New Bill to Update Tax Rules in New Zealand
August 9, 2016 Taxation in New Zealand
WELLINGTON – New rules in New Zealand will ease tax administration for small businesses while increasing the burdens on potential tax cheats.
On August 7th the Minister of Revenue of New Zealand Michael Woodhouse announced that a bill has been introduced to the New Zealand Parliament, with newly proposed rules aimed at simplifying the tax obligations of small businesses while also closing some potential loopholes in the country’s trust laws.
As part of the new bill, small businesses would be allowed to use the Accounting Income Method for calculating and paying their Provisional Tax obligations, if the business is using an approved accounting software.
Provisional Tax in New Zealand is a system whereby the overall income tax obligations of a business are spread out over several payments during the year, with the payment amount to be calculated based on an estimated total tax obligation for the year.
The new system will allow businesses to pay an amount of Provisional Tax based directly on their realized incomes, instead of an estimate, a change which will help reduce filing and administrative obligations, while also cutting down on both overpayments and underpayments by businesses.
The new bill also sets out rules for disclosure by Foreign Trusts, which would be required to complete annual returns, confirm details of Settlors and Beneficiaries, and to be part of a Register searchable by selected authorities.
New Zealand Foreign Trusts have faced some controversy following the release of the Panama Papers, as indications emerged that the structures could be misused to avoid some tax obligations.
Photo By: Ari Bakker