Clause 3 sets the annual rates of income tax for the 2021–22 tax year.

Clause 4 provides that Part 2 amends the Goods and Services Tax Act 1985 (the GST Act).

Clause 5 amends section 2, which gives definitions of terms used in the GST Act.

Clause 6 amends section 3A, which gives the meaning of input tax. Subclause (1) inserts new subsection (2)(ab), which excludes from the calculation of input tax the cost of supplies of secondhand goods acquired before 1 October 1986. Subclause (2) replaces subsection (3)(a)(i) with new subparagraphs (i) and (ib), which distinguish between goods acquired by the supplier from a person who is not an associated person and goods acquired by the supplier from an associated person.

Clause 7 amends section 5, which gives the meaning of supply. Subclause (1) amends subsection (6AB) to replace a reference to the New Zealand Fire Service Commission with a reference to Fire and Emergency New Zealand. Subclause (2) amends subsection (6E)(b)(ii) to correct a cross-reference. Subclause (3) amends subsection (8A) to exclude an amount paid by a member to a body corporate from being treated as a levy for a supply of a service by the body corporate if the payment is reimbursement for a payment by the body corporate for a service that is an exempt supply to the member. Subclause (4) repeals subsection (18). Subclause (5) amends subsection (23), which provides for a mistake in treating a supply of land as being zero-rated under section 11(1)(m)(b), so that the correction of the error is attributed to the taxable period in which the error is found.

Clause 8 amends section 6(3)(c)(iii) by removing the requirement, for membership of a board to be excluded from being a taxable activity, that the board be a statutory board.

Clause 9 inserts new section 8AA, which sets out the arrangement of the GST Act after the amendments made by Part 2.

Clause 10 replaces section 11(1)(eb)(i) so that goods supplied to a resident for export are zero-rated if the other requirements for zero-rating are met.

Clause 11 amends section 11A(1)(c) so that if services of transporting goods between places in New Zealand are provided as part of the transporting of goods into or out of New Zealand, the supply of the services within New Zealand is zero-rated whether or not the supplier of those services is the same as the supplier of the transport into or out of New Zealand.

Clause 12 inserts new section 12C, which gives the requirements for the information that must be provided to the New Zealand Customs Service by a person who imports goods as part of a supply of distantly taxable goods. The inserted section is a relocation of the requirements of repealed section 24BAC so that they are in closer proximity to section 12, which provides for the imposition of tax on imported goods.

Clause 13 amends section 15 to allow for taxable periods that are equivalent to periods of 1 month, 2 months, and 6 months but end on a date or day that is approved under section 15E, as amended.

Clause 14 amends section 15B to provide how a person’s GST cycle, based on a period allowed under section 15E as amended, aligns with the person’s balance date.

Clause 15 amends section 15C to allow a person to apply to the Commissioner for a change of the person’s taxable period to a period allowed under section 15E as amended.

Clause 16 amends section 15D to provide for the timing of a change in a person’s taxable period to a period allowed under section 15E as amended.

Clause 17 amends section 15E to allow a person to apply to the Commissioner for approval of a taxable period that is equivalent to a period of 1 month, 2 months, or 6 months but ends on an approved date or day that is not on or near the last calendar day of a month.

Clause 18 inserts new section 15EB, which gives the criteria for the Commissioner’s approval under section 15E of a taxable period that does not end on or near the last calendar day of a month.

Clause 19 inserts new cross-headings and sections 19E to 19P. New sections 19E to 19J give the requirements for the keeping by registered persons of records relating to taxable supplies made in different situations. The requirements reflect the consequences of the repeal of section 24 and the amendment of section 25, which abolish the requirements for tax invoices and credit and debit notes relating to a taxable supply, and the insertion of new sections 19K to 19N, which require taxable supply information to be issued when a taxable supply is made and supply correction information to be issued when an error in taxable supply information is recognised. New section 19O provides for the rounding of amounts that include fractions of cents, while new section 19P allows the Commissioner to make rulings on the use of various symbols in electronic forms of taxable supply information and supply correction information.

Clause 20 inserts a new cross-heading before section 20 to indicate the topic dealt with by the following sections in Part 3 of the GST Act.

Clause 21 amends section 20, which provides for the calculation of the tax payable by a registered person for a taxable period. Subclause (1) replaces section 20(2), which required a registered person to hold tax invoices, credit notes and debit notes for each supply that supported the treatment of the supply in the registered person’s return for the taxable period. The replacement subsection requires a registered person to hold appropriate records, rather than documents, in support of their treatment of each supply in the calculation of the tax payable for the taxable period. Subclauses (2), (3), and (9) make consequential amendments. Subclause (4) inserts new subsection (3C)(c), which allows a registered person to have a deduction for input tax charged on the purchase of goods that have not been available for use by the registered person, if the supplier is not associated with the registered person. Subclause (5) replaces subsection (3EB)(b)(i), removing a requirement that a registered person have a minimum value of taxable supplies before being able to make an agreement with the Commissioner on a method of apportioning input tax between different types of supply. Subclause (6) amends subsection (3J) so that the requirement for apportionment based on the use of a supply of land is extended to require apportionment based on the use of a supply of all or part of a taxable activity. Subclause (7) amends subsection (3J)(a)(iii) to clarify the drafting. Subclause (8) replaces subsections (3L), (3LB), and (3LC) so that they provide for the treatment of input tax by all non-resident registered persons.

Clause 22 replaces section 20H(1)(d) to allow for the possibility that the supplies of financial services made by a registered person in raising funds may include the issue or allotment of a cryptoasset.

Clause 23 amends section 21, which provides for adjustments to the apportionment of supplies. Subclause (1) inserts new section 21(2)(ac), which removes the need for a further adjustment by a registered person who makes an adjustment for a change in use of goods or services and has not made a further change subsequently. Subclause (2) replaces subsection (4B)(b)(i), removing a requirement that a registered person have a minimum value of taxable supplies before being able to make an agreement with the Commissioner on a method of calculating adjustments.

Clause 24 amends section 21B, which provides for adjustments when a person becomes a registered person after acquiring goods and services. Subclause (1) replaces subsection (1)(b) to simplify the drafting of the section. Subclause (2) replaces the opening words of subsection (2) as a consequence of the effect of subclause (3). Subclause (3) replaces subsection (3) to take into account the abolition of tax invoices.

Clause 25 amends section 21F, which applies to the disposal of goods and services for which a registered person did not receive a full deduction of input tax for the cost price. Subclause (1) repeals subsections (2) and (3), which provide a formula for calculating the final adjustment for the goods and services. Subclause (2) amends the opening words of subsection (4), which, as a consequence of subclause (1), gives the default formula for calculating the final adjustment. Subclause (3) replaces subsection (6) to prescribe a limit on the final adjustment that may be made for a disposal of land that is a taxable supply as a consequence of the registered person’s taxable activity. Subclause (4) consequentially amends subsection (7).

Clause 26 repeals section 24, resulting in the abolition of the requirement that, when requested, a registered person issue a tax invoice containing the prescribed content with each taxable supply to another registered person. The repeal is part of the changes made by new sections 19E to 19N, which prescribe the information that a registered person must issue with a taxable supply and the records that must be kept for each supply.

Clause 27 repeals section 24BA.

Clause 28 repeals section 24BAB.

Clause 29 repeals section 24BAC.

Clause 30 repeals section 24B.

Clause 31 amends section 25. Subclause (1) changes the section heading to show that it applies to adjustments for errors in accounting for taxable supplies. Subclause (2) replaces subsection (1) to give the application of the section. Subclause (3) repeals subsection (1B), which provided for changes under a Pharmac agreement. Subclause (4) amends subsection (2) to consequentially amend a cross-reference. Subclause (5) repeals subsections (3), (3A), (3B), and (3C), abolishing the requirement for a registered person to issue a credit note or debit note if there is an error in a tax invoice for a taxable supply. Subclause (6) replaces subsections (4) and (5) to provide for the treatment of an error in a return for a taxable period. Subclause (7) repeals subsections (6) and (7).

Clause 32 amends section 25AA consequentially on the abolition of tax invoices.

Clause 33 amends section 25AB consequentially.

Clause 34 repeals section 25A.

Clause 35 amends section 43, which gives the Commissioner a power to issue notices requiring deductions from amounts that would otherwise be paid to a person who is liable to the Commissioner for a payment of tax. The Commissioner’s power is extended to apply to amounts that would otherwise be paid to a person who is liable to meet the obligations of a person who defaults in the payment of tax to the Commissioner.

Clause 36 amends section 53 to allow for changes in terms used in the GST Act and for the abolition of tax invoices and of credit and debit notes.

Clause 37 amends section 55, which provides for a group of companies to be treated under the GST Act as a single registered person. Subclause (1) changes the section heading to “GST groups” to reflect the change in the name for a group to which the section applies. Subclause (2) inserts new subsections (1A) to (1AQ), which spell out the responsibilities and status under the GST Act of the GST group and of its members. In particular, the member that is the representative member for a GST group has the responsibilities and status associated with being treated as having all the activities that each member would otherwise have and making all the supplies that each member would otherwise be treated as making to persons who are not members. Subclause (3) amends subsection (1) so that it refers to a GST group. Subclause (4) replaces subsection (1)(a) to clarify the requirements that must be met by companies that wish to become a GST group. Subclause (5) amends subsection (1)(b) to clarify the requirements relating to the value of supplies made by companies wishing to become a GST group. Subclauses (6), (7), and (9) amend subsections (1B), (2), and (4) respectively, so that each refers to a GST group. Subclause (8) amends subsection (3) to remove unnecessary words. Subclause (10) inserts new subsection (4AA), which provides for the date on which a newly-incorporated company may join a GST group. Subclauses (11) to (13) amend subsections (4A), (5), and (6) respectively, so that each refers to a GST group. Subclause (14) repeals subsections (7) and (7B), the content of which forms part of new subsections (1A) to (1AQ). Subclause (15) amends subsection (8) so that it refers to a GST group and to correct a cross-reference to a repealed subsection.

Clause 38 inserts new section 55B, which provides for a grouping of suppliers, called a “supplier group”, which can nominate a member to issue taxable supply information for supplies by each of the members. The rules largely correspond to those in section 24BA, which is repealed.

Clauses 39 and 40 amend sections 60 and 75, respectively, to remove references to tax invoices, credit notes, and debit notes.

Clause 41 amends section 75B to remove a reference to fax as a consequence of the amendments to sections 14F and 14G of the Tax Administration Act 1994.

Clause 42 amends section 78AA to remove references to tax invoices, credit notes, and debit notes.

Clause 43 amends section 78B to remove references to tax invoices, credit notes, and debit notes.

Clause 44 amends section 78BA to remove references to tax invoices, credit notes, and debit notes.

Clause 45 repeals section 78G, which provides for regulation-making powers that are no longer required.

Clause 46 provides that Part 3 amends the Income Tax Act 2007.

Clause 47 amends section BC 5 to delete a superfluous item from the list of defined terms.

Clause 48 amends section CB 6A, as a remedial matter, to clarify the relationship between the exceptions to the bright-line test for residential land and the new 10-year bright-line period.

Clause 49 amends section CB 16A. Subclauses (1) and (2) clarify the relationship between the exceptions to the bright-line test for residential land and the new 10-year bright-line period. Subclause (3) inserts a term that is defined in that section into the list of defined terms.

Clause 50 amends section CD 5 to correct a minor fault of expression.

Clause 51 amends section CD 39 to clarify the relationship between the company dividend rules and the transfer pricing rules.

Clause 52 amends section CD 43 to correct a minor fault of expression.

Clause 53 amends section CD 44 to correct a minor fault of expression and to ensure that share-for-share exchanges are counted appropriately for the purposes of determining available subscribed capital.

Clause 54 amends section CW 10, which exempts inter-corporate dividends from income tax, to remove the exclusion for local authorities.

Clause 55 amends section CW 39 as a consequence of removing the exclusion for local authorities from the inter-corporate dividend exemption.

Clause 56 amends section CX 47 to remove RDTI transition support payments from being excluded income.

Clause 58 amends section DB 8, which allows a company a deduction for interest incurred on money borrowed to acquire shares in another company that is part of the same group of companies, to restrict the availability of a deduction for local authorities to cases where the shares being acquired are in a council-controlled trading organisation.

Clause 59 inserts new section DB 9B, which denies a local authority a deduction for interest incurred on borrowed money that it lends to a council-controlled organisation other than a council-controlled trading organisation.

Clause 60 amends section DB 11, which allows a person who has a negative base price adjustment a deduction for deemed expenditure to the extent to which it arises from assessable income deemed to have been derived by the person under the financial arrangement in earlier income years. The amendment restricts the availability of a deduction for local authorities to cases where the financial arrangement is with a council-controlled trading organisation.

Clause 61 amends section DB 20B to delete a superfluous item from the list of defined terms.

Clause 62 replaces an inaccurate cross-heading above section DB 41.

Clause 63 amends section DB 41, which allows a company a deduction for charitable gifts, to exclude local authorities from being allowed such a deduction.

Clause 64 amends section DF 1 to remove RDTI transition support payments from the rules denying deductions in relation to grants.

Clause 65 amends section DV 18B to correct a minor fault of expression.

Clause 66 amends section EE 6 to correct an entry in the list of defined terms.

Clause 67 amends section EE 40 to ensure that 0% depreciation rate buildings are depreciated appropriately in associated person transactions.

Clause 68 amends section EE 44 to correct a fault of expression.

Clause 69 amends section EJ 10B to correct faults of expression.

Clause 70 amends section EL 3 to properly account for income from foreign loans in the loss-making residential rental property rules.

Clause 71 amends section EM 1 as part of providing a new portfolio-based method for determining income and expenditure for fair dividend rate hedges.

Clause 72 amends section EM 3 to provide that, in some circumstances, no New Zealand dollar-denominated leg is required for a hedge under the proposed new portfolio-based method for determining income and expenditure for fair dividend rate hedges.

Clause 73 replaces section EM 4 as part of providing elections for the proposed new portfolio-based method for fair dividend rate hedges and consequentially amending and correcting the current hedge-by-hedge method.

Clause 74 amends section EM 5 as part of consequentially amending and correcting the current hedge-by-hedge method for fair dividend rate hedges.

Clause 75 inserts new section EM 5B to provide a new portfolio-based method for determining income and expenditure for fair dividend rate hedges.

Clause 76 amends section EM 6 as part of providing a new portfolio-based method for determining income and expenditure for fair dividend rate hedges and to specifically account for hedges entered into and settled within a single valuation period.

Clause 77 amends section EM 7 as part of providing a new portfolio-based method for determining income and expenditure for fair dividend rate hedges.

Clause 78 amends section EM 8 to provide new definitions as part of providing the proposed new portfolio-based method for fair dividend rate hedges and consequentially amending and correcting the current hedge-by-hedge method.

Clause 79 inserts new section EW 5(3BA) and (3BAB) to provide that a cryptoasset is an excepted financial arrangement, with an exception for a cryptoasset that produces a return for the owner at a rate that is known in advance.

Clause 80 amends section EW 46C to correct a matter of nomenclature (forgiven / remitted) and to ensure the ambit of the economic group debt remittance regime appropriately includes New Zealand-based companies.

Clause 81 amends section FH 11, which provides for the treatment of a transaction within the New Zealand tax base that is a source of funds for a payment producing a hybrid mismatch in a foreign tax jurisdiction that does not have hybrid mismatch legislation. All the clauses except subclause (4) come into force on 1  July 2018. Subclause (1) replaces subsection (1) with new subsection (1), which clarifies the description of the 2 types of transaction to which the section applies, and new subsection (1B), which clarifies the relationship, between the funds from a transaction and a funded payment producing the hybrid mismatch, that results in a deduction from the transaction being disallowed by the section. New subsection (1B) omits a former requirement that the funded payment be received in a country or territory outside New Zealand. Subclause (2) amends subsection (2), which states that the amount of the deduction that is disallowed is given by subsection (3) or (4), so that the subsection is subject to new subsections (5) and (6). Subclause (3) replaces subsection (4) with new subsection (4), which relates the amount of the deduction that is disallowed to the amount of the funded payment for which the foreign jurisdiction would disallow a deduction if the jurisdiction had hybrid mismatch legislation. Subclause (4) replaces subsection (5) with effect from the date on which the amendment receives the Royal assent. New subsection (5) gives the methods that must be used to determine whether funding is related to a payment in the foreign jurisdiction and, if so, the amount of the deduction that must be denied. Subclause (5) inserts new subsection (6), which gives the conditions under which a deduction that is disallowed under subsection (2) in an income year may be allowed as a deduction in a later income year.

Clause 82 amends section FH 15, which gives definitions of terms used in the hybrid mismatch legislation. Subclause (1) replaces the definition of hybrid mismatch so that the term is defined by reference to the effects of subpart FH. Subclause (2) amends the definition of hybrid mismatch legislation so that the term applies to legislation having the effect of all or part of subpart FH.

Clause 83 amends section FM 8 as a consequence of removing the exclusion for local authorities from the inter-corporate dividend exemption.

Clause 84 amends section FO 2 to correct a cross-reference.

Clause 85 amends section FO 21 to correct a minor fault of expression.

Clause 86 amends section GC 18 to correct the amount that is compared with the total group debt of the borrower’s worldwide group.

Clause 87 replaces section HF 7, which defines taxable Maori authority distribution, to separate the requirement that the distribution not be a cash distribution to a member in relation to a notional distribution for which the Maori authority has made an election under section OB 82 from the requirements that relate to the income of the Maori authority that is the source of the distribution.

Clause 88 amends section HR 3 to replace the reference to the Housing New Zealand Corporation with a reference to Kāinga Ora–Homes and Communities.

Clause 89 amends section HR 9BA by replacing subsection (1) to provide for an additional way of making an election under section HR 9.

Clause 90 amends section LB 1B as a consequence of changing the heading to section OB 32.

Clause 91 amends section LE 2 to exclude local authorities from having a tax loss component for excess imputation credits.

Clause 92 amends section LY 5 to allow supporting R&D activities that occur immediately before or after the start or end of relevant core activities to be counted for the R&D tax credit.

Clause 93 amends section LY 9 to correct an entry in the list of defined terms.

Clause 94 amends section LY 10 to correct 2 entries in the list of defined terms.

Clause 95 amends section MD 9, which gives the fifth requirement for an entitlement to an in-work tax credit. Subclause (1) amends subsection (1)(a) to remove the requirement that the person who is normally an earner derive certain types of income as a full-time earner. The full-time earner requirement was removed on 1 July 2020, but was inadvertently reinserted on 1 April 2021. Subclauses (2) and (3) replace subsection (4) and amend subsection (5), respectively, as a consequence of the removal of the full-time earner requirement on 1 July 2020. Subclause (4) reinstates full-time earner in the list of defined terms, as it still appears in subsections (4) and (5).

Clause 96 amends section MX 3 to correct cross-references.

Clause 97 amends section OA 9 to correct a cross-reference.

Clause 98 amends section OB 4, which provides for imputation credits from payments of tax made by an ICA company. Subclause (1) replaces the heading to the section. Subclause (2) replaces subsection (1) to include imputation credits arising from a transfer of excess tax to the company under section 173L or 173M of the Tax Administration Act 1994 or under section RC 32(5)(b). Subclause (3) inserts the cross-reference to the table containing the reference to the imputation credit and the transfer of excess tax to the ICA company. Subclause (4) amends subsection (4)(a) to introduce a cross-reference to new paragraph (c). Subclause (5) replaces subsection (4)(b) with new subsection (4)(c), which provides for the time at which the transfer affects the imputation credit account and permits the credit to be at the time that the transfer is requested, in some circumstances.

Clause 99 amends section OB 32, which provides for imputation debits from refunds of tax to an ICA company. Subclause (1) replaces the heading to the section. Subclause (2) amends subsection (1) to include imputation debits arising from a transfer of excess tax by the company under section 173L or 173M of the Tax Administration Act 1994 or under section RC 32(5)(b). Subclause (3) inserts the cross-reference to the table containing the reference to the imputation debit and the transfer of excess tax by the ICA company. Subclause (4) amends subsection (4) so that the application of the subsection is limited to the consequences of a refund of tax. Subclause (5) replaces subsection (6), which provides for the time at which the transfer affects the imputation credit account and permits the debit to be at the time that the transfer is requested, in some circumstances.

Clause 100 amends table O1 to reflect the amendments to section OB 4.

Clause 101 amends table O2 to reflect the amendments to section OB 32.

Clause 102 amends section OK 2, which provides for Maori authority imputation credits from payments of tax made by a Maori authority. Subclause (1) replaces the heading to the section. Subclause (2) amends subsection (1) to include imputation credits arising from a transfer of excess tax to the Maori authority from another period or tax type under section 173L of the Tax Administration Act 1994. Subclause (3) inserts the cross-reference to the table containing the reference to the imputation credit and the transfer of excess tax. Subclause (4) replaces subsection (4), which provides for the time at which the transfer affects the Maori authority credit account and permits the credit to be at the time that the transfer is requested, in some circumstances.

Clause 103 amends section OK 3, which provides for Maori authority imputation credits from transfers of excess tax made to the Maori authority by another Maori authority. Subclause (1) replaces the heading to the section. Subclause (2) replaces subsection (1) to include imputation credits arising from a transfer of excess tax to the Maori authority under 173M of the Tax Administration Act 1994 or under section RC 32(5)(b). Subclause (3) inserts the cross-reference to the table containing the reference to the imputation credit and the transfer of excess tax to the Maori authority. Subclause (4) replaces subsection (3) with new subsection (4), which provides for the time at which the transfer affects the Maori authority credit account and permits the credit to be at the time that the transfer is requested, in some circumstances.

Clause 104 amends section OK 11, which provides for Maori authority imputation debits from transfers of excess tax made by a Maori authority. Subclause (1) replaces the heading to the section. Subclause (2) replaces subsection (1) to include imputation credits arising from a transfer of excess tax by the Maori authority to another Maori authority under section 173M of the Tax Administration Act 1994 or section RC 32(5)(b). Subclause (3) inserts the cross-reference to the table containing the reference to the imputation debit and the transfer of excess tax. Subclause (4) replaces subsection (3), which provides for the time at which the transfer affects the Maori authority credit account and permits the credit to be at the time that the transfer is requested, in some circumstances.

Clause 105 amends section OK 12, which provides for Maori authority imputation debits from refunds of income tax made to a Maori authority. Subclause (1) replaces the heading to the section. Subclause (2) replaces subsection (1) to include imputation debits arising from a transfer of excess tax to another period or tax type by the Maori authority under section 173L of the Tax Administration Act 1994. Subclause (3) inserts the cross-reference to the table containing the reference to the imputation debit and the transfer of excess tax. Subclause (4) replaces subsection (6), which provides for the time at which the transfer affects the Maori authority credit account and permits the credit to be at the time that the transfer is requested, in some circumstances.

Clause 106 amends table O17 to reflect the amendments to sections OK 2 and OK 3.

Clause 107 amends table O18 to reflect the amendments to section OK 11 and OK 12.

Clause 108 amends section OP 12, which gives a consolidated imputation group an imputation credit for the amount of an imputation credit attached to a dividend derived by a group company, so that a consolidated imputation group to which a local authority belongs will not have an imputation credit for imputation credits attached to dividends derived by the local authority.

Clause 109 amends section OP 30, which gives a consolidated imputation group an imputation debit for the amount of a refund of income tax or provisional tax paid to the group, so that a consolidated imputation group to which a local authority belongs will not have an imputation debit for a refund of income tax or provisional tax paid to the local authority.

Clause 110 amends section RC 35B as a consequence of changing the heading to section OB 32.

Clause 111 amends section RC 38 so that the discount rate for the early-payment discount is related to the Commissioner’s paying rate, rather than being set separately.

Clause 112 amends section RC 40 to include, in the definition of small-business person, a person who conducts a business on their own account as the owner of a look-through company.

Clause 113 amends section RD 5 to correct cross-references.

Clause 114 replaces section RD 45, which provides when an employer is liable to pay fringe benefit tax on an unclassified benefit provided to an employee, so that unclassified benefits provided by persons associated with the employer to employees of those associated persons are only included in the relevant calculations if the employers are companies that are part of the same group of companies.

Clause 115 replaces section RD 67, which specifies the tax rate to be applied to an employer’s superannuation cash contribution, to allow employers to pay tax at a rate of 33% (instead of 39%) on contributions that are for the benefit of past employees.

Clause 116 amends section RE 2 as a consequence of removing the exclusion for local authorities from the inter-corporate dividend exemption.

Clause 117 amends section RE 10C to clarify that a non-resident custodial institution is an end investor. Where a non-resident custodial institution has a New Zealand branch, the amendments confirm that the branch must withhold tax from payments of investment income they receive.

Clause 118 amends section RE 21 to provide more flexibility in relation to frequency of tax payments by persons who estimate they will be required to withhold less than $500 of resident withholding tax each month.

Clause 119 amends section RF 12, which provides that NRWT is payable at a rate of 0% on some non-resident passive income, so that the exclusion for interest relating to related-party debt does not apply in some limited circumstances.

Clause 120 amends section RM 1, which gives the scope of subpart RM, to remove a redundant paragraph.

Clauses 121 and 122 amend sections RM 2 and RM 4, which specify the circumstances in which the Commissioner must refund overpaid tax, to deem, for the purposes of those sections, the provision by a person of a return for an amount of an ancillary tax for a period to be the making of an assessment of the amount of the ancillary tax by the person. As those sections require an assessment to have been made for overpaid tax to be refunded, the amendments will enable overpaid amounts of ancillary tax to be refunded.

Clause 123 amends section RM 27 as a consequence of changing the heading to section OK 2.

Clause 124 amends section RP 17 by replacing subsection (1) so that it refers to the list of purposes in section RP 17B for which funds in a tax pooling account may be used, instead of giving the same list of purposes.

Clause 125 amends section RP 17B, which governs the use of tax pooling accounts. Subclause (1) inserts new subsection (2)(f), which refers to the use of an amount in a tax pooling account to satisfy a new liability as given by new subsections (12) to (14) inserted by subclause (6). Subclause (2) amends subsection (4), which gives the period in which a person may use funds in a tax pooling account to satisfy an obligation for provisional tax or terminal tax for a tax year or for interest under Part 7 of the Tax Administration Act 1994. The subclause replaces subsection (4)(a) and (b) so that the funds may be used from the beginning of the person’s income year that corresponds to the tax year. Subclauses (3) to (5) repeal subsections (9) to (11) respectively. Subclause (6) inserts new subsections (12) to (14), which replace and expand the repealed subsections. Funds in a tax pooling account may be used to satisfy a new liability relating to any of a list of categories of tax in new subsection (14) if the way in which the person becomes aware of the new liability, and makes voluntary disclosure of the liability to the Commissioner, meets the requirements of new subsection (12) and the Commissioner notifies the person under new subsection (13) that the funds may be used to meet the new liability.

Clause 126 amends section RP 19 consequentially on the amendments to section RP 17B(4).

Clause 127 amends section YA 1. Subclause (2) inserts a new definition of cryptoasset. Subclause (3) replaces the definition of date of acquisition to update section headings and include a reference to the definition of that term in section CZ 39. Subclause (4) amends the definition of decommissioning to provide that plugged wells are not decommissioned unless the plugging is permanent. Subclause (5) amends the definition of dwelling to add a cross-reference to section CZ 40. Subclause (6) amends the definition of election day worker to generalise references to electoral officials and to extend the application of the election day worker tax code to advance voting workers. Subclause (7) amends the definition of employer by repealing a paragraph as a consequence of the amendment to section RD 45. Subclauses (8) and (9) replace the definition of group of persons to include a reference to the definition of that term in section CZ 40. Subclause (10) inserts new definitions of hybrid entity and hybrid mismatch, which refer to the definitions in section FH 15. Subclause (11) amends the definition of nominal share to correct a minor fault of expression. Subclause (12) inserts a new definition of non-eligble asset. Subclause (13) amends the definition of principal settlor to update the heading of a section referred to. Subclause (14) amends the definition of proportional debt ratio to correct a minor fault of expression. Subclause (15) amends the definition of proportional ownership ratio to correct a minor fault of expression. Subclause (16) amends the definition of residential land to correct a minor fault of expression. Subclause (17) amends the definition of settlement to correct a cross-reference and update a section heading.

Clause 128 amends section YA 4 to remove a reference to fax as a consequence of the amendments to sections 14F and 14G of the Tax Administration Act 1994.

Clause 129 amends section YC 13, which provides for corporate spin-outs of companies, to provide for the continuity of ownership of a company during the period in which its ownership is changed and it becomes a spun-out company under the section.

Clause 130 amends section YE 1 to correct a date in the definition of early balance date.

Clause 131 amends section YZ 5, which provides that the New Zealand Memorial Museum Trust—Le Quesnoy is a donee organisation, to replace the date on which the effect of the section ends.

Clause 132 amends schedule 21B to ensure that RDTI transition support payments are appropriately reflected for the purposes of R&D tax credits.

Clause 133 amends schedule 32, which lists organisations to which a charitable or other public benefit donation entitles the donor to a deduction.

Clause 134 sets out the clauses that amend the Tax Administration Act 1994.

Clause 135 amends section 3. Subclause (2) amends the definition of civil penalty to bring the new penalty for acquiring or possessing electronic sales suppression tools within the meaning of that term. Subclause (3) inserts a definition of electronic sales suppression tool. Subclause (4) amends the definition of employment income information to insert cross-references to new section 108AB and section 108B. Subclause (5) amends the definition of proscribed question to remove superfluous wording. Subclause (6) amends the definition of START tax type by inserting 3 new tax types with effect from 1 March 2021. Subclause (7) repeals the definition of START tax type with effect from 1 April 2022, when the definition is expected to cease to be relevant for the administration of tax. Subclause (8) amends the definition of tax shortfall to correct a cross-reference.

Clause 136 amends section 14 to remove a reference to fax as a consequence of the amendments to sections 14F and 14G.

Clause 137 amends section 14F to remove fax as an approved mode of communication between a person and the Commissioner.

Clause 138 amends section 14G to remove a fax number as a permitted contact address for the delivery of information under section 14F(2) and (4).

Clause 139 amends section 16C to clarify the meaning of revenue information and sensitive revenue information.

Clause 140 amends section 25MB to clarify that a non-resident custodial institution is an end investor. Where a non-resident custodial institution has a New Zealand branch, the amendments confirm that the branch must report investment income information relating to payments of investment income they receive.

Clause 141 inserts new section 25NB to provide for less onerous investment income information reporting requirements for certain persons.

Clause 142 inserts new section 33F to allow more time for filing a supplementary return for research and development tax credits.

Clause 143 amends section 43B, which limits the obligations to make tax returns for trustees of trusts that are referred to in the section as non-active trusts. The amendments extend the application of the section to the executors or administrators of estates that are non-active in the same way as the trustees to which the section applies. Subclause (1) amends the heading to the section. Subclause (2) replaces subsections (1) and (2) so that the criteria for an estate to be non-active are the same as for a trust and the requirements for an executor or administrator to be excused from making a return of income are the same as for a trustee. Subclauses (3) to (5) make consequential amendments.

Clause 144 amends section 68CB to allow more time for variations to general approvals in relation to supporting research and development activities, in some circumstances.

Clause 145 inserts new section 68CF to allow more time for applications for, and variations to, approvals in relation to research and development tax credits for the 2020–21 income year.

Clauses 146, 147, 154, and 156 amend sections 89B, 89L, 125, and 138P as a consequence of establishing a time bar for amending an assessment of KiwiSaver contributions. These sections contain references to existing time bar provisions and the amendments add references to the new time bar provision.

Clause 148 amends section 89P to clarify that the Commissioner is not required to issue a challenge notice where, following completion of the disputes process in a taxpayer-initiated dispute, an assessment is issued that reflects some but not all of the adjustments proposed by the taxpayer.

Clause 149 amends section 108 to establish a time bar for amending an assessment of the ACC earners’ levy so as to increase an amount assessed. This new time bar is aligned with the existing time bar for amending an assessment of the income tax component of PAYE deductions.

Clause 150 inserts new section 108AB, which establishes a time bar for amending an assessment of KiwiSaver contributions so as to increase an amount assessed.

Clause 151 amends section 108B, which allows existing time bars to be extended in certain circumstances, so that the section also allows the new time bar for amending an assessment of KiwiSaver contributions to be extended in the same circumstances.

Clause 152 amends section 113 to remove a cross-reference to a repealed provision.

Clause 153 amends section 113A by adding some missing words to ensure the provision works as intended for errors in fringe benefit tax returns.

Clause 155 amends section 138E to clarify that the disputes and challenge processes in the Tax Administration Act 1994 do not apply in relation to decisions of the Commissioner using the remedial powers in that Act.

Clauses 157, 158, and 159(1) remove a Commissioner’s discretion in relation to late filing penalties, non-electronic filing penalties, and late payment penalties from sections 139A, 139AA, and 139B.

Clause 159(2) and (3) amends section 139B to correct cross-references.

Clause 160 inserts new section 141EE, which establishes a civil penalty of $5,000 for acquiring or possessing an electronic sales suppression tool.

Clause 161 amends section 141FB, which provides for a 50% reduction of shortfall penalties for evasion for prior good behaviour, so that the reduction is not applied where the use of a suppression tool contributed to the evasion.

Clause 162 inserts new section 141GB, which provides for a reduction in the new civil penalty for acquiring or possessing an electronic sales suppression tool where the person liable to pay the penalty voluntarily discloses to the Commissioner details relating to the acquisition, possession, control, or use of the electronic sales suppression tool.

Clause 163 amends section 143, which provides for absolute liability offences, as a consequence of the changes to the GST Act, including the abolition of tax invoices, credit notes, and debit notes. Subclause (1) amends the section heading to show that the offences may be absolute liability offences or strict liability offences. Subclause (2) amends subsection (1)(ba) so that the offence relates to the supply of taxable supply information. Subclause (3) consequentially amends subsection (1)(c). Subclause (4) inserts new subsection (1)(d), which is a strict liability offence relating to excessive claims for input tax. Subclause (5) inserts new subsection (2D), which provides for a defence of reasonable care to the offence inserted by subclause (4).

Clause 164 amends section 143A, which provides for knowledge offences, as a consequence of the changes to the GST Act, including the abolition of tax invoices, credit notes, and debit notes. Subclause (1) repeals subsection (1)(f), which relates to the issue of tax invoices. Subclauses (2) and (3) correct cross-references to repealed provisions.

Clause 165 inserts new sections 143BB and 143BC. New section 143BB establishes a criminal penalty for manufacturing or supplying an electronic sales suppression tool. A person convicted of such an offence will be liable to a fine of up to $250,000. New section 143BC establishes a criminal penalty for acquiring or possessing an electronic sales suppression tool. A person convicted of such an offence is liable to a fine of up to $50,000.

Clause 166 amends section 143D, which provides for offences related to the disclosure of certain information by persons other than revenue officers, to bring employees of other government agencies within the scope of the provision.

Clause 167 amends section 157A, which provides that a person is liable to be prosecuted for an offence for failing to deduct an amount from payments to a taxpayer when the deduction is required by a notice from the Commissioner under certain provisions, to include express reference to section 12L of the Gaming Duties Act 1971.

Clause 168 amends section 173K, which provides as a general rule that a transfer by a taxpayer of tax paid in excess is treated as a refund to the transferor and tax paid in excess that is transferred to a taxpayer is treated as tax paid by the transferee. The clause inserts a new subsection (3), which provides that the general rule does not apply to Part O of the Income Tax Act 2007, which relates to memorandum accounts.

Clause 169 amends section 183ABAB, which provides for remission of interest payable by taxpayers affected by COVID-19. The amendment replaces subsection (4) to authorise an Order in Council extending the time limit imposed by subsection (3)(b).

Clause 170 amends section 183C as a consequence of the repeal of the definition of START tax type, which comes into force on 1 April 2022.

Clause 171 amends section 225, which authorises the making of regulations for several purposes. The amendments repeal powers that are no longer required.

Clause 172 repeals section 225AA, which authorises the making of regulations relating to co-operative dairy companies, co-operative milk marketing companies, and co-operative pig marketing companies. The regulations made under the powers are being revoked and the powers are no longer required.

Clause 173 amends schedule 7. Subclause (1) amends clause 23B, which enables Inland Revenue to share information with other government agencies for COVID-19 response purposes, to remove the sunset provision. Subclauses (2) and (3) repeal clauses that enable Inland Revenue to disclose certain information to the Registrar of Companies and the Accident Compensation Corporation.

Clause 174 amends schedule 8. Subclause (1) corrects a cross-reference. Subclause (2) corrects a description of an amount of a type of income.

Clause 175 sets out the clauses that amend the Child Support Act 1991.

Clause 176 amends section 40AA. The amendment to paragraph (c) of the definition of election period corrects a fault of expression to ensure that backdated estimations of income are able to cover the child support year in which they are made. Paragraph (b) of that definition is consequentially amended.

Clause 177 amends section 40. Subclause (1) inserts new subsection (4)(da) to require the Commissioner to refuse to accept an election by a person to estimate their income if notice of the election is given after the child support year to which it relates and the person has already estimated their income for that child support year. Subclause (2) amends subsection (8) to correct a fault of expression to ensure that backdated estimations are able to cover the child support year in which they are made. Subclause (3) consequentially amends subsection (9).

Clause 178 amends section 44 to insert new subparagraph (ia) into paragraph (a) of the definition of reconciliation period to provide that a reconciliation period for a backdated estimation starts on the first day of the month in which the formula assessment begins, rather than the first day of the month in which the notice is given. This is intended to enable backdated estimations to be squared-up accurately.

Clause 179 replaces section 81A, which specifies when the Commissioner may backdate an amendment to an assessment, to expressly provide that, in order to exercise this discretion, the Commissioner must be satisfied that the assessment was made on the basis that certain living circumstances existed at the time when the assessment begins that did not in fact exist at that time, and that the relevant living circumstances advised by the recipient of the assessment did exist at that time. The replacement section also requires the recipient to have provided to the Commissioner such supporting documentation as the Commissioner requires before the Commissioner may exercise the discretion.

Clause 180 amends section 87A, which sets a time bar of 4 years for amendment of certain assessments. Subclause (1) amends subsection (1) to provide that the Commissioner may only amend an assessment within 4 years from the end of the child support year to which the assessment relates, rather than within 4 years from the end of the child support year in which the assessment was given. Subclause (2) amends subsection (3), which provides an exception when a liable person has a dual liability with an overseas jurisdiction and has paid financial support in that overseas jurisdiction, to enable the exception to also be applied when a person has been assessed for, but has not paid, financial support in an overseas jurisdiction.

Clause 181 amends section 88 to align wording with replacement section 81A.

Clause 182 amends section 89H, which relates to applications for exemptions from payment of financial support, to require a person applying for an exemption on the grounds of a long-term period of illness to provide evidence that they are unable to engage in paid work as a result of the long-term period of illness.

Clause 183 amends section 152B, which relates to the offsetting of child support liabilities, to allow the Commissioner to offset liabilities under voluntary agreements.

Clause 184 amends section 180D to update terminology so that it is aligned with the terminology currently used in section 135.

Clause 185 amends Schedule 1, which contains application, transitional, and savings provisions, to remove unnecessary provisions from Part 4 and insert a new Part 5 relating to amendments made by this Bill.

Clause 186 amends Schedule 3 to delete redundant wording from a heading in a table.

Clause 187 sets out the clauses that amend the KiwiSaver Act 2006.

Clause 188 amends section 4. Subclause (2) inserts a definition of assessment, which is used in new section 91B. Subclause (3) amends the definition of employer contribution to, in cases where an employer knows that an employee has opted out of the overall KiwiSaver scheme, exclude an amount that would otherwise be an employer contribution.

Clauses 189, 190, 191, 194, 195, 196, and 197 amend sections 80, 81, 81B, 100, 101, 101AA, 114, which are existing refund provisions, to make them subject to the new time bar for refunds of excess employee and employer contributions that have arisen on an amended assessment.

Clause 192 amends section 83 to correct a modification of how the Unclaimed Money Act 1971 applies to money that has been in the possession of the Commissioner under the KiwiSaver Act 2006 for at least 5 years and about which the Commissioner has insufficient information to process in the usual way.

Clause 193 inserts a new cross-heading and section 91B into Part 3, subpart 2. The new section establishes a time bar for refunds of excess employee and employer contributions that have arisen on an amended assessment.

Clause 198 sets out the clauses that amend the Student Loan Scheme Act 2011 (the SLSA).

Clause 199 amends section 211 to remove fax as an approved means of notifying a person under the SLSA.

Clause 200 amends section 212 to remove fax as an approved means of notifying a person in writing under the SLSA.

Clause 201 repeals sections 2(37), 235, and 239(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020. Those provisions enable schedule 7, part A, clause 7 of the Tax Administration Act 1994 (which enables Inland Revenue to disclose certain information to the Serious Fraud Office) to be repealed, and a cross-reference to that clause in section 143D of that Act to be removed, by Order in Council.

Clause 202 revokes the Co-operative Dairy Companies Income Tax Regulations 1955.

Clause 203 revokes the Cooperative Milk Marketing Companies Income Tax Regulations 1960.

Clause 204 revokes the Cooperative Pig Marketing Companies Income Tax Regulations 1964.