Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill

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Hon Todd McClay

Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill

Government Bill



Explanatory note

1 Title

2 Commencement

Part 1
Annual rates of income tax

3 Annual rates of income tax for 2014–15 tax year

Part 2
Amendments to Income Tax Act 2007

4 Income Tax Act 2007 amended

5 Section BB 3 amended (Overriding effect of certain matters)

6 Section BH 1 amended (Double tax agreements)

7 New section CB 15B inserted (When land acquired)

8 Section CC 1 amended (Land)

9 Section CC 1B replaced (Consideration for agreement to grant, renew, extend, or transfer leasehold estate or licence)

10 Section CD 40 amended (Adjustment if dividend recovered by company)

11 Section CE 1 amended (Amounts derived in connection with employment)

12 New sections CE 1B to CE 1D inserted

13 Section CE 5 amended (Meaning of expenditure on account of an employee)

14 Section CG 2 amended (Remitted amounts)

15 New sections CG 2B to CG 2D inserted

16 New section CG 7B inserted (Disposals or applications after earlier deductions)

17 Section CT 1 amended (Disposal of exploratory material or petroleum mining asset)

18 Section CT 7 amended (Meaning of petroleum mining asset)

19 New section CV 17 inserted (Ceased charities: taxation of tax-exempt accumulation)

20 New sections CW 16B to CW 16F inserted

21 Section CW 17 amended (Expenditure on account, and reimbursement, of employees)

22 New section CW 17CB inserted (Payments for certain work-related meals)

23 New section CW 17CC inserted (Payments for distinctive work clothing)

24 New section CW 25B inserted (Accommodation provided to ministers of religion)

25 Section CW 38 amended (Public authorities)

26 Section CW 39 amended (Local authorities)

27 Section CW 41 amended (Charities: non-business income)

28 Section CW 42 amended (Charities: business income)

29 New section CW 42B inserted (Community housing trusts and companies)

30 Section CW 57 amended (Non-resident company involved in exploration and development activities)

31 Section CX 19 amended (Benefits provided instead of allowances)

32 Section CX 28 amended (Accommodation)

33 New section CZ 29 inserted (Accommodation expenditure: Canterbury earthquake relief)

34 New section CZ 30 inserted (Transitional provision: application of certain accommodation provisions)

35 New section CZ 31 (Accommodation expenditure: New Zealand Defence Force)

36 New section CZ 32 inserted (Treatment of certain petroleum storage facilities)

37 Section DB 1 amended (Taxes, other than GST, and penalties)

38 Section DB 10 amended (Interest or expenditure connected to profit-related or substituting debentures)

39 Section DB 19 amended (Expenses of failed or withdrawn application for resource consent)

40 Section DB 25 amended (Cancellation of shares held as revenue account property)

41 Section DB 37 amended (Expenses of failed or withdrawn patent application)

42 New section DB 40BA inserted (Expenses in application for plant variety rights)

43 Section DB 55 amended and repealed (Expenditure incurred in deriving exempt dividend)

44 New heading and sections DB 63 to DB 63C inserted

45 Section DD 4 amended (Employment-related activities)

46 Section DD 10 amended (Interpretation: reimbursement and apportionment)

47 Section DG 6 amended (Associated persons: company rule modified)

48 Section DZ 21 amended (Expenditure on certain assets before 31 March 2013)

49 Amendments to examples in subparts DG and DZ

50 Section DO 5 amended (Expenditure on land: planting of listed horticultural plants)

51 Section DP 8 amended (Forestry business on land bought from the Crown, Maori owners, or holding company: no deduction)

52 Section EA 3 amended (Prepayments)

53 Section EE 7 amended (What is not depreciable property?)

54 Section EE 25 amended (Depreciation loss for plant variety rights application granted in 2005–06 or later income year)

55 Section EE 57 amended (Base value in section EE 56 when none of sections EE 58, EE 59, and EZ 22(1) applies)

56 Section EE 67 amended (Other definitions)

57 Section EG 1 amended (Election to use balance date used in foreign country)

58 Section EI 7 amended (Leases: income derived in anticipation)

59 Section EI 8 amended (Disposal of land to the Crown)

60 Section EW 15D amended (IFRS financial reporting method)

61 Section EW 15F amended (Expected value method)

62 Section EW 15G amended (Modified fair value method)

63 Section EW 15H amended (Mandatory use of some determinations)

64 Section EW 15I amended (Mandatory use of yield to maturity method for some arrangements)

65 Section EW 32 amended (Consideration for agreement for sale and purchase of property or services, hire purchase agreement, specified option, or finance lease)

66 New sections EW 33B and EW 33C inserted

67 Section EW 35 amended (Value relevant for non-financial arrangements rule)

68 Section EX 5 amended (Direct control interests)

69 Section EX 9 amended (Direct income interests)

70 Section EX 20B amended (Attributable CFC amount)

71 Section EX 20C amended (Net attributable CFC income or loss)

72 Section EX 21B amended (Non-attributing active CFCs)

73 Section EX 21D amended (Non-attributing active CFC: default test)

74 Section EX 21E amended (Non-attributing active CFC: test based on accounting standard)

75 Section EX 22 amended (Non-attributing Australian CFCs)

76 Section EX 35 amended (Exemption for interest in FIF resident in Australia)

77 Section EX 46 amended (Limits on choice of calculation methods)

78 Section EX 50 amended (Attributable FIF income method)

79 Section EX 51 amended (Comparative value method)

80 Section EX 58 amended (Additional FIF income or loss if CFC owns FIF)

81 Section EZ 32D amended (Value of asset fraction: CFC with excessive debt funding and loan entered before 21 June 2012)

82 New sections EZ 70 and EZ 71 inserted

83 New section EZ 72 inserted (Substituting debentures repeal: transitional rules)

84 Section FA 2 amended (Recharacterisation of certain debentures)

85 Section FB 15 amended (Specified livestock valued under herd scheme)

86 Section FC 5 amended (Land transferred to close relatives)

87 Section FE 1 amended (What this subpart does)

88 Section FE 2 amended (When this subpart applies)

89 Section FE 3 amended (Interest apportionment for individuals)

90 Section FE 4 amended (Some definitions)

91 Section FE 13 amended (Financial arrangements entered into with persons outside group)

92 Section FE 14 amended (Consolidation of debts and assets)

93 Section FE 16 amended (Total group assets)

94 Section FE 18 amended (Measurement of debts and assets of worldwide group)

95 Section FE 25 amended (New Zealand group for excess debt entity that is a company)

96 Section FE 26 amended (Identifying New Zealand parent)

97 New section FE 31D inserted (Worldwide group for entity with New Zealand parent determined by non-resident owning body)

98 New defined term inserted in lists for some sections in subpart FE

99 Section FM 5 amended (Liability when company leaves consolidated group)

100 Section GB 34 amended (ICA arrangements for carrying amounts forward)

101 Section HA 31 amended (Revocation of directors' elections)

102 Section HC 27 amended (Who is a settlor?)

103 Section HC 30 amended (Treatment of foreign trusts when settlor becomes resident)

104 Section HC 31 amended (When existing trusts come into tax base)

105 Section HD 14 amended (Companies issuing debentures)

106 Section HM 1 amended (Outline of subpart and relationship with other Parts)

107 New heading and section HR 11 inserted

108 New section HR 12 inserted (Ceased charities: taxation of tax-exempt accumulation)

109 Section IW 1 amended (Shortfall penalties)

110 Section LD 3 amended (Meaning of charitable or other public benefit gift)

111 Section LJ 3 amended (Meaning of foreign income tax)

112 Section LJ 5 amended (Calculation of New Zealand tax)

113 Subpart LZ amended (Terminating provisions)

114 Section MB 1 amended (Adjustments for calculation of family scheme income)

115 Section MB 7B amended (Family scheme income from employment benefits: employees not controlling shareholders)

116 Section MB 13 amended (Family scheme income from other payments)

117 Section RD 5 amended (Salary or wages)

118 Section RD 6 amended (Certain benefits and payments)

119 Section RE 2 amended (Resident passive income)

120 Section RE 14 amended (Non-cash dividends other than certain share issues)

121 New section RE 18B (Capital value increase under inflation-indexed instruments: RWT cap)

122 Section RF 2 amended (Non-resident passive income)

123 Section YA 1 amended (Definitions)

124 Schedule 14 amended (Depreciable intangible property)

125 Schedule 20 amended (Expenditure on farming, horticultural, aquacultural, and forestry improvements)

126 Schedule 32 amended (Recipients of charitable or other public benefit gifts)

Part 3
Amendments to other enactments

Tax Administration Act 1994

127 Tax Administration Act 1994 amended

128 Section 3 amended (Interpretation)

129 Section 22 amended (Keeping of business and other records)

130 Section 25 amended (RWT withholding certificates)

131 Section 33A amended (Annual returns of income not required)

132 Section 33AA amended (Exceptions to requirement for return of income)

133 Section 51 amended (RWT withholding reconciliation statements)

134 New heading and section 91AAT inserted

135 Section 93 amended (Assessment of FBT)

136 Section 94 amended (Assessment of qualifying company election tax and additional tax)

137 Section 95 amended (Assessment of withdrawal tax)

138 Section 97 amended (Assessment of imputation penalty tax)

139 Section 97B amended (Assessment of Maori authority distribution penalty tax)

140 Section 98 amended (Assessment of ESCT)

141 Section 98B amended (Assessment of retirement scheme contribution withholding tax)

142 Section 99 amended (Assessment of RWT)

143 Section 100 amended (Assessment of NRWT)

144 Section 101 amended (Assessment of further income tax)

145 Section 101B amended (Assessment of imputation additional tax)

146 Section 141B amended (Unacceptable tax position)

147 Section 141EB amended (Promoter penalties)

148 Section 141FD repealed (Shareholders of loss-attributing qualifying companies)

149 Section 142A amended (New due date for payment of tax that is not a penalty)

150 Section 143 amended (Absolute liability offences)

151 Section 143A amended (Knowledge offences)

152 Section 173B amended (Definitions)

153 Section 176 amended (Recovery of tax by Commissioner)

154 Section 177 amended (Taxpayer may apply for financial relief)

155 Section 177A replaced (Definition of serious hardship)

156 Section 177B amended (Instalment arrangements)

157 Section 177C amended (Write-off of tax by Commissioner)

158 New Part 11B inserted (Foreign account information-sharing agreements)

159 New section 225D inserted (Regulations: community housing trusts and companies)

Goods and Services Tax Act 1985

160 Goods and Services Tax Act 1985 amended

161 Section 2 amended (Interpretation)

162 Section 3 amended (Meaning of term financial services)

163 Section 5 amended (Meaning of term supply)

164 Section 6 amended (Meaning of term taxable activity)

165 Section 11 amended (Zero-rating of goods)

166 Section 11A amended (Zero-rating of services)

167 Section 20 amended (Calculation of tax payable)

168 New section 21FB inserted (Treatment when use changes to total taxable or total non-taxable use)

169 Section 21HB amended (Transitional rule related to treatment of dwellings)

170 Section 46 amended (Commissioner's right to withhold payments)

171 Section 54C amended (Non-residents: cancellation of registration)

Income Tax Act 2004

172 Income Tax Act 2004 amended

173 Section CD 29 amended (Adjustment if dividend recovered by company)

174 Section DB 44 amended (Expenditure incurred in deriving exempt income)

175 Section EE 7 amended (What is not depreciable property?)

176 Section EG 1 amended (Election to use balance date used in foreign country)

177 Section EX 5 amended (Direct control interests)

178 Section EX 9 amended (Direct income interests)

179 Section EX 44 amended (Comparative value method)

180 Section OB 1 amended (Definitions)

Child Support Act 1991

181 Child Support Act 1991 amended

182 Section 2 amended (Interpretation)

183 Section 9 amended (Social security beneficiaries must apply for formula assessment)

184 Section 40 amended (Estimated taxable income)

185 Section 44 amended (End-of-year reconciliation)

186 Section 65 amended (Child support voluntary agreement no bar to application for formula assessment)

187 Section 81 amended (Notification requirements of liable parent)

188 Section 92 amended (Requirements in relation to objections)

189 Section 98 amended (Minimum liability in respect of child support)

190 Section 142 amended (Payment of formula assessment child support to custodians who are social security beneficiaries)

191 Section 179A amended (Waiver of right to payment)

Amendments to examples in subparts DG and DZ

The Parliament of New Zealand enacts as follows: