Digest No. 1929
Purpose
The aim of this Bill is to make amendments to the Income Tax Act 2007, the Tax Administration Act 1994, the Goods and Services Act 1985, the KiwiSaver Act 2006 and other revenue legislation.
Main Provisions
Annual rates
The Bill sets the annual rates of income tax for the 2012–13 tax year (Part 1, Clause 3, cf Section BB 1 of the Income Tax Act 2007).
Emissions units
The Bill makes amendments relating to the transfer of emissions units by a public body in certain circumstances. In particular, these amendments relate to the transfer of emissions units to a party to a negotiated greenhouse agreement. In the same context, the Bill also amends the definition of “pre-1990 forest land emissions unit” to take into account differing arrangements for the holding of pre-1990 forest land that is subject to a claim under the Treaty of Waitangi (Part 2, Clause 21, amending Section ED 1B of the Income Tax Act 2007; Clause 88(13) amending Section YA 1 of the Income Tax Act 2007 (definition of “pre-1990 forest land emissions unit)).
Working for Families tax credits
The Bill provides that a person who receives or will receive weekly compensation from the Accident Compensation Corporation as a surviving spouse or partner of a deceased claimant must be treated as being employed, during the week to which that compensation relates, for the number of hours that the deceased claimant would have been employed for in a week before dying, but for their incapacity.
This has the effect of treating such surviving spouses or partners as meeting the “hours in work” test for the tax credit.
The Bill also provides that, in the test for the credit, an unpaid shareholder-employee who works full-time in a business is to be treated as deriving income meeting the test.
The Bill also excludes foster care allowances and distributions from KiwiSaver and complying superannuation schemes from a person's family scheme income, which determines the person's entitlement to Working for Families tax credits (Part 2, Clauses 59-66 (amending Sections MD 1, MD 5, MD 7, MD 9, MD 10, and MD 13 of the Income Tax Act 2004)).
Exceptions to requirement for return of income
The Bill redrafts the criteria, without substantially changing them, for a taxpayer to be exempt from the requirement to file a tax return (Part 3, Clauses 106 (Inserting New Section 33AA(1)-(3) into the Tax Administration Act 1964), 107, 108 and 109).
Certain taxpayer furnishing returns must also file returns for four previous years
The Bill provides that a person who is not required to furnish a return of income for a tax year may choose to furnish a return of income for the tax year if that person also furnishes a return of income for each tax year of the four immediately preceding tax years:
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beginning in or after 1 April 2014; and
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for which the person has not previously furnished a tax return (Part 3, Clauses 106, Inserting New Section 33AA(4) into the Tax Administration Act 1964).
Electronic storage of a taxpayer's tax-related information
The Bill amends the Commissioner of Inland Revenue power to approve the electronic storage of a taxpayer's tax-related information by providing that a taxpayer who is given that approval and who files a tax return electronically with the Commissioner will not be required to store a signed hard copy of the return (Part 3, Clause 110, amending Section 36 of the Tax Administration Act 1994 by substituting subsections (a) and (b) and repealing subsection (ba)).
Requirement to issue income statements to certain taxpayers abolished
Section 80D of the Tax Administration Act 1994 provides that the Commissioner must, in general terms, issue an income statement to a person who the Commissioner considers derived in the tax year income that was income from employment, interest or dividends.
The Bill abolishes this requirement (Part 3, Clause 114, Repealing Part 3A (Sections 80A-80H of the tax Administration Act 1994)).
KiwiSaver
The Bill provides for the increase in the KiwiSaver default and minimum employee contribution rate, as announced in the 2011 Budget. The employee contribution rate is increased from 2% to 3%. The compulsory employer contribution also increases from 2% to 3%, as announced in Budget 2011 (Part 5, Clauses 153-163, amending the KiwiSaver Act 2006).
Business and remedial amendments
The Bill amends the Income to “look-through companies”, profit distribution plans, expenditure on unsuccessful software development and the valuation of certain shareholdings for FIF rules (foreign investment fund rules), film hire companies, thin capitalisation and other matters.
A large number of remedial amendments are made. Various amendments are made to the Goods and Services Act 1986. The GST issues dealt with include: input credits for second hand goods, zero-rating of land transactions, apportionment rules, deductible output tax, late payment fees, and liquidators and receivers).
