Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill

Hon Judith Collins

Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill

Government Bill

249—1

Contents

Explanatory note
1Title
2Commencement
3Annual rates of income tax for 2017–18 tax year
4Income Tax Act 2007
5Section BF 1 amended (Other obligations)
6Section CD 15 amended (Tax credits linked to dividends)
7Section CD 25 amended (Treasury stock acquisitions)
8New section CD 29C inserted (Transfers to shareholders by ASX-listed Australian company of shares in subsidiary)
CD 29CTransfers to shareholders by ASX-listed Australian company of shares in subsidiary
9Section CD 36 amended (Foreign investment fund income)
10Section CD 43 amended (Available subscribed capital (ASC) amount)
11Section CE 1 amended (Amounts derived in connection with employment)
12Sections CE 2 to CE 4 replaced
CE 2Benefits under employee share schemes
13Section CE 2 amended (Benefits under employee share schemes)
14Sections CE 6 and CE 7 replaced
CE 6Trusts are nominees
CE 7Meaning of employee share scheme
CE 7BMeaning of share scheme taxing date
CE 7CMeaning of employee share scheme beneficiary
CE 7DMeaning of replacement employee share scheme
15Section CQ 5 amended (When FIF income arises)
16New section CR 3B inserted (Lloyd’s of London: income from life insurance premiums)
CR 3BLloyd’s of London: income from life insurance premiums
17Section CT 5 amended (Petroleum mining operations outside New Zealand)
18New section CT 5B inserted (Resuming commercial production)
CT 5BResuming commercial production
19Section CT 6 amended (Meaning of petroleum miner)
20Section CT 6B amended (Meaning of petroleum mining operations)
21Section CT 7 amended (Meaning of petroleum mining asset)
22Section CV 17 amended (Non-exempt charities: taxation of tax-exempt accumulation)
23New section CV 20 inserted (Employee share schemes)
CV 20Employee share schemes
24Section CW 17CB amended (Payments for certain work-related meals)
25New sections CW 26B to CW 26G inserted
CW 26BShare purchase schemes
CW 26CMeaning of share purchase scheme
CW 26DMeaning of employee
CW 26EMeaning of normal retiring age
CW 26FMeaning of share
CW 26GMeaning of trustee
26New section CX 55B inserted (Proceeds from disposal of certain shares and financial arrangements)
CX 55BProceeds from disposal of certain shares and financial arrangements
27New cross-heading and section CX 57B inserted
CX 57BAmounts derived during periods covered by calculation methods
28Section CZ 1 replaced (Share purchase agreement income before 19 July 1968)
CZ 1Grandparented shares under employee share schemes
29New section DB 23B inserted (Revenue account property: certain intra-group transactions)
DB 23BRevenue account property: certain intra-group transactions
30New section DB 54C inserted (Certain expenditure incurred by foreign PIE equivalents)
DB 54CCertain expenditure incurred by foreign PIE equivalents
31Sections DC 12 to DC 15 repealed
32Section DN 6 amended (When FIF loss arises)
33Section DT 7 amended (Exploratory well expenditure)
34New section DT 7B inserted (Resuming commercial production: petroleum development expenditure)
DT 7BResuming commercial production: petroleum development expenditure
35Section DT 15 amended (Persons associated with petroleum miner)
36Section DT 16 amended (Removal or restoration operations)
37Section DT 17 amended (Attribution of expenditure)
38Section DT 20 amended (Petroleum mining operations outside New Zealand)
39Section DU 7 amended (Deduction for certain mining expenditure spread on basis of units of production)
40Section DV 2 amended (Transfer of expenditure to master fund)
41New cross-heading and section DV 27 inserted
DV 27Employee share schemes
42New section DV 28 inserted (Share purchase schemes)
DV 28Share purchase schemes
43New section DW 3B inserted (Lloyd’s of London: deductions for life insurance business)
DW 3BLloyd’s of London: deductions for life insurance business
44Section EA 2 amended (Other revenue account property)
45New section ED 2B inserted (Transfers to shareholders by ASX-listed Australian company of shares in subsidiary)
ED 2BTransfers to shareholders by ASX-listed Australian company of shares in subsidiary
46Section EE 7 amended (What is not depreciable property?)
47Section EE 34 amended (Annual rate for patent granted in 2005–06 or later income year)
48Section EJ 12 amended (Petroleum development expenditure: default allocation rule)
49Section EJ 13 replaced (Relinquishing petroleum mining permit)
EJ 13Permanently ceasing petroleum mining operations
50Section EJ 14 repealed (Spreading deduction backwards)
51Section EJ 18 amended (Petroleum mining operations outside New Zealand)
52Section EJ 20 amended (Meaning of petroleum mining development)
53Section EJ 22 amended (Deductions for market development: product of research, development)
54Section EW 13 amended (When use of spreading method not required)
55Section EW 15H amended (Mandatory use of some determinations)
56Section EW 31 amended (Base price adjustment formula)
57Section EX 21 amended (Attributable CFC amount and net attributable CFC income or loss: calculation rules)
58Section EX 21B amended (Non-attributing active CFCs)
59New section EX 21F inserted (Part-period calculations)
EX 21FPart-period calculations
60Section EX 38 amended (Exemption for employee share purchase scheme of grey list company)
61Section EX 59 amended (Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method)
62Section EY 10 amended (Meaning of life insurer)
63Section FC 2 amended (Transfer at market value)
64Section FM 31 amended (Eligibility rules)
65Section FM 36 amended (Joining existing consolidated group)
66Section FM 37 amended (Leaving consolidated group)
67Section FM 38 amended (Notice requirements on forming or joining consolidated group)
68Section FM 40 amended (Losing eligibility or entitlement to be part of consolidated group)
69Section FN 4 amended (Eligibility rules)
70New cross-heading and section GB 49B inserted
GB 49BEmployee share schemes
71Section GB 52 amended (Arrangements involving residential land: companies’ shares)
72Section HA 19 amended (Credit accounts and dividend statements)
73Section HC 2 amended (Obligations of joint trustees for calculating income and providing returns)
74Section HC 27 amended (Who is a settlor?)
75Section HC 33 amended (Choosing to satisfy income tax liability of trustee)
76Section HD 3 amended (Agents’ duties and liabilities)
77Section HD 15 amended (Asset stripping of companies)
78New section HD 17B inserted (Lloyd’s of London: agents for life insurance)
HD 17BLloyd’s of London: agents for life insurance
79Section HF 1 amended (Maori authorities and the Maori authority rules)
80Section HM 3 amended (Foreign PIE equivalents)
81Section HM 4 amended (Who is an investor?)
82Section HM 9 amended (Collective schemes)
83Section HM 13 amended (Maximum shareholdings in investments)
84Section HM 30 amended (When foreign PIE equivalent no longer meets requirements)
85Section HM 62 amended (Exit levels for investors)
86Section HM 67 amended (Formation losses carried forward to first quarter)
87Section HM 68 amended (When formation losses carried forward are less than 5% of formation investment value)
88Section HM 69 amended (When formation losses carried forward are 5% or more of formation investment value: 3-year spread)
89Section HR 10 amended (What happens when vehicle stops being financial institution special purpose vehicle?)
90Section HR 12 replaced (Non-exempt charities: taxation of tax-exempt accumulations)
HR 12Non-exempt charities: treatment of tax-exempt accumulations
91New cross-heading and section HR 13 inserted
HR 13Lloyd’s of London: life insurance
92Section IA 2 amended (Tax losses)
93Section IA 4 amended (Using loss balances carried forward to tax year)
94Section IA 4 amended (Using loss balances carried forward to tax year)
95Section IA 7 amended (Restrictions relating to ring-fenced tax losses)
96Section IA 8 amended (Restrictions relating to schedular income)
97Section IA 9 amended (Ordering rules)
98Section IC 3 amended (Common ownership: group of companies)
99Section IS 5 amended (Petroleum miners’ tax losses)
100Section IS 5 repealed (Petroleum miners’ tax losses)
101Section IZ 1 repealed (Use of specified activity net losses)
102Section IZ 2 repealed (Petroleum mining companies: treatment of payments from shareholders)
103Section IZ 3 repealed (Petroleum mining companies: use of loss balances)
104Section LA 6 amended (Remaining refundable credits: PAYE, RWT, and certain other items)
105Section LB 1 amended (Tax credits for PAYE income payments)
106Section LB 3 amended (Tax credits for resident withholding tax)
107Section LB 7 amended (Tax credits related to personal service rehabilitation payments: providers)
108Section LB 8 amended (Tax credits related to personal service rehabilitation payments: payers)
109Section LD 3 amended (Meaning of charitable or other public benefit gift)
110Section LD 4 amended (Tax credits for payroll donations)
111Section LD 5 amended (Calculating amount of tax credit and filing particulars)
112Section LK 1 amended (Tax credits relating to attributed CFC income)
113New subpart LT inserted (Tax credits for petroleum miners)
LT 1Tax credits for petroleum miners
LT 2Petroleum mining operations outside New Zealand
114Section MX 1 amended (When subpart applies)
115Section MX 4 amended (R&D loss tax credits)
116Section OA 2 amended (Memorandum accounts)
117Section OA 7 amended (Opening balances of memorandum accounts)
118Section OP 3 amended (Changes in consolidated imputation groups)
119Section OP 4 amended (Resident imputation subgroups)
120Section OP 22 amended (Consolidated ICA group company’s credit)
121Tables of credits and debits in memorandum accounts amended
122Section RA 11 amended (Adjustment to correct errors: certain underpayments)
123Section RA 12 amended (Adjustment to correct errors: certain excess amounts)
124Section RA 15 amended (Payment dates for interim and other tax payments)
125Section RA 16 amended (Payment date when taxable activity ends)
126Section RA 17 amended (Payment date when RWT exemption certificate expires)
127Section RC 3 amended (Who is required to pay provisional tax?)
128Section RC 19 amended (Disposal of assets)
129Section RD 2 amended (PAYE rules and their application)
130Section RD 4 replaced (Payment of amounts of tax to Commissioner)
RD 4Payment of amounts of tax to Commissioner
131Section RD 6 amended (Certain benefits and payments)
132Section RD 6 amended (Certain benefits and payments)
133Section RD 7 amended (Extra pay)
134Section RD 7 amended (Extra pay)
135Section RD 7B amended (Treatment of certain benefits under employee share agreements)
136Section RD 7B amended (Treatment of certain benefits under employee share agreements)
137Section RD 8 amended (Schedular payments)
138Section RD 10 amended (Amounts of tax for PAYE income payments)
139Section RD 10B amended (Amounts of tax for schedular payments)
140New section RD 10C inserted (Calculating amounts of tax following changes to rates or thresholds)
RD 10CCalculating amounts of tax following changes to rates or thresholds
141Section RD 12 replaced (Multiple payments of salary or wages)
RD 12Multiple payments of salary or wages
142Section RD 13 replaced (Advance payments of salary or wages)
RD 13Advance payments
143Section RD 13B amended (Adjustments for payroll donations)
144Section RD 14 repealed (Changes to tax rates for salary or wages)
145Section RD 17 amended (Payment of extra pay with other PAYE income payments)
146Section RD 18 amended (Schedular payments without notification)
147Section RD 21 amended (When amounts of tax not withheld or payment insufficient)
148Section RD 22 replaced (Returns for amounts of tax paid to Commissioner)
RD 22Providing employment income information to Commissioner
149Section RD 23 amended (Bonds given by employers of certain non-resident employees)
150Section RD 24 amended (Exemption certificates for non-resident contractors)
151Section RD 64 amended (ESCT rules and their application)
152New section RD 67B inserted (Calculating amounts of tax following changes to rates or thresholds)
RD 67BCalculating amounts of tax following changes to rates or thresholds
153Section RE 2 amended (Resident passive income)
154Section RE 4 amended (Persons who have withholding obligations)
155Section RE 5 amended (No withholding obligation in certain circumstances)
156Section RE 7 amended (When resident passive income paid to trustees)
157Section RE 8 amended (When resident passive income paid to nominees)
158Section RE 10 amended (Special rule relating to payments of interest)
159Section RE 14 amended (Non-cash dividends other than certain share issues)
160New section RE 14B inserted (Non-cash dividends distributed through intermediaries)
RE 14BNon-cash dividends distributed through intermediaries
161Cross-heading and section RE 27 amended
162Section RE 28 amended (When certificates expire)
163Section RE 29 replaced (Establishing whether person holds certificate)
RE 29Establishing whether persons have RWT-exempt status
164Section RE 30 amended (When unincorporated bodies hold certificates)
165Section RL 4 amended (How much RLWT?)
166Section RM 8 amended (Overpaid RWT or NRWT)
167Section RP 2 amended (PAYE intermediaries)
168Sections RP 3, RP 4, and RP 5 repealed
169Section RP 8 replaced (Information required from employers)
RP 8Information for PAYE intermediaries
170Section RP 14 amended (Collection, payment, and information requirements)
171New section RZ 13 inserted (Listed PAYE intermediaries: transitional provision)
RZ 13Listed PAYE intermediaries: transitional provision
172Section YA 1 amended (Definitions)
173New section YA 5 inserted (General rule: capacity of trustees)
YA 5General rule: capacity of trustees
174Section YC 4 amended (Look-through rule for corporate shareholders)
175Section YD 1 amended (Residence of natural persons)
176Section YD 2 amended (Residence of companies)
177Section YD 4 amended (Classes of income treated as having New Zealand source)
178Section YD 6 amended (Apportionment of income from sea transport)
179New section YD 8B inserted (Apportionment of life insurance premiums derived by Lloyd’s of London)
YD 8BApportionment of life insurance premiums derived by Lloyd’s of London
180Schedule 1 amended (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits)
181Schedule 2 amended (Basic tax rates for PAYE income payments)
182Schedule 25 amended (Foreign investment funds)
183Schedule 32 amended (Recipients of charitable or other public benefit gifts)
184Schedule 36 amended (Government enterprises)
185Consequential amendments to Income Tax Act 2007 related to trustee capacity
186Tax Administration Act 1994
187Section 3 amended (Interpretation)
188Section 15C amended (PAYE intermediaries and listed PAYE intermediaries)
189Section 15F amended (Fitness of applicants)
190Sections 15G, 15H, and 15I repealed
191Section 15J amended (Employers’ arrangements with PAYE intermediaries)
192Section 15L amended (Amended monthly schedules)
193Section 15M repealed (Subsidy claim forms)
194New subpart heading inserted (Commissioner’s powers to obtain information)
195New subpart heading inserted (Taxpayers’ obligations to keep records)
196Section 22 amended (Keeping of business and other records)
197New section 22AA inserted (Records to be kept by employers and PAYE intermediaries)
22AARecords to be kept by employers and PAYE intermediaries
198New section 22AAB inserted (Records to be kept by payers of passive income)
22AABRecords to be kept by payers of passive income
199Section 23 amended (Keeping of returns where information transmitted electronically)
200New subpart 3C inserted (Employment income information)
23BEmployment income information: outline of provisions
23CMeaning of employment income information
23DEmployers’ groups for delivery of information
23EOnline group of employers
23FThreshold group of employers
23GElectronic-exempt group of employers
23HNew group of employers
23IEmployment income information requirements for employees
23JEmployment income information requirements relating to employee share schemes
23KEmployment income information for new and departing employees
23LEmployment income information when employment ended
23MCorrection of errors
23NSetting electronic and non-electronic filing requirements
23OEmployment income information: payroll software
23PEmployment income information: variation of requirements
201Cross-heading and section 24 repealed
202Cross-heading and section 24BA repealed
203Section 24B amended (PAYE tax codes)
204Sections 24B to 24IB replaced
24BPAYE tax codes
24CNotified tax codes
24DTax codes provided by the Commissioner
24ENon-notified tax codes
24FRates of tax for schedular payments: standard, payee, and set rates
24GSpecial tax rates for schedular payments
24HVariation of requirements
205Cross-heading and section 24J repealed
206Section 24K amended (Certain information required in returns)
207Sections 24L, 24LB, 24LC, 24M, 24N, and 24P repealed
208Cross-heading and section 24Q amended
209New heading inserted (RWT rates, certificates, and records)
210Section 25A amended (Use of inconsistent RWT rates)
211Section 25 amended (RWT withholding certificates)
212New subpart 3E inserted (Investment income information)
25BInvestment income information: outline of provisions
25CInvestment income
25DInvestment income information
25EWho must provide investment income information to Commissioner
25FInformation on interest
25GInformation on dividends
25HInformation on royalties paid to non-residents
25IInformation on Maori authority distributions
25JInformation on attributed PIE income: non-locked-in funds
25KInformation on attributed PIE income: locked-in funds
25LInformation from emigrating companies
25MInformation in relation to persons with RWT-exempt status
25NInformation from payers with no withholding obligation
25OCertain information on financial arrangements
25PCorrection of errors in investment income information
25QNon-electronic filing of investment income information
25RSetting electronic and non-electronic filing requirements
25SInvestment income information: variation of requirements
213Section 26 repealed (Records to be kept for RWT purposes)
214Section 27 amended (Provision of tax file numbers)
215Section 28B replaced (Notification of investors’ tax rates)
28BNotification of investors’ tax file numbers
216New subpart heading inserted (Statements, notices, and certificates)
217Section 31B amended (Notification requirements for PIEs)
218Section 32E amended (Applications for RWT exemption certificates)
219Section 32G amended (Evidence of annual gross income and consequences of failure to meet threshold)
220Section 32H replaced (Providing RWT exemption certificate when person meets requirements)
32HRWT-exempt status when persons meet requirements
221Section 32I amended (Providing RWT exemption certificate to person who does not meet requirements)
222Section 32J replaced (RWT exemption certificates for unincorporated bodies)
32JRWT-exempt status for unincorporated bodies
223Section 32K amended (Failing to meet basis of exemption)
224Section 32L replaced (Cancellation of RWT exemption certificates)
32LRevocation of RWT-exempt status
225Section 33 amended (Returns of income)
226Section 33AA amended (Exceptions to requirement for return of income)
227Section 36 amended (Commissioner may approve furnishing of return information by electronic means)
228Section 36A repealed (Electronic format of employer monthly schedule and PAYE payment form)
229Section 36AB repealed (Electronic return requirements for multi-rate PIEs)
230Section 36B repealed (Other formats of employer monthly schedule)
231New section 36BD inserted (Electronic filing requirements for registered persons)
36BDElectronic filing requirements for registered persons
232Section 36C amended (Particulars furnished in electronic format)
233Sections 36CA, 36D, and 36E repealed
234New cross-heading inserted before section 37 (Returns and return dates)
235Section 46 amended (Employer to make returns as to employees)
236Section 46 repealed (Employers to make returns as to employees)
237Section 47 amended (ESCT statements provided by employers and others)
238Section 48 repealed (Special arrangements for supply of information by employer or PAYE intermediary to Commissioner)
239Section 49 amended (NRWT withholding certificates and annual reconciliations)
240Sections 49 and 50 repealed
241Section 51 amended (RWT withholding reconciliation statements)
242Sections 51, 52, 53, and 54 repealed
243Section 55 amended (Consequence of inability to provide tax file numbers)
244New section 55B inserted (Information relating to offshore persons and tax file numbers)
55BInformation relating to offshore persons and tax file numbers
245Section 57 amended (Maori authority to make returns of income)
246Section 57B amended (Return requirements for multi-rate PIEs)
247Section 61 amended (Disclosure of interest in foreign company or foreign investment fund)
248New section 63B inserted (Disclosure requirements for share purchase schemes)
63BDisclosure requirements for share purchase schemes
249Section 67 repealed (Company dividend statement when ICA company declares dividend)
250Section 68 amended (Statement when FDP credit attached to dividend)
251Section 68B repealed (Distribution statement required when Maori authority makes distribution)
252Section 70 amended (Annual ICA return to be furnished if: required by Commissioner; requirement for imputation credit account ceases; or balance retrospectively reduced to debit or to less than refund)
253Section 74 amended (Annual ICA return to be furnished in respect of consolidated imputation group)
254Section 80A amended (Application)
255Section 80D amended (Commissioner must issue income statement)
256Section 80F amended (Taxpayer obligations and assessment on receipt of income statement)
257Section 80KT amended (Details of payments of tax credits)
258Section 85 amended (Disclosure of address information in relation to debtors)
259Section 85H amended (Disclosure of information for purposes of Parental Leave and Employment Protection Act 1987)
260Section 91AAQ amended (Determination on insurer as non-attributing active CFC)
261Section 91FD amended (Disclosure requirements)
262Section 110 amended (Evidence of returns and assessments)
263Section 120C amended (Definitions)
264Section 120KE amended (Provisional tax and rules on use of money interest)
265New section 120X inserted (Petroleum miners’ tax losses)
120XPetroleum miners’ tax losses
266Section 120X repealed (Petroleum miners’ tax losses)
267Section 125 amended (Certain rights of objection not conferred)
268Section 139A amended (Late filing penalty for certain returns)
269Section 139AA amended (Non-electronic filing penalty)
270Section 141AA amended (Shortfall penalty if non-resident contractor relieved from all liability to pay tax on contract payment)
271Section 141ED amended (Not paying employer monthly schedule amount)
272Section 142 amended (Due date for payment of late filing penalty)
273Section 142A amended (New due date for payment of tax that is not a penalty)
274New section 142AB inserted (New due date for new and increased assessments)
142ABNew due date for new and increased assessments
275Section 142G replaced (Due date for payment of non-electronic filing penalty)
142GDue date for payment of non-electronic filing penalties
276Section 173L amended (Transfer of excess tax within taxpayer’s accounts)
277Section 183A amended (Remission for reasonable cause)
278Section 183D amended (Remission consistent with collection of highest net revenue over time)
279Section 183F amended (Small amounts of penalties and interest not to be charged)
280Section 185 amended (Payment out of Crown Bank Account)
281Sections 185C and 185D repealed
282New sections 227C and 227D inserted
227CTransitional provision: voluntary application of employment income information provisions
227DTransitional provision for certain filing requirements of employers
283New section 227E inserted (Transitional provision: application of investment income information provisions)
227ETransitional provision: application of investment income information provisions
284New schedules inserted
285KiwiSaver Act 2006
286Section 4 amended (Interpretation)
287Section 17 amended (How to opt out)
288Section 22 amended (Employees giving information to employers)
289Section 23 amended (Employers must give information to Commissioner)
290Section 34 amended (Opting in by person 18 years or more)
291Section 42 amended (Employer must supply information pack to certain employees)
292Section 60 amended (Application of subpart)
293Section 64 amended (Contribution rate)
294Section 67 amended (PAYE rules apply to deductions)
295Section 73 amended (Deductions entered in and paid out of holding account)
296Section 93 amended (Employer contributions paid via Commissioner)
297Section 97 replaced (Commissioner must give notice if employer contributions not remitted)
97Commissioner must give notice if employer contributions not remitted
298Section 98 amended (Short payments by employers if not enough money remitted to Commissioner to cover all of employees’ deductions and employer contributions)
299Section 98A amended (Quantifying short payments for the purposes of Income Tax Act 2007 and Tax Administration Act 1994)
300Section 99 amended (Short payments if not enough employer contribution remitted to cover all employees)
301Section 101D amended (Compulsory employer contribution amount: general rule)
302Student Loan Scheme Act 2011
303Section 34 amended (Repayment codes for New Zealand-based borrowers who derive salary or wages)
304Section 37 amended (Deduction rates that apply to standard deductions from salary or wages)
305Section 202 amended (Provisions of Tax Administration Act 1994 and Income Tax Act 2007 to apply to this Act)
306Schedule 2 amended (Application of PAYE rules for purposes of section 70)
307Goods and Services Tax Act 1985
308Section 2 amended (Interpretation)
309Section 2A amended (Meaning of associated persons)
310Section 25 amended (Credit and debit notes)
311Section 53 amended (Registered person to notify change of status)
312Child Support Act 1991
313Section 89D amended (Exemption for long-term prisoners)
314Section 89F amended (Exemption does not apply at any time during child support year if income criteria not met at any time during relevant period)
315Schedule 4 amended (Deductions on account of earner levies)
316Section EA 2 of the Income Tax Act 2004 amended (Other revenue account property)
317Income Tax (Payroll Subsidy) Regulations 2006
318Anti-Money Laundering and Countering Financing of Terrorism (Class Exemptions) Notice 2014

The Parliament of New Zealand enacts as follows: