Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill

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Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill

Government Bill

149—1

Explanatory note

General policy statement

This taxation omnibus Bill introduces amendments to the—

  • Income Tax Act 2007:

  • Tax Administration Act 1994:

  • Student Loan Scheme Act 2011.

There are 3 main policy proposals in the Bill. These are—

  • Changes to business taxation to make tax simpler:

  • Implementing the G20/OECD standard for Automatic Exchange of Financial Account Information in Tax Matters:

  • Changes to implement the disclosure requirements for foreign trusts recommended by the Government Inquiry into Foreign Trust Disclosure Rules.

The Bill contains 3 measures to support the deployment of stage 1 of Inland Revenue’s new computer system, START, including its co-existence with the existing FIRST system over the staged implementation of Inland Revenue’s business transformation programme.

There is also a remedial amendment to the PAYE rules for employee income for share benefits to ensure the rules work as intended. The Bill also contains a remedial amendment to the Student Loan Scheme Act 2011 to correct a terminology reference.

The following is a brief summary of the policy measures contained in this Bill. A comprehensive explanation of all the policy items will be included in a Commentary on the Bill. The Commentary will be available shortly after this Bill is introduced, at http://taxpolicy.ird.govt.nz.

Changes to business taxation to make tax simpler

The Bill proposes 16 discrete measures to make tax simpler for businesses. The 16 measures reflect 6 key themes—

  • Changes to provisional tax to increase certainty:

  • More accurate and timely payment of provisional tax:

  • Self-management and integrity:

  • Making the system fairer:

  • Improving the operation of markets through greater tax transparency:

  • Making the system simpler.

Changes to provisional tax to increase certainty
Increasing the current $50,000 residual income tax limit for interest to $60,000 (for individuals and non-individuals)

The Bill proposes to increase the current “safe-harbour” threshold from use of money interest. Currently, when businesses who have less than $50,000 of residual income tax pay provisional tax using the standard “uplift” method, they are not subject to use of money interest. The Bill proposes to increase this limit to $60,000 and extend it so that it applies to non-individuals as well as individuals. This will reduce the impact of use of money interest for these businesses and therefore provide greater certainty.

Removing use of money interest for the first 2 provisional tax payments for all taxpayers who use the uplift method

The Bill proposes amendments so that for taxpayers using the standard uplift method and who fall outside of the $60,000 “safe-harbour”, use of money interest only applies from the final instalment date. As the final instalment date of provisional tax occurs after the end of the income year, these taxpayers will have reasonable certainty as to how much income they have earned before they make their final payment and become liable for use of money interest.

Additional rules are proposed to prevent taxpayers from taking inappropriate advantage of the new rules by switching income between related parties or by switching between provisional tax payment methods.

More accurate and timely payment of provisional tax
The Accounting Income Method

The Bill proposes to allow businesses to use the Accounting Income Method (AIM) to pay their provisional tax based on a calculation prepared by accounting software.

AIM is available for businesses where either—

  • They have turnover of less than $5 million a year:

  • They have previously used AIM, have a good track record with taking reasonable care, and are continuing to use the same approved software package:

  • They are using an accounting system that the Commissioner has approved as being suitable for persons with turnover greater than $5 million.

For these businesses, AIM enables provisional tax to be calculated within their accounting software packages. Calculation of provisional tax in arrears means payments made under AIM will more closely match the accounting income of the business and be integrated into business practices.

For taxpayers using AIM, provisional tax payments will be made monthly for those on monthly GST filing and 2 monthly for those on 2 or 6 monthly GST filing. For businesses who aren’t GST registered they will make payments in line with the GST dates that fit with their balance dates. If the taxpayer makes these required payments, then no use of money interest will apply should a shortfall arrive at year end.

Approval criteria

The Bill proposes the Commissioner must approve a software provider before they can become an approved AIM provider. To become an approved AIM provider, the provider must make a statutory declaration that it has an accounting system—

  • that can make generate and keep comprehensive financial accounts, complete required tax adjustments, filing and payment requirements, and can produce the required reports; and

  • the accounting system is fully documented and that there is support for end-users; and

  • the product is updated regularly to reflect changes in tax law or Commissioner requirements.

If the Commissioner receives a statutory declaration of this and considers that approving the provider would not negatively affect the integrity of the tax system, the Commissioner may approve the provider as an approved AIM provider. The Commissioner may revoke this approval on the request of the provider or if the Commissioner considers that anything in their statutory declaration is not true, the providers accounting system provides a materially inaccurate tax calculation, or that revoking the approval would positively affect the integrity of the tax system.

The Bill provides that the Commissioner may make determinations setting out the required tax adjustments required by the software provider.

Provisional tax attribution for shareholder-employees

The Bill proposes to allow a company to make tax payments on behalf of shareholder-employees. This proposal is intended to enable companies to reduce compliance costs for their shareholder-employees by paying tax on their behalf and therefore potentially removing the shareholder-employee from the provisional tax rules.

This method would be optional and apply if a company and its shareholder-employees elect to use it by the company’s first provisional tax payment date.

Once elected a company would add to its own provisional tax payments amounts equal to any provisional tax the shareholder-employee would have had in relation to their salaries, if they had not elected into provisional tax attribution. At the end of the income year the company can allocate some of the provisional tax paid to its shareholder-employees which is treated as a tax credit for the shareholder-employee. If the tax credit is equal to or greater than the shareholder-employees’ total tax liability they will have no further tax to pay.

Self-management and integrity
Electing own withholding rate

Amendments are proposed to allow contractors subject to the schedular payment rules to elect their own withholding rate. This will enable contractors to more easily match their withholding rates to their final tax liability without the need to make an application to Inland Revenue.

There are integrity measures proposed to minimise the risk of contractors picking low rates to defer or avoid paying their tax. This includes a minimum rate of withholding of 10% for residents and 15% for non-residents and contractors who are on temporary work visas. In addition the Commissioner has the power to prescribe a rate of withholding for contractors who are non-compliant with their tax obligations.

There is a “standard rate” of withholding for contractors that do not pick a withholding rate. In addition, if a contractor has previously changed their withholding rate twice in the year, they will require the consent of the payer to any further changes in their withholding rate. This is to reduce compliance costs for payers who may have contractors repeatedly changing their withholding rate.

These amendments do not apply to non-resident entertainers. This is to enable non-resident entertainers to retain their current treatment which allows them to be treated as non-filing taxpayers.

Labour-hire firms

Amendments are proposed to extend the current schedular payment rules to cover all contractors operating through labour-hire firms. This means that labour-hire firms will be required to withhold from any payment they make to their contractors, including those operating through a company. Certificates of exemption from withholding will not be available for contractors working through labour-hire firms.

This is a first step in modernising the coverage of the current schedular payment rules and is expected to reduce compliance costs for these contractors as well as address non-compliance issues identified by Inland Revenue.

Voluntary withholding

An amendment is proposed to enable contractors that are not subject to the schedular payment rules to opt in to the withholding rules through voluntary withholding agreements. These will be available where a contractor has the mutual consent of their payer to have withholding apply. This enables greater flexibility for contractors to elect into withholding and therefore a more pay-as-you go method of paying their tax.

Making the system fairer
Changes to late payment penalties

The Bill proposes to reform the late payment penalty by no longer imposing the 1% monthly incremental late payment penalty from new GST, income tax, and Working for Families tax credit overpayment debt.

This is intended to reduce the penalties imposed on businesses who may end up paying late so to allow businesses a chance to trade their way out of debt, without having onerous financial penalties being continually imposed.

This measure is proposed to apply to GST for GST periods ending 31 March 2017. The measure applies for provisional tax, income tax, and Working for Families tax credit debt from the 2017–18 income year.

Improving the operation of markets through greater tax transparency
Sharing tax information for significant debts with credit reporting agencies

The Bill proposes an amendment to the tax secrecy rules to allow Inland Revenue to disclose information about taxpayer’s tax debts to approved credit reporting agencies. The will enable businesses contemplating providing credit to make more informed commercial decisions, as they will have a more comprehensive picture of a businesses’ total debt position.

It is proposed that the criteria for initial disclosure of tax debt include—

  • The debt is significant:

  • The debt is not disputed:

  • Reasonable efforts have been made to collect the debt:

  • The debt is not subject to an existing instalment arrangement:

  • The taxpayer has not applied for relief or remissions:

  • The taxpayer has been served notice of the Commissioner’s intention to disclose tax debt information to credit reporting agencies, and has been given 30 days to repay the debt or to arrange for repayment. The notice to a company will be served on the company’s directors.

A significant tax debt would be a debt relating to unpaid income tax, GST or an employer’s unpaid PAYE, child support, student loan or KiwiSaver employee deductions where the debt is—

  • overdue by a period of 12 months and greater than 30% of a taxpayer’s gross income; or

  • new debt of more than $150,000.

The Bill proposes a regulation making power to be able to adjust the $150,000 threshold for “significant tax debt”.

The Bill also proposes that the Commissioner has the ability to approve an organisation as an approved credit reporting agency when they carry on a business of credit reporting and approval would positively affect the integrity of the tax system.

An additional rule is proposed to enable Inland Revenue to disclose information to credit reporters when a taxpayer repeatedly avoids having their information disclosed through avoiding the thresholds for what is significant tax debt.

The Bill proposes that Inland Revenue will be required to report annually on its use of this amendment including the number of taxpayers whose information has been disclosed to approved credit reporting agencies.

Information sharing with the Registrar of Companies

The Bill proposes to enable Inland Revenue to share information about certain serious offences under the Companies Act 1993 with the Registrar of Companies. This will enable the Registrar of Companies to more easily investigate and prosecute company directors who are operating outside of the law and reduce the harm that these directors cause.

The Bill proposes that Inland Revenue is permitted to share information with the Registrar of Companies when—

  • there is reasonable suspicion that a serious offence has been, is being, or will be committed; and

  • Inland Revenue considers the information will prevent, detect, aid in the investigation of, or provide evidence of, a serious offence that has been, is being, or will be committed; and

  • Inland Revenue is satisfied that the information is readily available, it is reasonable and practicable to communicate it, and communication is in the public interest.

Making the system simpler
Motor vehicle expenditure of close companies

The Bill proposes to extend the rules for motor vehicle expenditure for sole traders and partnerships to close companies. Currently close companies that provide their shareholder-employees with a motor vehicle for private use are required to register and pay FBT on that benefit. This can result in an increase in compliance cost for these companies as they are required to register and pay FBT solely due to the provision of 1 or 2 motor vehicles to shareholder-employees.

This amendment will mean that companies will have the option to instead apportion expenditure incurred in relation to that vehicle between business and private use. This will mean that companies that are currently registered for FBT solely due to the provision of a motor vehicle to shareholder-employees will no longer have to file and pay FBT.

Increasing the threshold for annual FBT returns

Currently businesses are entitled to calculate and return FBT on an annual basis (instead of the standard quarterly basis) if they have combined PAYE and employer superannuation contribution tax obligations of not more than $500,000 per year. The Bill proposes an amendment to increase this $500,000 threshold to $1 million.

Increasing the threshold for self-correction of minor errors

Currently, taxpayers who make a minor error in a return which results in a tax discrepancy of $500 or less are allowed to correct the error in a subsequent return. The Bill proposes an amendment to increase this $500 threshold to $1,000.

Simplified calculation of deductions for dual use vehicles and premises

The Bill proposes to simplify the calculation of deductions for dual use vehicles and premises.

Currently, small business owners often use their personal vehicles and homes for both business and private purposes. Because there are numerous expenses for these items, allocating them between business and personal use can create a large compliance obligation compared to the amount of tax at stake.

The Bill proposes to simplify the calculation for vehicles by modifying and extending the current per kilometre options for calculating business use of vehicles so it is available regardless of kilometres travelled. The current rules only allow the method to be used if the business use is less than 5,000km per year.

The Bill proposes to simplify the calculation of deductions for business use of home premises by allowing taxpayers to simply multiply the number of square metres used primarily for business purposes by a single rate. This rate would be set by Inland Revenue.

This calculation would not cover mortgage interest, rates, or rental costs. Instead these would be deducted based on actual costs due to these costs being too variable to include in a single representative rate.

Removing the requirement to renew resident withholding tax exemption certificates annually

Some taxpayers who hold a certificate of exemption from resident withholding tax must renew their certificate annually. Taxpayers have indicated that this is creating compliance costs for relatively little value. To address this, the Bill proposes to legislatively require most RWT exemption certificates to be issued for an unlimited period.

Modifying the 63 day rule on employee remuneration

Currently, there is a special deduction and timing rule for the deferred payment of employee remuneration. This is intended to prevent taxpayers from claiming deductions for amounts of employee remuneration that have been accrued but not paid. This rule can create an additional compliance burden for taxpayers because they need to track payments accrued at year end and paid within 63 days of the end of the income year.

The Bill proposes to alter this rule to make the deduction for payments made within 63 days of the income year optional for taxpayers. For those taxpayers that do not wish to undertake the exercise, it would not be required and the deduction for those payments paid after the end of the income year can be claimed in the following year.

Automatic exchange of information

The Bill proposes amendments to implement the G20/OECD standard for Automatic Exchange of Financial Account Information in Tax Matters (in short, Automatic Exchange of Information, or AEOI) in New Zealand.

AEOI is an international initiative that responds to concerns that individuals and entities can, with relative ease, evade their home country tax obligations by concealing their wealth in “off-shore” financial accounts.

In broad terms, AEOI implementation involves enacting legislation that requires financial institutions to—

  • undertake due diligence to identify off-shore accounts; and

  • report information on those accounts to the local tax authority.

Then, tax authorities exchange the reported information with applicable jurisdictions, under tax treaties.

In return for New Zealand providing information on off-shore accounts to other jurisdictions, Inland Revenue will receive reciprocal information from other jurisdictions on the off-shore accounts of New Zealand tax residents.

The information will be used to detect and prevent off-shore tax evasion.

Exchange of information

New Zealand has a wide network of tax treaties that currently extends to 90 jurisdictions. These treaties all contain exchange of information provisions that oblige the parties to assist each other in tax compliance matters.

This assistance primarily involves responding to specific requests for information. However, the majority of tax treaties also provide for other forms of assistance, including the ability to enter into automatic exchange programmes with treaty partners.

Automatic exchange programmes are typically specific to certain categories of information. AEOI is an automatic exchange programme for financial account information.

Inland Revenue has significant experience in automatic exchange programmes, but only has 1 existing precedent for the automatic exchange of financial account information. This is with the USA, and is referred to as the FATCA initiative (the term “FATCA” derives from the name of the USA enabling legislation, the Foreign Account Tax Compliance Act).

The Common Reporting Standard

The Bill proposes incorporating the Common Reporting Standard (CRS) into New Zealand law. The CRS is an element of the AEOI standard developed by the OECD that sets out the due diligence and reporting obligations to be imposed on financial institutions.

The other elements of the AEOI standard relate primarily to exchange of information with other jurisdictions, and generally do not require additional legislation.

Due diligence

The CRS due diligence procedures are complex and highly prescriptive.

The rules set out criteria for identifying the financial institutions that must conduct due diligence and reporting and the financial accounts that the financial institutions must conduct due diligence and reporting on. Additional rules apply to exclude certain financial institutions and accounts from these obligations.

The principal due diligence requirement for the relevant financial institutions is to identify and determine the tax residence of account holders.

Different due diligence procedures are prescribed for different types of accounts. For example, for new accounts, financial institutions must generally determine tax residence based on self-certifications from customers. However, for pre-existing accounts, financial institutions can rely generally on information on hand (including information collected pursuant to anti-money laundering/countering the financing of terrorism laws).

In addition, when an account holder is a passive non-financial entity (as defined in the CRS), it must be looked through to identify and determine the tax residence of the natural persons that are its ultimate controlling persons.

Reporting

The CRS provides that information on relevant accounts must be reported to Inland Revenue. The information to be reported includes identity information (including tax residence) and financial account information (such as account balances and interest earned).

If a financial institution is unable to determine the status of a pre-existing account it generally must report it as an “undocumented account”.

The information must be reported to Inland Revenue on an annual basis. For this purpose, the reporting period will be the New Zealand tax year (that is, the period ending 31 March), and the deadline for reporting will be 30 June.

Timing

The proposed due diligence obligations will apply in New Zealand from 1 July 2017. This means that the due diligence procedures for new accounts will apply to all new accounts opened from that date. The due diligence procedures for pre-existing accounts will apply to accounts already open on 1 July 2017.

For pre-existing accounts that are held by an individual and that have a balance that exceeds US $1 million, the Bill proposes that due diligence and reporting must be completed by 30 June 2018.

For any other pre-existing account, the Bill proposes that due diligence and reporting must be completed by 30 June 2019.

Options

Although international consistency is a key requirement, the OECD has included certain options in the CRS that implementing jurisdictions can take to reduce some compliance costs.

The circumstances of each reporting financial institution can differ markedly, meaning that financial institutions may have different preferences as to whether these options should be adopted. Accordingly, the general approach proposed in this Bill is to permit each reporting financial institution to make its own decision on whether or not to adopt any particular CRS option.

In a small number of cases, a particular option will be mandated for all reporting financial institutions. For example, the New Zealand reporting period will be mandated, rather than allowing each financial institution to adopt its own preferred period.

The wider approach

New Zealand’s list of tax treaty partners with which it will exchange AEOI information will increase over time. Absent specific rules, each addition of a new jurisdiction would trigger a new round of due diligence reviews for financial institutions to search for residents of that jurisdiction. This would impose significant compliance costs on financial institutions.

In recognition of this problem, a key option offered in the CRS is for implementing jurisdictions to allow financial institutions the option of identifying all non-residents rather than just residents of specific jurisdictions. This is referred to as the “wider approach”.

This Bill proposes that New Zealand adopt the wider approach, and that this be mandatory for all financial institutions.

This Bill also proposes that financial institutions be permitted the option of reporting all of the non-residents that they have identified irrespective of whether they are residents of jurisdictions that New Zealand will exchange with. This will be optional rather than mandatory, as some reporting financial institutions may prefer to conduct the sorting and filtering of the data themselves. However, when financial institutions opt to report all non-residents, the task of sorting and filtering the data will fall to Inland Revenue.

Enforcement

The CRS requires implementing jurisdictions to have rules and procedures in place to ensure compliance and address non-compliance. This includes appropriate anti-avoidance rules, document retention requirements, auditing programmes, and sanctions to deal with identified non-compliance.

To ensure New Zealand’s full compliance with these requirements, this Bill proposes a comprehensive suite of enforcement rules and penalties.

The proposed approach recognises that New Zealand’s rules will be subject to international peer review, and that any deficiency identified in that peer review could adversely affect New Zealand’s international reputation. Accordingly, strong sanctions are proposed for serious failure by a financial institution to comply or for failure to comply through lack of reasonable care.

The Bill proposes that the following penalties will apply to financial institutions:

  • A general (civil) penalty of $300, to be imposed on a financial institution for any failure to comply with its CRS due diligence and reporting requirements:

  • A specific (civil) penalty of $300, to be imposed on a financial institution for each new account where there is a failure to obtain a self-certification on account opening when required by the CRS:

  • The above provisions will be subject to a transitional period (until 31 March 2019) in which penalties will not be imposed if the financial institution is able to demonstrate it has made reasonable efforts to comply with its CRS due diligence and reporting obligations:

  • A specific (civil) penalty of $20,000 for a first offence and $40,000 for any subsequent offence, to be imposed in circumstances where a financial institution fails to take reasonable care in complying with its CRS due diligence and reporting requirements:

  • Knowledge based offences by financial institutions will be subject to the application of existing legislative provisions.

The Bill proposes that the penalties to be imposed on financial institutions will be backed up with specific obligations and penalties to be imposed directly on account holders, controlling persons, or persons that otherwise hold accounts for the benefit of others (including trusts and intermediaries)—

  • A specific (civil) penalty of $1,000, if a person provides a false self-certification or related information, fails to provide a self-certification or related information within a reasonable time after receiving a request, or fails to provide information about a material change of circumstances relating to a self-certification or related information within a reasonable period of time:

  • Knowledge based offences by such persons will be subject to the application of existing legislative provisions.

However, these penalties are subject to a no fault defence (for persons providing self-certifications or other information about their own status) and a reasonable care defence.

Record keeping and anti-avoidance rules

The Bill proposes specific record-keeping requirements for financial institutions. The Bill also proposes an anti-avoidance provision that applies to arrangements and practices entered into or by financial institutions, persons, or intermediaries with “a main purpose” of circumventing CRS due diligence or reporting requirements.

Multilateral Convention

The Multilateral Convention was given effect in New Zealand in 2014 by means of an Order in Council made under section BH 1 of the Income Tax Act 2007. The Bill proposes a remedial amendment to section BH 1 to clarify its application to multilateral treaties.

FATCA

For consistency, the Bill proposes amendments to the FATCA implementation legislation to—

  • align the FATCA anti-avoidance rule with the AEOI anti-avoidance rule; and

  • provide for the imposition of the same obligations and penalties on persons other than financial institutions under FATCA as for AEOI.

Changes to implement the disclosure requirements for foreign trusts recommended by the Government Inquiry into Foreign Trust Disclosure Rules

The Bill proposes amendments to the disclosure requirements for foreign trusts with New Zealand resident trustees. These amendments largely follow the recommendations of the Government Inquiry into Foreign Trust Disclosure Rules. The amendments in this Bill are intended to deter offshore parties from using NZ trusts for illicit purposes. This is intended to provide a clear signal about the importance of complying with the disclosure rules.

Registration

The Bill proposes an amendment to require foreign trusts to formally register with Inland Revenue. As part of this registration the trust will be required to declare that—

  • the person establishing the foreign trust; and

  • the settlor(s); and

  • the trustees

have all been advised of, and have agreed to comply with the applicable requirements in the—

  • Tax Administration Act 1994; and

  • Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and associated regulations; and

  • AEOI requirements (as proposed in this Bill).

Disclosure upon registration

The Bill proposes increased disclosure requirements on registration. Specifically, that on registration the name, e-mail address, foreign residential address, country of tax residence, and taxpayer identification number of all of the following be provided to Inland Revenue:

  • The settlor(s):

  • The protector (if there is any):

  • Non-resident trustees:

  • Any other natural person who has effective control of the trust:

  • Beneficiaries of fixed trusts, including the underlying beneficiary where a named beneficiary is a nominee.

The proposed amendments also require the trust deed of the trust to be filed with the registration form, and that, discretionary trusts are required to describe in the registration any class of beneficiary not listed in the trust deed. This will enable the identity of a beneficiary to be established at the time of a distribution or when vested rights are exercised.

Timing of registration requirements

The registration requirement will apply to all trusts formed after enactment of the enabling legislation. Existing foreign trusts will be required to meet the new information requirements by 30 June 2017.

Annual filing

The proposed amendments require foreign trusts to file annual returns with Inland Revenue. The proposed amendments require the return to include—

  • Any changes to the information provided at registration:

  • The trust’s annual financial statement:

  • The amount of any distributions paid or credited and the names, foreign address, taxpayer identification number, and country of tax residence of the recipient beneficiaries.

When a foreign trust qualifies to be exempt from New Zealand tax

Foreign trusts are not taxable under current law. The Bill proposes that a foreign trust will lose its exemption from New Zealand tax if it has not registered with Inland Revenue and fulfilled its associated disclosure obligations. This means that a foreign trust that fails to meet these requirements will be taxable in New Zealand on its worldwide income. The proposed amendment is intended to provide a sanction for non-registration.

Qualifying resident foreign trustee safe harbour

Currently, if a trustee of a foreign trust is convicted of an offence of not providing information requested by Inland Revenue then the foreign trust loses its exemption from New Zealand tax and is subject to New Zealand tax on its worldwide income.

However, legislation currently provides that the tax exemption will still apply, in the case where a trustee is convicted of a knowledge offence if the trustee of the foreign trust is a “qualifying resident foreign trustee”. To be a “qualifying resident foreign trustee”, the trustee must be a member of a specified professional body.

The Bill proposes an amendment to remove this “qualifying resident foreign trustee” exemption.

Register of foreign trusts shared with law enforcement agencies

The proposed amendments require Inland Revenue to share information contained in the foreign trusts register for law enforcement purposes with the Department of Internal Affairs and the New Zealand Police. This will apply from the date of enactment.

Registration and filing fee

The Bill proposes to require foreign trusts to pay a registration fee of $270 and annual filing fee of $50 to Inland Revenue. The Bill proposes a regulation making power to enable the amount of the fees to be adjusted through an Order in Council.

Other measures

Amendments to the UOMI and transfer rules

The Bill proposes amendments to the use of money interest and transfer rules to prevent taxpayers from artificially obtaining credit use of money interest or reducing debit use of money interest.

Currently taxpayers can transfer amounts of tax to an earlier period and have use of money interest apply from the date of transfer, rather than the applicable date under the use of money interest rules. This means they can manipulate the amount of use of money interest payable by moving an overpayment or refund to an earlier period.

The proposed amendments address this by preventing taxpayers from transferring amounts of tax to a prior period that exceed the amount of debt or amount in dispute in that period. The amendments also clarify the difference between a GST refund and a GST overpayment to prevent an overpayment of GST being treated as a GST refund and having an earlier transfer date.

Amending the rules for new and increased assessments by the Commissioner

At present, when the Commissioner makes a new assessment or a re-assessment after the original due date of a taxable period, a new due date is set for the payment of the newly assessed tax that is 30 or more days after the date of the notice of assessment.

When this occurs, use of money interest applies from the day after the original due date for the period the assessment or re-assessment applies to, while a late payment penalty applies for amounts unpaid from the day after the new due date. If a taxpayer has excess tax or a credit becomes refundable, for example from a different taxable period or from a different tax type, in the time between the new or increased assessment and the new due date for payment, the excess or credit is generally refunded to the taxpayer rather than being offset against the amount of tax as a result of the new assessment or re-assessment.

START has the ability to allow time for payment before the imposition of late payment penalties, whereas the current software platform, FIRST, requires a new due date to be set. Building a new due date concept into START would add unnecessary complexity. Setting new due dates increases compliance costs for some taxpayers.

The Bill proposes an amendment to remove the requirement for the Commissioner to set a new due date in these situations. Under the proposed amendment the Commissioner has discretion to set a new due date for a tax type when she considers this necessary because of resource constraints imposed on her during the period of co-existence of 2 Inland Revenue software platforms.

The amendment allows for any refund becoming available to be applied in payment for the new or increased tax liability from the assessment date. The timing of interest and penalty rules will not change. Taxpayers will continue to have at least 30 days after a new assessment or re-assessment before a late payment penalty is applied and before any collection action is taken.

Amendments to the late payment penalty grace period rules

Currently, if a taxpayer does not pay their tax on time and they have previously paid all taxes due in the 2 years prior to the late payment; they have a “grace period” before the late payment penalty is applied to them.

However, as Inland Revenue moves to its new computer system information relating to the taxpayer’s tax compliance history and payment activity will reside in 2 systems. This means it will be difficult for the Commissioner to look across all applicable tax types to determine whether the taxpayer is entitled to a grace period under the current legislation.

The Bill proposes an amendment to simplify the administration of the grace period during this transitional period. The Bill proposes that in determining whether or not to apply a grace period, the Commissioner has discretion to ignore any failure to pay tax on time if—

  • the Commissioner decides it is appropriate to ignore; and

  • it is necessary because of resource constraints imposed on the Commissioner during the period of co-existence of 2 Inland Revenue software platforms; and

  • it does not impose a greater penalty than would have applied if not for this amendment.

Remedial amendments to the collection of tax on employment income from employee share benefits

The Bill proposes the following remedial amendments to ensure the PAYE rules for employment income from employee share benefits work as intended:

  • Provide in the PAYE rules clearer points in time relating to when employment income in the form of a share benefit is derived by the employee for tax purposes, and when the employer declares that income to Inland Revenue:

  • Correct a number of terminology references in the Income Tax Act 2007 in relation to when large employers (employers with annual PAYE obligations, including Employer Superannuation Contribution Tax, of $500,000 or more) are required to disclose information about a share benefit received by an employee.

Departmental disclosure statement

Inland Revenue is required to prepare a disclosure statement to assist with the scrutiny of this Bill. The disclosure statement provides access to information about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

Regulatory impact statement

Inland Revenue produced regulatory impact statements to help inform the main policy decisions taken by the Government relating to the contents of this Bill.

Clause by clause analysis

Clause 1 gives the title of the Act.

Clause 2 gives the dates on which the sections come into force.

Part 1Exchange of information

Subpart 1—Amendments to Income Tax Act 2007

Clause 3 provides that Part 1, subpart 1 amends the Income Tax Act 2007.

Clause 4 amends section BH 1(1), which defines double tax agreement. The amendment clarifies that a double tax agreement can be negotiated and agreed with more than 1 government and comes into force on 21 October 2013, when the MCMAA convention was brought into force for New Zealand.

Clause 5 amends section HC 26 by inserting new subsection (1)(c), providing that a foreign-sourced amount derived by a resident trustee of a foreign trust is not exempt income if the foreign trust is not registered or the trustee has not complied with record-keeping, registration, or disclosure obligations.

Clause 6 amends section YA 1 by replacing the definition of foreign account information-sharing agreement. The new definition refers generally to double tax agreements that facilitate the automatic exchange of information relating to financial accounts and specifically to both the FATCA agreement and MCMAA convention.

Subpart 2—Amendments to Tax Administration Act 1994

Clause 7 provides that Part 1, subpart 2 amends the Tax Administration Act 1994.

Clause 8 amends section 3(1). Subclause (2) inserts new definitions of CRS applied standard, CRS publication, and CRS standard. Subclause (3) inserts a new definition of FATCA agreement. Subclause (4) inserts a new definition of maintain, which refers to the functions of a financial institution in relation to a financial account. Subclause (5) inserts a new definition of MCA agreement. Subclause (6) inserts a new definition of MCMAA convention. Subclause (7) inserts a new definition of passive income. Subclause (8) repeals the definition of qualifying resident foreign trustee, which is not required under the proposed rules for foreign trusts. Subclause (9) inserts a new definition of taxpayer identification number, which refers to the equivalent of a tax file number assigned to a taxpayer by a foreign jurisdiction.

Clause 9 amends section 22, which provides for the keeping of business and other records. Subclause (2) inserts, in the list of persons to which the subsection applies, a reference to persons having obligations of a financial institution. Subclause (3) includes a specific requirement that such a person keep a record of a failure to obtain a self-certification as required by the CRS applied standard. Subclause (4) amends section 22(7), by repealing section 22(7)(d)(i) and (ii). Those subparagraphs refer to information that a resident trustee of a foreign trust will be required by new section 59B to provide to the Commissioner when applying for registration of the trust.

Clause 10 replaces section 59B with new sections 59B to 59E. New section 59B requires a resident trustee of a foreign trust to register the trust and provide specified information with the application for registration. New section 59C gives the time limits for a trustee to comply with the requirements of new section 59B. New section 59D requires a resident trustee of a foreign trust to provide an annual return for the trust to the Commissioner. New section 59E sets the fees for an application for registration and an annual report. The section provides a power for the Governor-General to amend the amounts of the fees by Order in Council.

Clause 11 amends section 81 by inserting new subsection (4)(z), which allows the Commissioner to provide information relating to the registration of a foreign trust to a member of the New Zealand Police or an officer, employee, or agent of the Department of Internal Affairs.

Clause 12 inserts new sections 91AAU to 91AAW, which give the Commissioner of Inland Revenue powers to issue determinations relating to obligations under the CRS applied standard. Section 91AAU gives the Commissioner a power to determine whether a territory outside New Zealand is, or has ceased to be, a participating jurisdiction. Section 91AAV gives the Commissioner a power to determine that a territory outside New Zealand is not to be treated as a reportable jurisdiction for a period of 3 months or less, although an earlier Order in Council has provided that the territory is a reportable jurisdiction. Section 91AAW gives the Commissioner a power to determine that a financial institution or type of financial institution is, or has ceased to be, a non-reporting financial institution and that a financial account or type of financial account is, or has ceased to be, an excluded account.

Clause 13 inserts new sections 142H and 142I, which impose penalties for failures to perform obligations imposed by Part 11B of the Act. Section 142H imposes penalties on a financial institution under the CRS applied standard that fails to comply with an obligation relating to financial accounts maintained by the financial institution. Section 142I imposes penalties on persons or entities that are obliged to provide information or a self-certification relating to a financial account and that provide false information or a false self-certification, or fail to provide the information or self-certification within a reasonable time, or fail to inform the person or entity provided with the information or self-certification of a material change in related circumstances.

Clause 14 amends section 143 by inserting new subsection (2C), which provides that an existing absolute liability offence for failing to satisfy obligations relating to the FATCA agreement does not apply to a failure to satisfy obligations relating to the CRS applied standard. The offence would otherwise overlap with new section 142H, which imposes penalties for corresponding failures.

Clause 15 amends section 143A, which provides for offences committed knowingly, by inserting a specific offence for failing to provide a self-certification to another person or entity and providing for the application of a defence that the person did not have control of the required information.

Clause 16 amends section 185E by inserting new subsections describing the obligations to which the other sections in Part 11B relate.

Clause 17 inserts a new heading after section 185E to indicate the sections relating to obligations under the FATCA agreement.

Clauses 18 to 22 amend sections 185F to 185J by replacing references to foreign account information-sharing agreements with references to the FATCA agreement.

Clause 23 repeals section 185L. A corresponding anti-avoidance provision applying for foreign account information-sharing agreements is inserted by clause 24 as new section 185R.

Clause 24 inserts a new heading and new sections 185N and 185O, which relate to the application of the CRS applied standard, followed by another new heading and new sections 185P to 185R, which relate to the application of foreign account information-sharing agreements generally. New section 185N provides for the obligations of a financial institution under the CRS applied standard relating to the due diligence procedures to be applied for financial accounts maintained by the financial institution and the reporting of information to the Commissioner. In new section 185O, subsection (2) provides for the modification of the published CRS standard in the ways given by the items in new schedule 2 of the Act. Subsection (3) provides for the modified CRS standard to be applied consistently with the published Commentary on the CRS standard. Subsection (4) provides that terms defined in the CRS standard or MCMAA convention are to be given those defined meanings when the CRS standard is applied. Subsection (5) provides for the general availability to persons or entities of elections under the CRS applied standard. New section 185P provides for the obligations of persons affected by the FATCA agreement or the CRS applied standard to provide information and self-certifications relating to a financial account. Under subsection (4), the obligations include providing information about changes affecting information or self-certifications provided previously. In new section 185Q, subsection (1) provides that where an obligation or penalty under the FATCA agreement, the CRS applied standard, or the Act is expressed as being imposed on an entity that is a relationship rather than a person, the obligation or penalty is treated as being imposed on the persons in the relationship. Subsection (2) provides that a requirement to provide information to such an entity is treated as being a requirement to provide information to the persons given by subsection (1) for the entity. New section 185R is an anti-avoidance provision providing that an arrangement with a main purpose of avoiding an obligation relating to a foreign account information-sharing agreement is treated as having no effect on a person’s obligations under the Act and giving the Commissioner a power to determine the appropriate obligations for the person.

Clause 25 inserts new clause 226D, which provides that the Governor-General may make regulations by Order in Council providing that a territory outside New Zealand is a reportable jurisdiction for the purposes of the CRS applied standard and the Act.

Clause 26 inserts new schedule 2, which lists amendments to the version of the CRS standard published by the Organisation for Economic and Cultural Development, for the purposes of determining the obligations of persons and entities under the CRS applied standard and the Act.

Part 2Business tax: AIM provisional tax method

Subpart 1—Amendments to Income Tax Act 2007

Clause 27 provides that Part 2, subpart 1 amends the Income Tax Act 2007.

Clause 28 amends section LA 6, to enable AIM provisional tax method taxpayers to transfer excess tax credits to shareholders and reduce the shareholders’ use of money interest liability.

Clause 29 amends section RA 14, to provide the correct instalment dates for the AIM provisional tax method.

Clause 30 amends section RC 1, to provide the correct instalment dates for the AIM provisional tax method.

Clause 31 amends section RC 5, to provide the threshold criteria that a person must meet to be able to use the AIM provisional tax method.

Clause 32 inserts a new section RC 7B, to provide a description of the AIM provisional tax method. New section RC 7B contains the definition of AIM-capable accounting system.

Clause 33 amends section RC 9, to provide the correct instalment dates for the AIM provisional tax method, based on GST filing periods and the proposed amendments to schedule 3.

Clause 34 inserts a new section RC 10B, to calculate the amount of provisional tax a person must pay for an instalment date under the AIM provisional tax method.

Clause 35 amends section RC 24, to amend a cross-reference consequential to providing the correct instalment dates for the AIM provisional tax method.

Clause 36 inserts a new section RM 6B, to provide a part-year refund for overpaid provisional tax under the AIM provisional tax method.

Clause 37 amends section RP 17, to ensure that tax pooling can not be used for AIM provisional tax.

Clause 38 amends section RP 17B, to ensure that tax pooling can not be used for AIM provisional tax.

Clause 39 amends section RP 19B, to ensure that tax pooling can not be used for AIM provisional tax.

Clause 40 amends section YA 1. Subclause (2) inserts a new definition of AIM-capable accounting system, to provide minimum standards for software to be used for the AIM provisional tax method. Subclause (3) inserts a new definition of approved AIM provider, to ensure that only approved software providers can supply software to be used for the AIM provisional tax method. Subclause (4) inserts a new definition of large business AIM-capable system, to allow businesses with annual gross income of more than $5 million to use an approved AIM-capable accounting system if the Commissioner has given approval.

Clause 41 amends schedule 3, to provide the correct instalment dates for the AIM provisional tax method, based on GST filing periods.

Subpart 2—Amendments to Tax Administration Act 1994

Clause 42 provides that Part 2, subpart 2 amends the Tax Administration Act 1994.

Clause 43 amends section 3(1), to amend the definition of tax position and ensure that the use of the AIM provisional tax method, including the use of software, counts as a tax position for purposes of the Tax Administration Act 1994, including penalties.

Clause 44 inserts a new heading and new sections 15U to 15X. New section 15U provides that the Commissioner may approve a person as an approved AIM provider in relation to an AIM-capable accounting system. New section 15V provides a process by which the Commissioner may revoke a person’s approval as an approved AIM provider. New section 15W provides a process by which a person’s approval as an approved AIM provider is revoked upon notification by the person that they choose revocation. New section 15X provides that the Commissioner may publish notice of any of the matters in new sections 15U to 15W.

Clause 45 inserts new sections 45 to 45D. New section 45 provides for the giving of information to the Commissioner by a person in relation to their use of the AIM provisional tax method. New section 45B provides for the giving of information to the Commissioner by an approved AIM provider in relation to their AIM-capable accounting system products. New section 45C provides that the Commissioner may approve an AIM-capable accounting system as a large business AIM-capable system for use by people with annual gross income of more than $5 million. New section 45D provides that the Commissioner may approve a person’s continued use of an AIM-capable accounting system, if the person has annual gross income of more than $5 million.

Clause 46 inserts a new heading and new sections 91AAX and 91AAY. New section 91AAX provides for the Commissioner publishing binding determinations of tax adjustments for accounting income and expenditure under the AIM provisional tax method. New section 91AAY provides for that Commissioner publishing determinations of classes of taxpayers that must not use the AIM provisional tax method.

Clause 47 amends section 119, to provide that the Commissioner may determine the amount of a person’s provisional tax if the AIM-capable accounting system they are using is inaccurate.

Clause 48 inserts a new section 120KBC, to provide concessionary use of money interest rules for people who use the AIM provisional tax method.

Clause 49 amends section 120KC, to amend a cross-reference consequential to providing the correct instalment dates for the AIM provisional tax method.

Clause 50 amends section 120KE, to remove AIM method taxpayers from the provisional tax safe harbour, as a consequence of their concessionary treatment under new section 120KBC.

Clause 51 inserts a new section 120LB, to enable AIM provisional tax method taxpayers to transfer excess tax credits to shareholders and reduce the shareholders’ use of money interest liability.

Clause 52 inserts a new section 120VB, to remove the Commissioner’s obligation to pay use of money interest to AIM method taxpayers.

Clause 53 amends section 141, to ensure the correct basis for calculating the amount of tax shortfall that may be penalised for the AIM provisional tax method.

Clause 54 amends section 141B, to remove the unacceptable tax position penalty in some circumstances for AIM method taxpayers.

Part 3Business tax and remedial matters

Subpart 1—Amendments to Income Tax Act 2007

Clause 55 provides that Part 3, subpart 1 amends the Income Tax Act 2007.

Clause 56 amends section CD 32, consequential to providing an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 57 amends section CE 2, as part of ensuring that benefits under employee share purchase agreements are valued and recognised appropriately for different-sized employers.

Clause 58 amends section CX 6, to ensure that subpart DE is used if there is an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 59 amends section CX 17, to give an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 60 amends section DB 7, to ensure that subpart DE is used for interest deductions if there is an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 61 amends section DB 8, to ensure that subpart DE is used for interest deductions if there is an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 62 inserts a new section DB 18AA, to provide a square metre rate method to determine the amount of a deduction for a building that is used partly for business and partly for other purposes.

Clause 63 amends section DE 1, as part of providing an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 64 amends section DE 2, as part of providing an election to use a kilometre rate method for business motor vehicle use deductions. Also, the amendments ensure that interest in relation to shareholder-employee motor vehicles is subject to subpart DE, if there has been an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 65 inserts a new section DE 2B, to provide an election to use a kilometre rate method for business motor vehicle use deductions.

Clause 66 amends section DE 3, consequential to providing an election to use a kilometre rate method for business motor vehicle use deductions.

Clause 67 amends section DE 4, consequential to providing an election to use a kilometre rate method for business motor vehicle use deductions.

Clause 68 replaces the heading before section DE 12 and section DE 12, to provide a kilometre rate method for business motor vehicle use deductions.

Clause 69 amends section DF 4, as part of providing an election to not apply the unpaid expenditure rules to shareholder-employee expenditure.

Clause 70 amends section EA 4, as part of providing an election to not apply the unpaid expenditure rules to shareholder-employee expenditure.

Clause 71 amends section EE 49, to turn off depreciation recovery income for a motor vehicle for which a person has used the kilometre rate method for business motor vehicle use deductions.

Clause 72 amends section LA 6, to enable companies under the proposed provisional tax attribution regime to transfer excess tax credits to shareholders who are provisional tax attributors.

Clause 73 replaces section LB 2, to provide for tax credit transfers to a shareholder who is a provisional tax attributor from a company that has paid provisional tax under the proposed provisional tax attribution regime.

Clause 74 amends section LB 7, to correct cross-references consequential to providing tax rate options for deductions from schedular payments.

Clause 75 amends section LB 8, to correct cross-references consequential to providing tax rate options for deductions from schedular payments.

Clause 76 amends section MD 9, to correct cross-references consequential to providing tax rate options for deductions from schedular payments.

Clause 77 inserts a new section OB 33B, to ensure that a company’s imputation credit account is debited for a tax credit transfer to a shareholder from the company, under the proposed provisional tax attribution regime.

Clause 78 amends table O2, to ensure that a company’s imputation credit account is debited for a tax credit transfer to a shareholder from the company, under the proposed provisional tax attribution regime.

Clause 79 amends section RC 3, to turn off the provisional tax rules for shareholders that attribute enough provisional tax to a company under the proposed provisional tax attribution regime.

Clause 80 amends section RC 5, to prevent standard method provisional taxpayers swapping to the estimate method for the last instalment of the year.

Clause 81 amends table R1, as a consequence of allowing a concession for use of money interest for standard method provisional taxpayers who meet their obligations during the year.

Clause 82 amends section RC 10, to calculate the amounts of provisional tax instalments for shareholders and companies under the proposed provisional tax attribution regime.

Clause 83 amends section RD 3, to correct cross-references consequential to providing tax rate options for deductions from schedular payments.

Clause 84 amends section RD 6, as a remedial matter, to ensure that benefits under employee share purchase agreements are valued and recognised appropriately for different-sized employers.

Clause 85 amends section RD 7B, as a remedial matter, consequential to ensuring that benefits under employee share purchase agreements are valued and recognised appropriately for different-sized employers.

Clause 86 amends section RD 8, consequential to providing tax rate options for deductions from schedular payments. Also, the amendments ensure that labour-hire entities’ payments to companies are caught as schedular payments.

Clause 87 amends section RD 10, consequential to providing tax rate options for deductions from schedular payments.

Clause 88 inserts a new section RD 10B, to provide tax rate options for deductions from schedular payments. Also, the amendments provide that the tax rate for deductions from schedular payments may be set by the Commissioner for certain payees in certain circumstances.

Clause 89 repeals section RD 18, consequential to providing tax rate options for deductions from schedular payments.

Clause 90 amends section RD 60 changes the close company annual FBT payment option threshold from “no more than $500,000” to “no more than $1,000,000”, allowing more people to use the option.

Clause 91 amends section RD 61 changes the small business annual FBT payment option threshold from “no more than $500,000” to “no more than $1,000,000”, allowing more people to use the option.

Clause 92 amends section YA 1. Subclauses (2) to (6) amend relevant definitions to correct cross-references consequential to providing tax rate options for deductions from schedular payments. Subclause (7) inserts a new definition of PAYE income payment form period, as part of ensuring that benefits under employee share purchase agreements are valued and recognised appropriately for different-sized employers. Subclause (8) inserts a new definition of provisional tax attributor, as part of the proposed provisional tax attribution regime. Subclause (9) inserts a new definition of shareholder attributed income, as part of the proposed provisional tax attribution regime. Subclause (10) inserts a new definition of shareholder attributed tax, as part of the proposed provisional tax attribution regime.

Clause 93 amends schedule 4, consequential to providing tax rate options for deductions from schedular payments. Also, the amendments provide a new part J, to ensure that labour-hire agreements and entities are under the schedular payments rules. A new part W is provided, to allow deductions on account of voluntary schedular payments.

Subpart 2—Amendments to Tax Administration Act 1994

Clause 94 provides that Part 3, subpart 2 amends the Tax Administration Act 1994.

Clause 95 amends section 3(1). Subclause (2) inserts a new definition of approved credit reporting agency, as part of allowing the Commissioner to credit report some unpaid tax to third parties. Subclause (3) inserts a new definition of credit report, as part of allowing the Commissioner to credit report some unpaid tax to third parties. Subclause (4) inserts a new definition of provisional tax interest avoidance arrangement as part of allowing a concession for use of money interest for standard method provisional taxpayers who meet their obligations during the year. Subclause (5) inserts a new definition of reportable unpaid tax, as part of allowing the Commissioner to credit report some unpaid tax to third parties. Subclause (6) inserts a new definition of standard method associate, as part of allowing a concession for use of money interest for most standard method provisional taxpayers who meet their obligations during the year.

Clause 96 inserts a new heading and a new section 15Y, to provide the criteria that a shareholder must meet to use the proposed provisional tax attribution regime.

Clause 97 amends section 24G, consequential to providing tax rate options for deductions from schedular payments.

Clause 98 amends section 24L, to provide notice provisions in relation to the proposed tax rate options for deductions from schedular payments.

Clause 99 inserts new sections 24LB and 24LC. New section 24LB provides the election mechanism and thresholds in relation to the proposed tax rate options for deductions from schedular payments. New section 24LC provides the mechanism and thresholds in relation to allowing the Commissioner to set the tax rate for deductions from schedular payments for certain payees in certain circumstances

Clause 100 amends section 24M, to ensure that labour-hire agreements and entities are under the schedular payments rules and may not get an exemption.

Clause 101 amends section 32H, to ensure that RWT exemption certificates do not constantly need to be renewed.

Clause 102 inserts a new section 45E, to provide a tax reconciliation statement for the proposed provisional tax attribution regime.

Clause 103 amends section 81, to provide exemptions from secrecy for credit reporting some unpaid tax to third parties and reporting some offences under the Companies Act 1993 to the Registrar of Companies.

Clause 104 inserts new sections 85M and 85N. New section 85M provides an exemption from secrecy for reporting some offences under the Companies Act 1993 to the Registrar of Companies. New section 85N provides an exemption from secrecy for credit reporting some unpaid tax to third parties.

Clause 105 amends section 113A, to increase the threshold below which minor errors may be corrected in subsequent returns, from $500 to $1,000.

Clause 106 amends section 120C, to clarify the date interest starts under the use of money interest rules for GST refunds and GST overpayments.

Clause 107 further amends section 120C, as part of allowing concessionary use of money interest treatment for most standard method provisional taxpayers.

Clause 108 amends section 120KB, as part of allowing concessionary use of money interest treatment for failed instalments for most standard method provisional taxpayers.

Clause 109 inserts a new section 120KBB, as part of allowing concessionary use of money interest treatment for most standard method provisional taxpayers.

Clause 110 amends section 120KE, as part of allowing concessionary use of money interest treatment for most standard method provisional taxpayers. The use of money interest safe harbour is increased from $50,000 to $60,000 and companies may take advantage of it. The safe harbour is not available to persons involved in a provisional tax interest avoidance arrangement.

Clause 111 amends section 120L, to provide adjustments for use of money interest purposes for shareholders and companies under the proposed provisional tax attribution regime.

Clause 112 amends section 138E, to ensure that the Commissioner’s proposed discretion to ignore tax types when determining late payment penalties while there are 2 Inland Revenue software platforms is not a disputable decision.

Clause 113 amends section 139B, to give the Commissioner a discretion to ignore tax types when determining late payment penalties while there are 2 Inland Revenue software platforms. Also, the amendments ensure that the Commissioner’s proposed power to set a new collection date, and to allow a concession from that date while there are 2 Inland Revenue software platforms, is correctly accounted for in the late payment penalties regime.

Clause 114 further amends section 139B, to remove incremental late payment penalties for most taxpayers. Also the amendments ensure that the unpaid tax for the late payment penalties regime is the same as the unpaid tax given by the concessionary use of money interest treatment for failed instalments for most standard method provisional taxpayers.

Clause 115 amends section 139BA, to ensure that the Commissioner’s proposed power to set a new collection date, and to allow a concession from that date while there are 2 Inland Revenue software platforms, is correctly accounted for in the late payment penalties regime.

Clause 116 amends section 139C, to ensure that the Commissioner’s proposed power to set a new collection date, and to allow a concession from that date while there are 2 Inland Revenue software platforms, is correctly accounted for in the late payment penalties regime.

Clause 117 amends section 142A, to provide the Commissioner a power to set a new collection date, and to allow a concession from that date while there are 2 Inland Revenue software platforms.

Clause 118 amends section 142B, to ensure that the Commissioner’s proposed power to set a new collection date, and to allow a concession from that date while there are 2 Inland Revenue software platforms, is correctly accounted for in the shortfall penalties regime.

Clause 119 amends section 173L, to ensure that a transfer of excess tax to another period or tax type of the taxpayer is not in excess of the amount of tax payable or in dispute for the requested period or tax type. Also, the amendments clarify the transfer date of GST refunds and GST overpayments.

Clause 120 amends section 173M, to ensure that a transfer of excess tax to a tax period or tax type of another taxpayer is not in excess of the amount of tax payable or in dispute for the requested period or tax type.

Subpart 3—Amendment to other enactment

Clause 121 amends section 27E(3)(b) of the Student Loan Scheme Act 2011, to correct a fault of expression.

Schedule 1New schedule 2 inserted

Schedule 1 contains new schedule 2 of the Tax Administration Act 1994, which lists amendments to the version of the CRS standard published by the Organisation for Economic and Cultural Development, for the purposes of determining the requirements for persons and entities under the CRS applied standard and the Act.