesses to reduce costs, identify new opportunities, and make better decisions. It provides an opportunity for staff at all levels of a business to reflect on their performance and, if required, take actions that improve the overall performance of the business.

Family. Gifts. Carols, baubles, tinsel on the tree. When it comes to Christmas time, these are the things that most Kiwis are going to be thinking about—but there’s one more thing that business owners need to keep in mind over the Season of Giving: how much they should be giving to their employees in pay over the holidays.

A massive overhaul and rewrite to trust law in New Zealand is currently underway—and your trust may be affected. The IRD are taking a long, hard look at trusts that don’t make commercial sense, but still manage to deliver unusually favourable tax advantages—and new changes to family trust laws are currently being drafted to allow beneficiaries greater knowledge of what their trust is doing, and how much money it is making.

If you use a company vehicle as a benefit for your employees, you need to make sure you’re keeping the IRD happy over the holidays. Here’s what you need to know...

‘Tis the season of giving! But if you’re planning to give your clients and/or employees a present this year, you should temper your generosity of spirit with the correct tax treatment of gifts for employees. After all, you wouldn’t want the IRD to put you on its naughty list… here’s what you need to know:

From 1 April 2017, tax must be deducted from all payments made to contractors working under a ‘labour hire arrangement’ for a labour hire business. This change will impact many businesses and different industries such as: employment agencies, ‘temp’ agencies, on-hire businesses as well as the wider recruitment, IT and healthcare industries.

In 2015, the Tax Department introduced a ‘bright-line test’ for the sale of residential property. If you buy and sell a property within two years, this test is used to determine if you are required to pay tax on the profit. We explain how the bright-line test works and the responsibilities of residential property owners.