The taxation bill, which makes several changes to the law, has passed its third reading and is awaiting Royal Assent.
“Building a more competitive and productive economy for New Zealanders is a priority for this Government,” said Revenue Minister
Judith Collins. “Making sure that the tax rules keep up with social and economic changes, as well as current business practices, is a vital part of a well-functioning economy.”
The Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters)
Bill sets annual rates of income tax for the 2016-17 tax year and makes several changes, including in relation to closely held companies and the goods and services tax (GST).
The bill aims to stop conversion of small businesses to a company driven purely by tax considerations by simplifying the look-through company rules and the dividend rules for closely held companies.
It also aims to ensure greater fairness regarding tax treatment of interest earned in New Zealand by non-residents. Collins also said that the bill includes taxpayer-friendly changes to the GST rules, such as enabling businesses to deduct GST associated with the costs of raising capital.
It also includes changes for depreciation rollover relief for businesses in the upper South Island and Greater Wellington areas hit by last year’s earthquakes and aftershocks, the revenue minister said.
The other changes are in relation to related parties debt remission; loss grouping and imputation; remission income, insolvency, and bankruptcy; aircraft overhaul reserves; New Zealand double tax agreements; Schedule 32 donee status for charities; land tainting and council controlled organisations; loss offsets by mineral miners; Working for Families tax credits; information sharing; and the application of the time bar to ancillary taxes; and makes other remedial amendments.
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