Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Bill

Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Bill

Government Bill

72—1

Explanatory note

General policy statement

This taxation omnibus Bill introduces amendments to the following enactments—

  • Tax Administration Act 1994

  • Income Tax Act 2007

  • Goods and Services Tax Act 1985

  • KiwiSaver Act 2006

  • Child Support Act 1991

  • Student Loan Scheme Act 2011

  • Taxation (Annual Rates for 2017–18, Employment and Investment Income and Remedial Matters) Act 2018

  • Families Package (Income Tax and Benefits) Act 2017

  • Income Tax Act 2004

  • Accident Compensation Act 2001

  • Intelligence and Security Act 2017

  • Financial Advisers Act 2008

  • Financial Service Providers (Registration and Dispute Resolution) Act 2008

  • Income Tax Act 1994

  • Taxation Review Authorities Act 1994

  • Taxation Review Authorities Regulations 1998

  • Tax Administration (Binding Rulings) Regulations 1999.

Broadly, the policy proposals in this Bill fall into 3 categories. The first category sets the annual rates of income tax for the 2018–19 tax year.

The second of these categories relates to proposals aimed at modernising and improving the legislative settings for the administration of the tax system as part of the Government’s programme of transforming the revenue system through business process and technology change. This category includes measures to simplify and modernise the administration of individuals’ income tax, modernise aspects of the Tax Administration Act 1994, such as the care and management provisions and the information collection and disclosure provisions. Amendments to methods of error correction of PAYE information in the context of payday reporting, and a number of minor measures relating to provisional tax and the payment allocation rules, are also included.

The third category comprises proposals aimed at improving current tax settings within a broad-base, low rate framework. Under the framework, the treatment of alternative forms of income and expenditure is intended to be as even as possible. This treatment ensures that overall tax rates can be kept low, while also minimising the biases that taxation introduces into economic decisions. This framework underpins the Government’s revenue strategy and helps maintain confidence that the tax system is broadly fair, which is crucial to encouraging voluntary compliance.

Although New Zealand has relatively strong tax settings, it is important to maintain the tax system and ensure that it continues to be fit for purpose. Changes in the economic environment, business practice, or interpretation of the law can mean that the tax system becomes unfair, inefficient, complex, or uncertain. The tax system needs to be responsive to accommodate these concerns.

The main policy measures within this Bill have been developed in accordance with the Generic Tax Policy Process (GTPP). It is a very open and interactive engagement process between the public and private sectors, which helps ensure that tax and social policy changes are well thought through. This process is designed to ensure better, more effective policy development through early consideration of all aspects, and likely impacts, of proposals, and increased opportunities for public consultation.

The GTPP means that major tax initiatives are subject to public scrutiny at all stages of their development. As a result, Inland Revenue and Treasury officials have the opportunity to develop more practical options for reform by drawing on information provided by the private sector and the people who will be affected.

The final stage of the GTPP is a post-implementation review of new legislation and identification of remedial issues that need correcting for the new legislation to have its intended effect. Further information on the GTPP can be found at http://taxpolicy.ird.govt.nz/how-we-develop-tax-policy.

The following is a brief summary of the policy measures contained in this Bill. A comprehensive explanation of all the policy items will be provided in a commentary on the Bill that will be available shortly after this Bill is introduced, at http://taxpolicy.ird.govt.nz/publications/2018-commentary-armtarm-bill/overview.

Confirmation of annual rates of income tax for the 2018–19 tax year

The Income Tax Act 2007 requires the rates of income tax to be set each tax year by an annual taxing Act. The Bill sets the annual rates of income tax for the 2018–19 tax year at the same rates that apply for the 2017–18 tax year.

Better administration of individuals’ income tax

The Bill proposes to reform the administration of individuals’ income tax, in particular the way in which individuals are required to report their income for a tax year. The new rules are part of the Government’s plans to modernise the revenue system through business process and technology change. They simplify individuals’ year-end income tax obligations, remove unnecessary compliance costs for individuals and ensure that rates of withholding and tax codes that are applied to individuals’ income during the year are more appropriate.

Proactive actions

The new rules would enable Inland Revenue to use the income information received during the year to proactively help people to move to appropriate tax rates. By recommending more appropriate tax rates during the year Inland Revenue would help people to receive the right amount of income when they need it and would help to reduce the size of tax refunds or amount of tax payable by individuals at the end of the year.

Tailored tax codes

Inland Revenue would make it easier for individuals to apply for tailored tax codes that suit their income earning circumstances, and would provide an online process for applications. Also Inland Revenue would monitor changes in a person’s earnings to identify where they may be using an incorrect or less appropriate tax rate, so identifying where they might benefit from the use of a tailored tax code or a secondary tax rate. The Bill proposes that Inland Revenue would contact the individuals who could benefit from using a tailored tax code and recommend that they change their tax rate.

Year-end income tax filing obligations for individuals

The Bill proposes that individuals who earn only income that must be reported to Inland Revenue by third parties during or shortly after the end of the income tax year (reportable income) would not have an obligation to provide information about that income to Inland Revenue.

An individual earning up to $200 of income other than reportable income in a tax year would not be required to provide that information to Inland Revenue.

Those individuals who derive more than $200 of non-reportable income, are non-resident, have tax losses, are subject to the financial arrangements rules, or pay provisional tax, would still need to provide income information to Inland Revenue.

Refunds of tax and amounts of tax to pay

Inland Revenue would calculate whether people who are not required to provide income information are entitled to a refund or had tax to pay. If they have a tax refund, it will automatically be paid out to them and Inland Revenue will contact them if they have tax to pay (subject to the de minimis rules discussed below).

If tax on an individual’s income has been withheld at an appropriate withholding tax rate or tax code, they will not be required to pay additional tax on any income that has been under-taxed.

The Bill also proposes that if amounts of tax to pay arise in relation to income that is subject to withholding rules when less than $200 of income is not taxed correctly, those amounts of tax would not have to be paid.

All individuals’ income tax refunds would be paid out by direct credit unless refunding by direct credit would result in undue hardship or was not practicable.

The administration of donations tax credits

The Bill proposes that donation receipts could be submitted electronically during the year and the donations tax credits could be claimed as part of the year-end income tax process. When donation receipts have been submitted electronically during the year, they would be taken into account without requiring a separate claim form to be completed. However, people would be able to continue to complete a separate donation tax credit claim form should they wish to.

Modernising core aspects of the Tax Administration Act 1994

The Bill proposes to modernise key aspects of the Tax Administration Act 1994. These aspects form part of the modernisation of the tax system being implemented by Inland Revenue’s business transformation programme to modernise the revenue system through business process and technology change. They cover 4 areas: information collection, use, and disclosure; helping taxpayers get it right from the start; the role of tax intermediaries; and the role of the Commissioner.

Information collection, use, and disclosure

Two amendments are proposed to the information collection, use, and disclosure rules—

  • introducing a regulation-making power to govern the repeat collection of large third-party datasets, providing a more efficient and transparent process for this type of collection, as distinct from the ad hoc collection of such information using existing powers:

  • clarifying explicitly in the legislation that information collected for 1 Inland Revenue purpose can be used for the department’s other functions.

The Bill also proposes the rewriting of the information collection provisions to modernise the rules and to improve the navigability of these provisions.

The modernisation of the rules regarding the confidentiality of Inland Revenue’s information is intended to make them clearer, more cohesive, and better aligned with the underlying rationale of protecting taxpayer information. It also proposes 2 amendments to the way Inland Revenue shares information, specifically—

  • providing more flexibility for Inland Revenue to share information within a regulatory framework, building on existing legislative provisions:

  • allowing Inland Revenue to enter into agreements to share information with other agencies without the need for regulation where customer consent for sharing is obtained.

Other minor amendments are also proposed allowing Inland Revenue to disclose information to ensure taxpayer compliance with the Anti-Money Laundering and Countering Financing Terrorism Act 2009 and the Customs and Excise Act 2018. This information sharing is authorised under existing legislation and these amendments insert parallel authorisations into the Tax Administration Act 1994.

Rulings and amending assessments

The Bill proposes changes to the binding rulings regime to provide earlier certainty and thus reduce compliance and administrative costs for a greater number of business taxpayers. Currently, rulings are in practice only available to large taxpayers due to their cost, and there are issues which cannot be ruled on. Changes are proposed to expand access to binding rulings—

  • creating a simplified process for small and medium-sized taxpayers to obtain a binding ruling at a reduced cost compared with the current process:

  • extending the scope of the regime so that rulings can be provided on a broader range of issues.

To align the error-correction process with taxpayers’ processes it is proposed to increase the current $1,000 threshold for taxpayers to include an error in a subsequent return (rather than having to reopen the original assessment). The new threshold would be where the error is equal or less than both $10,000 and 2% of the taxpayer’s taxable income or GST output tax liability.

Third party providers and intermediaries

The Bill proposes amendments that will clarify Inland Revenue’s ability to provide more services to tax preparers who are not tax agents (such as intermediaries who prepare PAYE and GST returns for other taxpayers) while safeguarding the integrity of the tax system. An example of such a service is being able to order a report on a clients’ filing performance online.

The Bill also proposes to provide the Commissioner of Inland Revenue would have a discretion to refuse to recognise a person acting on behalf of another for a fee as a nominated person. This refusal would occur if the person has been removed from the list of tax agents for tax integrity reasons, or if allowing them to act for others would otherwise adversely impact on the integrity of the tax system.

The Commissioner of Inland Revenue’s care and management role

The Bill proposes amendments to introduce a more flexible approach to dealing with situations when the legislation does not align with the intended policy (that is, when there is a legislative anomaly).

The Commissioner’s care and management role would be extended by having more tools for addressing gaps or inconsistencies in the legislation that do not reflect the clear policy intent of a provision. These are—

  • an Order in Council on the recommendation of the Minister of Revenue:

  • a binding determination of the Commissioner of the treatment to be applied:

  • an administrative action of the Commissioner either notifying a class of persons of a proposed treatment, an exemption for a class of persons to remove a compliance burden or a declaration of the validity of an established administrative practice.

The application period of the regulation, determination, or administrative action would be limited to 3 years, and their application would be optional for taxpayers.

PAYE error correction rules

Amendments to the Income Tax Act 2007 are proposed to clarify 2 issues relating to error correction in the context of payday reporting of employment income information. The amendments provide that—

  • PAYE-related overpayments that are not repaid remain taxable as PAYE income:

  • fringe benefit tax (FBT) on an interest-free loan does not arise where an employer allows an employee time to repay an overpayment.

Mid-year entry to the accounting income method

Currently, taxpayers who are eligible to use the accounting income method (AIM) to pay provisional tax may only commence using AIM prior to the first AIM instalment for the tax year of that taxpayer. For existing businesses, this rule means that they can join only at the beginning of the income year. The Bill proposes to allow taxpayers who are eligible to use AIM to switch from another provisional tax method (excluding the estimation method) to AIM during the income year, as long as all their payments under the other method have been made.

Amending the payment allocation rules

At present, payments received from taxpayers are allocated to use of money interest before being allocated to core tax debt. Inland Revenue has moved to multiple billing items within a period, as part of the transition to Inland Revenue’s new START system. The current payment allocation rule can create some issues where there are multiple bill items within a period and, as such, an amendment to that rule is proposed to accommodate the change. The proposal continues to have a general rule of use of money interest first, but allows some flexibility to apply payments to core tax on older debt before use of money interest on newer debt within a taxable period.

Correction of unintended change in the provisional tax use of money interest rules

In 2007, amendments were made to align the payment dates for GST and income tax. At that time, a change was made to the wording in the use of money interest rules which made an unintended change to the way in which interest was charged to certain taxpayers. These taxpayers, because of certain circumstances, were required to make only 1 or 2 provisional tax payments rather than the usual 3 payments. The unintended change meant that arguably those taxpayers should be charged use of money interest only from the date of those instalments rather than over the standard 3 instalments. The Bill proposes to restore the correct policy position for those taxpayers from the date of the unintended change with a savings provision for a person who has previously challenged that position and received a cancellation of use of money interest.

KiwiSaver enhancements

Based on recommendations made in the Retirement Commissioner’s December 2016 review of retirement income policies, the Bill proposes to amend the KiwiSaver Act 2006 to improve the effectiveness of KiwiSaver in helping New Zealanders save for their retirement. The proposed amendments—

  • introduce additional KiwiSaver employee contribution rate options of 6% and 10%:

  • reduce the maximum contributions holiday period from 5 years to 1 year:

  • change the name of the contributions holiday to savings suspension:

  • allow over 65 year olds to opt-in to KiwiSaver:

  • remove the 5 year lock in period (which currently affects members who join KiwiSaver between the ages of 60 and 65 years old).

Tax status of public purpose Crown-controlled companies and public authorities

The Bill proposes to give certain Crown-controlled companies listed in schedule 4A of the Public Finance Act 1989 their own income tax exemption, and a goods and services (GST) provision comparable to that of public authorities to help ensure that they can claim back GST input credits.

The qualifying public purpose Crown-controlled companies will be listed in a new schedule to the Income Tax Act 2007, and an Order in Council mechanism is inserted into the Act to facilitate amendments to this schedule.

The Bill also proposes to extend the definitions of public authority in the Income Tax Act 2007 and Goods and Service Act 1985 by specifically including a number of additional Crown/Parliamentary entities.

Schedule 32 overseas donee status

The Bill proposes to amend the Income Tax Act 2007 by adding 13 charities to the list of donee organisations in schedule 32. New Zealand charities that support activities overseas must be listed in schedule 32 in order for their donors to be eligible for tax benefits (in particular, the donations tax credit). The new additions to schedule 32 are—

  • Books for Cambodia Trust

  • Children of the Light

  • Effective Altruism NZ Charitable Trust

  • Flame Cambodia

  • Forgotten Sherpas of Nepal

  • Global Development Group Limited

  • Good Trust

  • INF Humanitarian Aid Trust

  • NVADER

  • Nyingje Trust

  • Rwenzori Special Needs Foundation (NZ)

  • St Columban’s Mission Society Trust Board

  • Talkingtech Foundation Trust.

Fringe benefit tax: market interest rate for employment related loans

Banks and other employers in the business of lending money are required to pay FBT if they provide a loan to an employee at a rate below the market interest rate. However, the legislative definition of the market interest rate is out-dated and no longer reflects the lending practices of banks and other money lenders. This approach can result in the over-taxation of loans made by banks and other money lenders to their employees. To address this problem, the Bill proposes to add a new definition of market interest rate to the Income Tax Act 2007. Under this new definition, the market rate for a given employee and loan type will be the lowest rate given around the same time in the ordinary course of business to a customer with a similar profile to the employee.

Corporate securitisations

A securitisation is a funding mechanism that involves a special purpose vehicle (SPV) issuing securities that are backed by the expected cash flows from specific assets. Securitisations can have a number of commercial benefits compared with other funding mechanisms, including providing access to a lower cost of financing.

An important commercial objective of a securitisation is maintaining tax neutrality while ensuring the vehicle is bankruptcy-remote. The current tax rules may not achieve tax neutrality, so may discourage securitisations. The securitisation rules for financial institutions in the Income Tax Act 2007 were introduced as a result of the Reserve Bank’s response to the global financial crisis. The rules ensure there are no tax consequences arising from the securitisation transactions between the financial institution and the SPV.

This Bill extends the current securitisation rules beyond financial institutions to other corporate securitisations, with appropriate modifications.

Land tainting and Housing New Zealand Corporation

The land-tainting rules impose tax on certain disposals of land by an associate of a person who deals in, develops, subdivides, or improves land. The rules were introduced to prevent the land sale rules from being undermined, but are leading to an incorrect policy result for the Housing New Zealand Group (HNZ) by imposing tax on sales that are not a policy concern, impeding HNZ’s ability to implement the Government’s building programme, as well as distorting the decision-making of the group and imposing excessive compliance costs. The Bill proposes an exclusion from the land tainting rules for HNZ.

Bank account requirement for IRD numbers: change of application date

Amendments were made by the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 giving the Commissioner a discretion to issue IRD numbers to offshore persons without New Zealand bank accounts if satisfied with their identity and background. This amendment was primarily made to assist taxpayers with meeting their New Zealand tax obligations. The Bill proposes to change the application date of this amendment to 15 October 2015, the date of the original requirement that offshore persons need to provide the Commissioner with their New Zealand bank accounts to obtain an IRD number.

Noise mitigation expenditure

The Bill proposes to amend the Income Tax Act 2007 to ensure that businesses incurring expenditure to mitigate noise can deduct such expenditure under the relevant pollution remediation provisions. The amendment applies to expenditure incurred for the 2018–19 and later income years.

Repeal of the adverse event scheme

The Bill proposes the repeal of the adverse event scheme, which is, in practice, not used much, because a different scheme, the main income equalisation scheme, offers more flexibility. The Bill proposes the transfer of existing balances in the adverse event scheme to the main income equalisation scheme.

Wind-up of a listed PIE

A transitional provision allows a company to become a listed PIE before they become listed on a recognised exchange on the expectation they will eventually do so. The Bill proposes a remedial amendment introducing an equivalent transitional provision for a listed PIE that delists as part of the wind-up process so that the PIE rules will continue to apply to distributions after de-listing as part of the wind-up.

Notional single person concession for public unit trusts

An existing concession for public unit trusts allows them to choose to be treated as owned by a notional single person. This option is equivalent to the same concession for widely-held companies and allows an entity partly or wholly-owned by a public unit trust to calculate their shareholder continuity more efficiently. However, the concession applies only when the public unit trust chooses to apply it and some may not have done so (for example, when they are non-resident and have no New Zealand tax liability). The Bill proposes a remedial amendment to allow an entity partially- or wholly-owned by a public unit trust to treat the public unit trust as being owned by a notional single person, even where the public unit trust has not chosen to do so.

Schedule 29: Northland Regional Council

The Bill proposes adding Northland Regional Council to schedule 29 of the Income Tax Act 2007 to allow it to hold more than 20% of a PIE and for the minimum 20 investor requirement to not apply on the basis Northland Regional Council is acting on behalf of ratepayers and is effectively widely-held.

Remedial amendments following the recently enacted Families Package

The Bill proposes 3 amendments that arose during the design implementation of the Families Package.

Working for Families abatement rates and thresholds

The Families Package made changes to the Working for Families tax credit from 1 July 2018. As the changes are made part way through the tax year, the legislation sets out an average abatement rate, threshold, and family tax credit rates for that year. The Bill proposes that instead of average annual rates, the actual income earned before 1 July be squared up using the old abatement rate and threshold and the income earned from 1 July be squared up using the new rate and threshold.

Interaction between Best Start and paid parental leave

The Families Package legislation includes the introduction of the new Best Start tax credit. It was intended that a person could receive paid parental leave and once it ceases to be payable, Best Start payments can be made for the rest of the eligible period. The Bill proposes that the legislation be amended to clarify this policy intent.

Parental tax credit clarification

The Families Package legislation repeals the parental tax credit for children born on or after 1 July 2018, but is still available for children born before that date. The Bill proposes a minor retrospective technical amendment to enable the parental tax credit to be paid on a pro-rata basis to qualifying persons to reinstate the original policy intent.

GST remedial amendments

The Bill proposes a number of remedial amendments to the Goods and Services Tax Act 1985. These amendments are primarily intended to correct a number of cross-referencing errors or improve the drafting of a number of sections. One amendment proposes to remove the requirement for registered persons to notify the Commissioner of a change in their company constitution as it is of little relevance to the Commissioner and few companies comply.

Financial arrangement rules: treatment of foreign currency agreements for the supply of goods and services

Amendments are proposed for a foreign exchange denominated agreement for the sale and purchase of goods and services (ASAP) with a contingent amount (an amount payable or receivable depending on a future event, for example, future performance). Accounting practice treats adjustments to these as being on revenue account in the financial arrangement rules. As a result, contingent payments are automatically treated as interest under the Income Tax Act 2007 (and assessable or deductible). This outcome is inconsistent with the policy intent and the amendment ensures that these adjustments have regard to the underlying transaction. The Bill proposes that a savings provision is given for this amendment.

Resettlements by foreign trusts with at least 1 resident trustee

The Bill would correct unintended outcomes for resettlements by trustees of a trust that has no settlor resident in New Zealand at the time of resettlement. This amendment is intended to ensure that income derived from that resettled property is taxed only if it is derived from New Zealand (providing the settlor of the new trust remains non-resident), beneficiaries are not exposed to a 45% tax rate on distributions, the resettled trust is able to register under the foreign trust disclosure rules, and the resettlement is fully counted as corpus of the new trust. The Bill also clarifies the relationship between the trust rules for foreign trusts and the rules that treat resettlements of trust property as a sale and purchase of the property at market value.

Binding rulings on tax record-keeping requirements

The Bill proposes to provide the Commissioner with a general power to issue a binding ruling on the record-keeping requirements under a tax law. At present, this power exists only for GST record-keeping.

Technical amendments to the trust rules

Technical amendments are proposed to the trust rules to ensure internal consistency in the Income Tax Act 2007 in relation to the test for tax residence, transitional residence, and certain trustee administrative elections, to correct some minor unintended changes arising from the rewrite of the trust rules, to correct some cross-references, and to improve relationships of some trust provisions with other parts of that Act. The proposals arise from an administrative review of the income tax treatment of trusts and respond to stakeholder feedback on the review.

Remedial changes to the tax rules regarding not-for-profit entities

The Bill contains a number of remedial changes to address unintended gaps in the current law governing the tax treatment of not-for-profit entities. These proposed changes are intended to ensure greater transparency from entities that receive not-for-profit tax treatment, and improve the overall integrity and coherency of the rules. Changes are proposed to ensure—

  • the charitable business income tax exemption applies only to charities registered under the Charities Act 2005:

  • organisations seeking donee status must obtain donee status approval by the Commissioner of Inland Revenue:

  • organisations with charitable purposes must be registered charities in order to obtain donee status:

  • refinements are made to the tax rules for deregistered charities:

  • relevant penalty, interest, and avoidance provisions apply to donation tax credits:

  • the deemed disposal provision for depreciation recovery income applies when a taxable entity becomes a registered charity:

  • the disclosure requirements which apply to foreign trusts also apply to foreign trusts that are registered charities.

Calculation of average tax rate for an extra pay

A retrospective amendment to the beginning of the 2008–09 income year is proposed to correct an unintended change in the amounts taken into account in calculating the PAYE payable on an extra pay (that is, an amount paid over and above normal regular wages).

Pre-consolidation imputation credits for consolidated groups of companies

Amendments were made in section 174 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 to the way in which pre-consolidation imputation credits can be transferred from an individual company’s imputation credit account to the consolidated group’s account. The Bill proposes that a savings provision is given for this amendment.

Remedial amendments

A number of remedial matters are addressed in the Bill. In addition to correcting minor faults of expression, reader’s aids, and incorrect cross-references, the following specific issues are dealt with by—

  • amending the residential and main home exclusions under the rules that tax sales of land, to ensure those exclusions work as intended:

  • amending 1 of the income calculation methods in the foreign investment fund rules in the Income Tax Act 2007 to ensure the law works as intended:

  • clarifying the rule that applies to disposals of land to an associated person to ensure that the disposal is neither over- nor under-taxed retrospective to the beginning 2008–09 income year:

  • correcting an unintended legislative change arising in the rewrite of the trust rules relating to services provided to the trust for less than market value:

  • correcting a rewrite change to the relationship between an individual and their in-laws to restore the correct policy intent in relation to the definition of associated person:

  • clarifying that incidental services provided by a trustee (such as bookkeeping and trustee services) for less than market value are not a transfer of value, which aligns the general meaning of settlement with current practice.

Departmental disclosure statement

Inland Revenue is required to prepare a disclosure statement to assist with the scrutiny of this Bill. The disclosure statement provides access to information about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

Regulatory impact assessments

Inland Revenue produced regulatory impact assessments on 26 July 2017, 7 February 2018, 15 February 2018, 1 March 2018, 14 March 2018, and 19 March 2018 to help inform the main policy decisions taken by the Government relating to the contents of this Bill.

Clause by clause analysis

Clause 1 gives the title of the Act.

Clause 2 gives the dates on which the clauses come into effect.

Part 1Annual rates for 2018–19

Clause 3 provides that income tax for the 2018–19 tax year is to be paid at the basic rates specified in schedule 1 of the Income Tax Act 2007.

Part 2Amendments to Tax Administration Act 1994

Clause 4 sets out the clauses that affect the Tax Administration Act 1994.

Clause 5 amends section 3.

Subclause (2) inserts a definition of accident compensation legislation for the purposes of section 143E which is amended for the purposes of the information disclosure rules.

Subclause (3) inserts a definition of adjusted account which is used in new subpart 3B in relation to the requirements of an individual to provide income information.

Subclause (4) inserts a definition of agency which is used in the information disclosure rules.

Subclause (5) inserts definitions of applicant and applicant information which are used in the information disclosure rules.

Subclause (6) replaces the definition of approved credit reporting agency for the purposes of the information disclosure rules.

Subclause (7) replaces the definition of authorised officer for the purposes of the information disclosure rules.

Subclause (8) inserts definitions of authorised officer of the Ministry and authorised officer of the Police for the purposes of the information disclosure rules.

Subclause (9) replaces the definition of beneficiary for the purposes of the information disclosure rules.

Subclause (10) replaces the definition of beneficiary information for the purposes of the information disclosure rules.

Subclause (11) inserts a new paragraph in the definition of binding ruling for the purposes of the rules related to short-process rulings.

Subclause (12) inserts a definition of chief executive for the purposes of the information disclosure rules.

Subclause (13) inserts a definition of Commission for the purposes of the information disclosure rules.

Subclause (14) inserts a definition of company for the purposes of the information disclosure rules.

Subclause (15) replaces the definition of Corporation for the purposes of the information disclosure rules.

Subclause (16) replaces the definition of credit report for the purposes of the information disclosure rules.

Subclause (17) repeals the definition of duty of the Commissioner.

Subclause (18) inserts definitions of earnings as an employee, earnings as an employer, earnings as a private domestic worker, earnings as a self-employed person, and earnings as a shareholder-employee for the purposes of the information disclosure rules.

Subclause (19) replaces the definition of earnings related compensation for the purposes of the information disclosure rules.

Subclause (20) replaces the definition of employee to include a reference to section 143E which is amended as part of the new information disclosure rules.

Subclause (21) inserts a definition of final account which is used in new subpart 3B in relation to the requirements of an individual to provide income information.

Subclause (22) inserts definitions of fines defaulter and fines defaulter information for the purposes of the information disclosure rules.

Subclause (23) amends the definition of full and complete inspection to update a cross-reference.

Subclause (24) amends the definition of gift-exempt body to update a cross-reference.

Subclause (25) repeals the definition of income statement.

Subclause (26) inserts a definition of individual for the purposes of new subpart 3B in relation to the requirements of an individual to provide income information.

Subclause (27) inserts a definition of information demand for the purposes of the rules related to the collection of information.

Subclauses (28) and (29) repeal the definitions of information requisition and Inland Revenue officer.

Subclause (30) inserts a definition of integrity of the tax system for the purposes of the rules related to care and management.

Subclause (31) replaces the definition of issuing officer for the purposes of the rules related to the collection of information.

Subclause (32) inserts a definition of large multinational group for the purposes of the rules related to the collection of information.

Subclause (33) replaces the definition of legal personal representative for the purposes of the information disclosure rules.

Subclause (34) inserts a definition of legislative anomaly for the purposes of the rules related to care and management.

Subclause (35) inserts a definition of Ministry for the purposes of the information disclosure rules.

Subclause (36) inserts a definition of nominated person for the purposes of new Part 7B, which relates to third-party providers.

Subclause (37) inserts a definition of non-filing taxpayer in relation to the requirements of an individual to provide income information.

Subclause (38) amends a cross-reference in the definition of offshore payment.

Subclause (39) inserts a definition of parental leave for the purposes of the information disclosure rules.

Subclause (40) inserts a definition of permitted disclosure for the purposes of the information disclosure rules.

Subclause (41) repeals the definitions of person incorrectly assumed to be a provisional taxpayer, person to whom this section applies and person with access to restricted information.

Subclause (42) inserts a definition of personal information for the purposes of the information disclosure rules.

Subclause (43) inserts a definition of pre-populated account in relation to the requirements of an individual to provide income information.

Subclause (44) replaces the definition of private dwelling for the purposes of the rules related to collection of information.

Subclause (45) replaces the definition of property or documents for the purposes of the rules related to collection of information.

Subclause (46) amends the definition of proscribed question in relation to the new rules for short-process rulings.

Subclause (47) inserts a definition of provider of digital services for the purposes of the information disclosure rules.

Subclause (48) inserts a definition of public service for the purposes of the information disclosure rules.

Subclause (49) inserts a definition of reportable income which is used in the new subpart 3B related to the requirements for individuals to provide income information.

Subclause (50) replaces the definition of reportable unpaid tax for the purposes of the information disclosure rules.

Subclause (51) inserts a definition of representative which is used in the new rules for third-party providers.

Subclause (52) amends the definition of resident foreign trustee to ensure that the disclosure requirements applying to foreign trusts also apply to those foreign trusts that are registered charities.

Subclause (53) inserts a definition of responsible department for the purposes of the information disclosure rules.

Subclause (54) inserts definitions of revenue information, revenue law, and revenue officer for the purposes of the rules related to information collection.

Subclause (55) inserts definitions of sensitive revenue information, serious threat, and sex offence for the purposes of the information disclosure rules.

Subclause (56) inserts a definition of short-process ruling for the purposes of the rules related to short-process rulings.

Subclause (57) inserts a definition of social security agreement for the purposes of the information disclosure rules.

Subclause (58) amends the definition of tax, to ensure that tax credits for charitable and other public benefit gifts are treated as tax for the purposes of the Tax Administration Act 1994 (for example: shortfall penalties).

Subclause (59) amends the definition of tax agent in relation to the new rules for third-party providers.

Subclause (60) amends the definition of tax position for the purposes of the rules related to the requirements for individuals to provide income information.

Subclause (61) amends the definition of tax return for the purposes of the rules related to the requirements for individuals to provide income information.

Subclause (62) amends the definition of taxpayer’s tax position for the purposes of the rules related to the requirements for individuals to provide income information.

Subclause (63) inserts a definition of victim for the purposes of the information disclosure rules.

Subclause (64) inserts a definition of workplace legislation for the purposes of the information disclosure rules.

Clause 6 amends section 4A to update a cross-reference and terminology to take into account the new rules related to the requirements for individuals to provide income information.

Clause 7 inserts a new subpart heading.

Clause 8 inserts new section 5B as a consequence of the rewriting of the information collection provisions. The section provides for the chief executive of the department to be designated the Commissioner of Inland Revenue.

Clause 9 replaces sections 6, 6A, and 6B with the new subpart 2B related to the care and management of the tax system. New section 6 sets out the responsibilities of Ministers and officials to protect the integrity of the tax system. New section 6A sets out the Commissioner’s duty of care and management of taxes. New section 6B provides that directions may be issued to the Commissioner by the Governor-General in relation to the administration of the Inland Revenue Acts. New section 6C gives the Commissioner a power to remedy legislative anomalies by recommending regulations, making determinations, or undertaking certain administrative actions. New sections 6D to 6H set out restrictions, requirement for consultation and other matters, and the status and application of modifications made under section 6C.

Clauses 10 and 11 insert new subpart headings.

Clause 12 amends section 15 by renumbering it as section 13C.

Clause 13 repeals section 15B(h) and (i) as part of the new rules related to the requirements for individuals to provide income information.

Clause 14 repeals a heading and amends sections 15C to 15Z by renumbering them.

Clause 15 inserts new subpart 3A for the collection, use, and disclosure of revenue information. New section 16 sets out the purposes of the subpart. New section 16B sets out the principles on which the subpart is based. New section 16C provides definitions for the key terms used in the subpart. New section 17 provides that the Commissioner may obtain information by accessing property or documents. New section 17B provides that the Commissioner may require information or the production of documents through an information demand. New section 17C sets out the Commissioner’s powers in relation to documents accessed or provided. New section 17D relates to the warrants required for entry and removal of documents. New section 17E describes when information or documents are considered within a person’s knowledge, possession, or control. New section 17F relates to the Commissioner’s powers regarding offshore payments. New section 17G provides for information from large multinational groups. New section 17H allows the Court to make orders for the provision of information. New section 17I provides that the Commissioner may conduct inquiries for the purposes of obtaining information. New section 17J allows the Commissioner to apply to a District Court Judge to conduct an inquiry. New section 17K provides the rules that apply when a person is summoned and examined. New section 17L provides a regulation-making power for the collection of bulk data in relation to the administration of the Inland Revenue Acts. New section 17M sets out how the information obtained may be used. New section 18 provides the confidentiality rule of sensitive revenue information. New section 18B sets out the requirements for revenue officers and other persons in relation to the confidentiality rule. New section 18C provides exceptions to the rule for confidentiality as permitted disclosures. New section 18D states the first exception for disclosures made in carrying into effect the revenue laws. New section 18E states the second exception for disclosures made under information-sharing arrangements. New section 18F provides a regulating-making power for matters relating to the provision of public services in the sharing of revenue-information. New sections 18G to 18J provide the other exceptions for personal revenue information, certain agencies for certain specified purposes, international purposes, and risk of harm purposes.

Clause 16 inserts a new subpart heading.

Clause 17 replaces a subpart heading.

Clause 18 repeals section 21, the content of which is moved to new subpart 3A.

Clause 19 repeals section 21BA, the content of which is moved to new subpart 3A.

Clause 20 amends section 22 to update a cross-reference and replace a subsection in relation to the requirements of individuals to provide income information.

Clause 21 inserts a new subpart 3B for the reporting of income information by individuals. New section 22C provides an outline of the subpart. New section 22D provides definitions for key terms used in the subpart. New section 22E requires the Commissioner to include information held on an individual’s income for a tax year in a pre-populated account. New section 22F sets out the information requirements placed on individuals in relation to their other income and their reportable income. New section 22G sets out the ways in which an individual can confirm their account. New section 22H provides for amending accounts for incorrect information. New section 22I provides for the treatment of an individual’s final account as a return, an assessment, and a statement of the taxpayer’s tax position. The section also provides the assessment points for an individual. New section 22J sets out when individuals do not have an obligation to provide information. New section 22K sets out the information particulars. New section 22L allows for electronic and non-electronic requirements to be prescribed by the Commissioner.

Clause 22 amends section 23 to renumber it as section 22AAC.

Clause 23 provides some amendments for subparts 3C and 3D in the addition of subsection headings.

Clauses 24 and 25 amend sections 23C and 23D, to correct cross-references.

Clause 26 amends section 24B to improve the terminology.

Clause 27 amends section 24D to take account of a change from ‘special tax code’ to ‘tailored tax code’, and for a new notification requirement.

Clause 28 inserts new section 24DB to allow the Commissioner to recommend a more suitable or more accurate tax code to an employee and, if the employee consents, to notify the employer of a change of tax code.

Clause 29 amends section 24Q to renumber the section as section 169B.

Clause 30 replaces section 25A to allow the Commissioner to recommend a more suitable or more accurate RWT rate to the payee and notify the payer of the new rate.

Clause 31 provides some amendments for subpart 3E in the addition of subsection headings.

Clause 32 amends section 31C, to correct a cross-reference.

Clause 33 amends section 32E, to make public purpose Crown-controlled companies eligible to apply for an RWT exemption certificate, as a consequence of providing an income tax exemption for them.

Clause 34 amends section 33 as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 35 repeals sections 33AA, 33C, and 33D as a consequence of the changes in subpart 3B related to the requirements for individuals to provide income information.

Clause 36 repeals section 34B as part of the rationalisation of the rules relating to third-party providers.

Clause 37 amends section 36BB, to update some cross-references.

Clause 38 amends section 36BD, to correct a minor fault of expression.

Clause 39 amends section 37 to clarify what is meant by return of income for an individual for the purposes of that section.

Clause 40 amends section 38 as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 41 amends section 41 to clarify the relationship between the section and new subpart 3B.

Clause 42 amends section 41A in relation to the donations tax credit to provide the ways in which applications for a refund can be made and to clarify the application of the time bar. A further amendment requires registration of entities on a donee list.

Clause 43 amends section 42C as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 44 amends section 43, to repeal redundant subsections.

Clause 45 amends section 47, to correct a cross-reference.

Clause 46 amends section 55B by replacing existing subsection (1) with a subsection that has unchanged wording and a commencement date of 29 March 2018 but applies to applications for tax file numbers made after 1 October 2015 under section 55B or under former section 24BA.

Clause 47 repeals Part 3A as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 48 amends section 80KM as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 49 repeals a heading and sections 81 to 88 as a consequence of the changes in new subpart 3A related to the collection, use, and disclosure of information.

Clause 50 amends section 89 to renumber it as section 18K.

Clauses 51 and 52 amend sections 89C and 89D as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 53 inserts a new heading and new section 91AAZB to allow the Commissioner to make a determination to remedy a legislative anomaly as part of the new care and management rules.

Clause 54 amends section 91C to allow the Commissioner to make a binding ruling on how the record-keeping provisions apply.

Clause 55 inserts new sections 91CB and 91CC to clarify the matters on which the Commissioner may make a binding ruling or a new short-process ruling. It is also clarified that binding rulings can be made on certain determination matters.

Clause 56 amends section 91E to clarify the basis on which private rulings may be made.

Clause 57 amends section 91EA to update a cross-reference.

Clause 58 amends section 91EB to clarify when a private ruling ceases to apply to a person.

Clause 59 amends section 91EF to update the terminology related to the conditions on which a private ruling is based.

Clause 60 amends section 91EH to repeal redundant subsections.

Clause 61 inserts new sections 91EK to 91ET related to the new rules for short-process rulings. New section 91EK allows the Commissioner to make short-process rulings and sets out when a ruling may be declined. New section 91EL sets out the requirements for an application for a short-process ruling. New section 91EM sets out the effect of a short-process ruling. New section 91EN states how a short-process ruling applies to a person, particular circumstances, and tax type. New section 91EO sets out the disclosure requirements for a short-process ruling. New section 91EP provides that the Commissioner may request further information. New section 91EQ allows the Commissioner to state conditions on which the ruling is based. New section 91ER provides a right to consultation. New section 91ES sets out the content and notification of a short-process ruling. New section 91ET sets out the treatment of information supplied to the Commissioner and provides for an inquiry into the facts.

Clause 62 amends section 91F to update the terminology related to the conditions on which a private ruling is based.

Clause 63 amends section 91FB to update the terminology and to clarify when a private ruling ceases to apply to a person.

Clause 64 amends section 91FC to clarify that a product ruling may apply to a person.

Clause 65 amends section 91FF to update the terminology related to the conditions on which a private ruling is based.

Clause 66 amends section 91FH to repeal redundant subsections.

Clause 67 amends section 91GB to clarify the basis on which the Commissioner may not make a status ruling.

Clause 68 amends section 92 in relation to assessments as a consequence of the changes in subpart 3B related to the requirements for individuals to provide income information.

Clause 69 amends section 106 in relation to default assessments as a consequence of the changes in subpart 3B related to the requirements for individuals to provide income information.

Clause 70 amends section 108 in relation to the time bar as a consequence of the changes in subpart 3B related to the requirements for individuals to provide income information.

Clause 71 amends section 110 in relation to the evidence of returns and assessments as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 72 amends section 111 in relation to notices of assessment as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 73 replaces section 113A in relation to the correction of minor errors in subsequent returns to simplify the provision and to add a materiality threshold.

Clause 74 amends section 120C to update the definition of date interest starts as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 75 amends section 120F to provide the Commissioner with the pattern and order for applying taxpayer’s payments against unpaid tax and interest.

Clause 76 amends section 120KB to clarify, for the purpose of the interest regime, the instalment dates of certain provisional taxpayers.

Clause 77 inserts a new section 120VD to ensure that the Commissioner is not liable for interest on refunds of tax credits for charitable and other public benefit gifts.

Clause 78 amends section 124A to renumber the section.

Clause 79 inserts new Part 7B containing the rules related to third-party providers. New section 124B provides the outline for the Part. New section 124C provides for the listing of tax agents and the eligibility requirements for listing. New section 124D provides for representatives, the eligibility requirements, and the requirements for approval. New section 124E sets out the information requirements for tax agents and representatives. New section 124F provides for nominated persons and sets out the requirements. New section 124G provides for the refusal, removal, or disallowance of tax agents, representatives, and nominated persons.

Clause 80 amends section 124H to update the cross-references and to repeal a redundant provision.

Clause 81 repeals sections 124L, 124M, and 124N as a consequence of the repeal of the payroll subsidy.

Clause 82 amends section 124O as a consequence of the introduction of the new rules related to third-party providers.

Clause 83 repeals section 124R as a consequence of the repeal of the payroll subsidy.

Clause 84 amends section 125 to update some cross-references.

Clause 85 amends section 135 as a consequence of the changes to the binding rulings regime.

Clause 86 amends section 136 as a consequence of the changes to the binding rulings regime.

Clause 87 amends section 138A to update some cross-references.

Clause 88 amends section 138E to update some cross-references.

Clause 89 amends section 139A in relation to late filing penalties as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clauses 90 and 91 amend section 141B to correct cross-references. The clauses have different commencement dates.

Clause 92 amends section 141JA in relation to offences as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 93 amends section 143 in relation to absolute liability offences as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 94 amends section 143A in relation to knowledge offences as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 95 amends section 143C in relation to offences by officers as a consequence of the changes made in the new confidentiality rules.

Clause 96 replaces sections 143D and 143E applying to offences related to the disclosure of information by persons other than revenue officers. New section 143D relates to persons who fail to obtain confidentiality certificates or disclose certain information. New section 143E relate to the disclosure of certain information to employees, and new section 143EB concerns the disclosure of certain information by employers and directors.

Clause 97 amends section 174AA in relation to the power of the Commissioner to refrain from imposing penalties as a consequence of the changes in new subpart 3B related to the requirements for individuals to provide income information.

Clause 98 amends section 184A to enable refunds to be paid by direct credit to a bank account.

Clause 99 inserts new section 227F as a savings provision related to the new information disclosure rules. It provides that in cases of ambiguity, the old provisions guide the interpretation of the new law.

Clause 100 amends schedule 4 to correct a minor fault of expression.

Clause 101 amends schedule 5 in relation to the use of tax codes to update the terminology for tailored tax codes.

Clause 102 inserts 2 new schedules to the Act relating to the disclosure rules and to the reporting of income information by individuals. New schedule 7 reproduces section 81(4) and related sections that specify the particular permitted disclosures. New schedule 8 sets out the reporting requirements for other income and for the additional information that an individual may include in their adjusted account.

Clause 103 inserts a schedule to the Act with consequential amendments related to the new information disclosure rules and the rules for third-party providers.

Part 3Amendments to Income Tax Act 2007

Clause 104 provides that Part 3 affects the Income Tax Act 2007.

Clause 105 amends section CB 9 by replacing subsection (3), so that subsection (2) is overridden by new section CB 15D.

Clause 106 amends section CB 10 by replacing subsection (3), so that subsection (2) is overridden by new section CB 15D.

Clause 107 amends section CB 11. Subclauses (1) and (3) correct a faulty expression of the policy intent arising from the rewrite of the Income Tax Act 1994. Subclause (2) replaces subsection (3), so that subsection (2) is overridden by new section CB 15D.

Clause 108 amends section CB 15, which relates to income from certain land transactions. Subclause (1) removes a phrase that links income arising under the section with particular sections governing land transactions, to clarify that exceptions to those sections are not applicable to income under section CB 15. Subclause (2) inserts new subsection (1B), so that subsection (1) is overridden by new section CB 15D. Subclause (3) replaces section CB 15(2), clarifying that the effect of the subsection on the date of an acquisition of land does not include the effect of the subsection on the date of a previous acquisition of the land.

Clause 109 inserts a new heading and new section CB 15D, which provides that Housing New Zealand Corporation and companies in the same wholly-owned group are not affected by various provisions attributing income to an associate of a person with a business of dealing in, developing, or building on, land or another activity involving land.

Clause 110 amends section CB 16A(2)(b) to correct a cross-reference, as a remedial matter.

Clause 111 amends section CB 16 to correct a cross-reference and to clarify a fault of expression, as a remedial matter.

Clause 112 amends section CB 17 to clarify 2 faults of expression, as a remedial matter.

Clause 113 amends section CB 18(3)(a) to clarify a fault of expression, as a remedial matter.

Clause 114 amends section CB 27 to remove references to the adverse event income equalisation scheme, which is being abolished.

Clause 115 amends section CB 28 to update a cross-reference to schedule 19.

Clause 116 amends section CD 3 to correct a cross-reference, as a remedial matter.

Clause 117 amends section CD 5(2)(a) to correct a cross-reference, as a remedial matter.

Clause 118 amends section CD 6 to correct 3 cross-references, as a remedial matter.

Clause 119 amends section CE 1 to make unrepaid PAYE income overpayments assessable income and expressly provide that PAYE-related overpayments that have been repaid are not income.

Clause 120 amends section CV 1 by inserting a new subsection (2) providing that the section is overridden by new section CB 15D.

Clause 121 amends section CV 2 by replacing subsection (2) so that the section is overridden by new section CB 15D.

Clause 122 amends section CW 9(2)(a) to remove a redundant cross-reference, as a remedial matter.

Clause 123 amends section CW 19(1) to clarify a fault of expression, as a remedial matter.

Clause 124 inserts new section CW 38B to provide an exemption from income tax for public purpose Crown-controlled companies, and to provide a power for companies to be added or removed from the list of qualifying companies by Order in Council.

Clause 125 amends section CW 42(1) to ensure that a business carried on by, for, or for the benefit of, a charity must itself be a registered charitable entity.

Clause 126 amends section CX 10 to ensure that a PAYE-related overpayment does not give rise to an employment-related loan for FBT purposes.

Clause 127 amends section CX 27 as a consequence of the changes in new subpart 3B of the Tax Administration Act 1991 related to the requirements for individuals to provide income information.

Clause 128 amends section CX 51 by removing a cross-reference to section EH 42, which is being repealed.

Clause 129 amends section DB 41 to ensure that a company does not receive a double deduction for certain charitable gifts if they have already been given a concessionary treatment under another provision of the Income Tax Act 2007.

Clause 130 amends section DB 46 to indicate the additional expenditure coming within the scope of the section as a consequence of the amendments to schedule 19.

Clause 131 repeals section DQ 2, relating to the adverse event income equalisation scheme, which is being abolished.

Clause 132 amends section DV 12 to ensure that a Maori authority does not receive a double deduction for certain charitable gifts if they have already been given a concessionary treatment under another provision of the Income Tax Act 2007.

Clause 133 amends section DV 19(2)(a) to correct a fault of expression, as a remedial matter.

Clause 134 amends section EE 47 to ensure that depreciation claw-back applies appropriately to entities that leave the tax base to become charities.

Clause 135 amends section EH 1 by removing references to the adverse event income equalisation scheme, which is being abolished.

Clause 136 amends section EH 4, allowing for deposits to main income equalisation accounts that replace earlier refunds made from the accounts for purposes described in section EH 15(1)(a).

Clause 137 amends section EH 35 to remove a cross-reference to repealed section EH 38.

Clause 138 repeals sections and headings relating to the abolished adverse event income equalisation scheme.

Clause 139 amends section EK 2 to update a cross-reference to schedule 19.

Clause 140 amends section EK 11 to update a cross-reference to schedule 19.

Clause 141 amends section EK 12 to update a cross-reference to schedule 19.

Clause 142 amends section EK 20 to update a cross-reference to schedule 19.

Clause 143 amends section EK 23 to update a cross-reference to schedule 19.

Clause 144 amends section EW 6 to clarify that the Commissioner may make a binding ruling on whether an amount is solely attributable to an excepted financial arrangement.

Clause 145 amends section EW 14 to clarify that the Commissioner may make a binding ruling on the use of a spreading method in certain circumstances.

Clauses 146 and 147 amend sections EW 15E and EW 15I to add a power to make a binding ruling in addition to a determination-making power.

Clause 148 amends section EW 32 to add a power to make a binding ruling in addition to a determination-making power, and to correctly account for contingent consideration in the sale and purchase of a business under a foreign currency denominated agreement for sale and purchase.

Clause 149 inserts a new section EW 33D to account correctly for contingent consideration in the sale and purchase of a business under a foreign currency denominated agreement for sale and purchase.

Clause 150 amends section EW 46C to clarify 2 faults of expression, as a remedial matter.

Clause 151 amends section EX 56 to clarify a fault of expression, as a remedial matter.

Clause 152 inserts a new heading and new section EZ 80, which is a transitional provision. The Commissioner is required to open a main income equalisation account for a person who does not have such an account but has an adverse event income equalisation account when those accounts are abolished. The balance in a person’s adverse event income equalisation account is credited to the person’s main income equalisation account when the adverse event equalisation account is abolished.

Clause 153 amends section FC 2 by inserting subsection (4), which states that the treatment by subsection (1) of a transfer of property as being at market value does not affect the classification of the transfer under the definition of distribution in section HC 14.

Clause 154 amends section FM 9 by replacing subsection (3) so that the section is overridden by new section CB 15D.

Clause 155 amends section FM 15 by inserting new subsection (8), providing that the section does not apply to Housing New Zealand Corporation and companies in the same consolidated group.

Clause 156 amends section FM 40 as a remedial matter.

Clause 157 inserts a new heading and new section GB 54 to provide a specific anti-avoidance provision to counter inappropriate use of tax credits for charitable or other public benefit gifts.

Clause 158 amends section HC 10 by correcting the time limit given in the section for an election under section HC 30(2) so that it corresponds to the time limit given in section HC 30 for such an election.

Clause 159 amends section HC 15. Subclause (1) replaces subsection (5)(a) with paragraphs (a) to (ac), providing for different treatments for the proceeds of capital gains by trustees of 2 classes of foreign trust. Subclause (2) inserts new subsection (5B) providing, for the purposes of section HC 16, for the classification of the capital gains realised by a trustee of a foreign trust.

Clause 160 amends section HC 16. Subclause (1) amends subsection (2)(c) to allow for the effect of new section HC 15(5B). Subclause (2) amends subsection (6)(c) by removing a reference to the maker of an election under section HC 30 that is inconsistent with the description in section HC 30 of the persons who may make an election.

Clause 161 amends section HC 27. Subclause (1) inserts new subsection (1)(ab), under which, with effect from 1 April 2008, a person who provides services to a trust at less than market value is a settlor of the trust. Subclause (2) amends the inserted paragraph (ab), with prospective effect, to exclude services incidental to the operation of the trust. Subclause (3) inserts new subsection (3D) with prospective effect. The subsection excludes a trustee of a head trust, who is a New Zealand resident and makes a resettlement of a new trust, from being a settlor of the new trust if the settlors of the head trust are non-residents. The application subclauses for subsections (1) and (3) protect tax positions taken before the date on which the Act receives the Royal assent.

Clause 162 amends section HC 30 to clarify the tax consequences relating to a trust that makes a distribution after ceasing to satisfy the requirements for being a foreign trust. Subclauses (1) and (2) amend subsection (3) to clarify the tax consequences if an election for the trust is made under subsection (2). Subclause (3) amends subsection (4) to clarify the tax consequences if no election is made for the trust.

Clauses 163 and 164 amend sections HC 36 and HC 37 so that they both allow for a situation in which the sections apply separately for different settlements on a trust from which a minor derives beneficiary income.

Clause 165 amends section HE 3 to correct a minor fault of expression.

Clause 166 amends section HM 2 to correct a cross-reference, as a remedial matter.

Clause 167 replaces section HM 28 so that it provides, if a PIE that is a listed PIE elects to have its status cancelled, for the PIE to retain listed PIE status for a period of 2 years or more after its listing on a recognised exchange is cancelled. The PIE must continue to have 100 or more shareholders during the period.

Clause 168 amends section HR 8 to add the new category of representative as a consequence of the changes to the rules on third-party providers.

Clause 169 amends a cross-heading as a consequence of the extension of the securitisation regime beyond financial institutions.

Clause 170 replaces section HR 9 to extend transparency for special purpose vehicles used in securitisations beyond financial institutions to other corporate securitisations and to make the regime elective.

Clause 171 inserts new section HR 9BA to prescribe who may make an election for a special purpose vehicle used in a securitisation to be treated as transparent, how they do so, and the effect of making such an election.

Clause 172 replaces section HR 9B as a consequence of the extension of the securitisation regime beyond financial institutions.

Clause 173 replaces section HR 10 as a consequence of the extension of the securitisation regime beyond financial institutions.

Clause 174 amends section HR 12 to introduce a $5,000 safe harbour from the tax rules for deregistered charities, to clarify valuation rules for the assets subject to the rules, and to exclude Maori reservation lands and certain corporate share transactions.

Clause 175 amends section LD 1 to add the new category of representative as a consequence of the changes to the rules on third-party providers.

Clause 176 amends section LD 3 to provide that, for the purposes of determining a tax credit, the Commissioner may determine if funds are applied for charitable, benevolent, philanthropic, or cultural purposes within New Zealand. Also, a tax credit is denied if an entity could, in the opinion of the Commissioner, be registered under the Charities Act 2005 but the entity has not so registered.

Clause 177 amends section LD 4 to update a cross-reference.

Clause 178 amends section MC 6 by replacing paragraph (c) to clarify the different situations affecting a person’s entitlement to a Best Start tax credit.

Clause 179 amends section MD 3 to allow for the part-year calculation of family tax credits, as provided by the Families Package (Income Tax and Benefits) Act 2017.

Clauses 180 to 182 amends section MD 11 to correct, in 3 places, a minor historical fault of expression. The clauses have different commencement dates.

Clause 183 amends section MD 13 to allow for the part-year calculation of family tax credits, as provided by the Families Package (Income Tax and Benefits) Act 2017.

Clause 184 amends section MF 7 to allow for the part-year calculation of family tax credits, as provided by the Families Package (Income Tax and Benefits) Act 2017.

Clause 185 amends section MZ 3 to remove a subsection relating to deposits under the abolished adverse event income equalisation scheme.

Clause 186 amends section OP 22 to replace existing subsections (1)(d) and (1B) with provisions that have unchanged wording and a commencement date of 29 March 2018 but have a restricted application to tax positions, for periods ending before 1 April 2018, that relied on section OP 22 as it was before the commencement of the amendments. Subclause (4) limits the liabilities for further income tax, imputation additional tax, and imputation penalty tax that would otherwise be a consequence of a debit balance arising in an imputation credit account as a result of the amendments.

Clause 187 amends section RA 13 to repeal a redundant provision.

Clause 188 amends section RB 3 to correct the list of defined terms.

Clause 189 amends section RC 3 to repeal a redundant provision.

Clause 190 amends section RC 5 to allow provisional taxpayers to join the AIM provisional tax method part the way through a tax year.

Clause 191 amends inserts a new section RC 9(4C) to provide the provisional tax instalments for a provisional taxpayer that joins the AIM provisional tax method part the way through a tax year.

Clause 192 amends section RC 10B to provide the calculation of provisional tax instalment amounts for a provisional taxpayer that joins the AIM provisional tax method part the way through a tax year.

Clause 193 amends section RD 2 to update cross-references.

Clause 194 amends section RD 3 to create a new category of PAYE income payment for unrepaid overpayments.

Clause 195 amends section RD 5 to include in the definition of salary or wages an unrepaid overpayment that an employer treated as salary or wages.

Clause 196 amends section RD 7 to include in the definition of extra pay an unrepaid overpayment that an employer treated as an amount of extra pay.

Clause 197 amends section RD 8 to include in the definition of schedular payment an unrepaid overpayment that an employer treated as all or part of a schedular payment.

Clause 198 inserts new section RD 8B, which applies to PAYE-related overpayments and provides how these amounts, to the extent to which they have not been repaid, are treated under the PAYE rules.

Clause 199 amends section RD 17 as a remedial matter.

Clause 200 amends section RD 22 to update cross-references.

Clause 201 amends section RD 35 to provide for an alternative method of calculating market interest for employment-related loans made by an employer that is in the business of lending money or is in a group with a company in the business of lending money. An employer does not need to give advance notice to the Commissioner of a proposed change between the alternative methods.

Clause 202 amends section RD 64 to update cross-references.

Clause 203 amends section RE 1 to update cross-references.

Clauses 204 and 205 amend the lists of defined terms in sections RF 2B and RF 2C.

Clause 206 repeals section RM 5.

Clauses 207 to 210 correct cross-references in sections RM 16, RM 22, RM 25, and RM 31.

Clause 211 amends section RP 14 to update cross-references.

Clause 212 amends section RZ 14 to update cross-references.

Clause 213 amends section YA 1.

Subclauses (2) to (5) repeal the definitions of adverse event deposit, adverse event income equalisation account, adverse event income equalisation scheme, and adverse event maximum deposit.

Subclause (6) amends the definition of cost of timber to update a cross-reference to schedule 19.

Subclause (7) inserts a new definition of current market value for the purposes of valuing charitable accumulations under section HR 12.

Subclause (8) amends the definition of date the deposit ends by repealing a paragraph referring to the abolished adverse event income equalisation scheme.

Subclause (9) inserts a new definition of debt funding special purpose vehicle as part of the extension of the securitisation regime beyond financial institutions and to assets that are not financial arrangements.

Subclause (10) amends the definition of deposit by repealing a paragraph referring to the abolished adverse event income equalisation scheme.

Subclause (11) amends the definition of employer monthly schedule to correct a fault of expression.

Subclause (12) amends the definition of financial institution to correct a cross-reference.

Subclause (13) repeals the definition of financial institution special purpose vehicle as a consequence of the extension of the securitisation regime beyond financial institutions.

Subclause (14) repeals the definition of income statement as a consequence of the changes in subpart 3B of the Tax Administration Act 1991 related to the requirements for individuals to provide income information.

Subclause (15) amends the definition of large budget film grant to clarify the source of the funds as MBIE.

Subclause (16) amends the definition of large business AIM-capable system to correct a cross-reference.

Subclause (17) amends the definition of listed PIE to insert a cross-reference to section HM 28, as replaced, in paragraph (a) and to repeal superfluous paragraphs (c) and (d).

Subclause (18) amends the definition of multi-rate PIE to correct a fault of expression.

Subclause (19) replaces the definition of non-filing taxpayer as a consequence of the changes in Part 3, subpart 3B of the Tax Administration Act 1994 related to the requirements for individuals to provide income information.

Subclause (20) inserts a new definition of originator as a consequence of the relaxation of the consolidation requirement under the securitisation regime.

Subclause (21) amends the definition of overtime to correct a cross-reference.

Subclause (22) amends the definition of pay to update a cross-reference.

Subclause (23) amends the definition of PAYE intermediary to update some cross-references.

Subclause (24) inserts a new definition of PAYE-related overpayment, which means an amount described in new section RD 8B(1).

Subclause (25) amends the definition of public authority to specifically include 6 entities.

Subclause (26) inserts a new definition of public purpose Crown-controlled company as a consequence of the introduction of an income tax exemption for certain Crown-controlled companies.

Subclause (27) inserts a new definition of representative as a consequence of the introduction of the new rules related to third-party providers.

Subclause (28) repeals the definition of residential mortgage backed security as a consequence of the extension of the securitisation regime beyond assets that are financial arrangements.

Subclause (29) amends the definition of RWT proxy to update a cross-reference.

Subclause (30) amends the definition of specified period by repealing a paragraph referring to the abolished adverse event income equalisation scheme.

Subclause (31) replaces the definition of tax agent as a consequence of the introduction of the new rules related to third-party providers.

Subclause (32) replaces the definition of tax charity to correct a cross-reference

Subclause (33) inserts a new definition of unrepaid PAYE income overpayment, which refers to the definition of that term in new section RD 8B(3).

Subclause (34) amends the definition of unwind to update a cross-reference.

Clause 214 amends section YC 12 by inserting new subsection (1B), which provides that the treatment under subsection (2) of the ownership of a public unit trust is optionally available to a subsidiary of the public unit trust. Subclause (1) consequentially amends subsection (1).

Clause 215 amends schedule 19 to add expenditure, in avoiding, remedying, or mitigating the detrimental effects of noise, to the expenditure that is allowed as a deduction under section DB 46.

Clause 216 amends schedule 28 as a consequence of allowing over 65 year olds to join KiwiSaver.

Clause 217 amends schedule 29 by inserting Northland Regional Council as a new listed investor for portfolio investment entities.

Clause 218 amends schedule 32 to insert entities into the list of recipients of charitable and other public benefit gifts.

Clause 219 inserts new schedule 35 which lists companies that are public purpose Crown-controlled companies.

Clause 220 refers to consequential amendments listed in schedule 3.

Part 4Amendments to other enactments

Goods and Services Tax Act 1985

Clause 221 sets out the clauses that affect the Goods and Services Tax Act 1985.

Clause 222 amends section 2.

Subclause (2) amends the definition of public authority to include specifically the New Zealand Lottery Grants Board.

Subclause (3) inserts a new definition of public purpose Crown-controlled company as a consequence of providing certain Crown-controlled companies with a GST treatment comparable to that of public authorities.

Clause 223 amends section 2A to correct a cross-reference relating to associated persons.

Clause 224 amends section 6 to provide public purpose Crown-controlled companies with a GST treatment comparable to that of public authorities to help ensure that GST input credits can be claimed back.

Clause 225 amends section 10(3C) and (3D) so that the exclusions under those subsections also apply to supplies of remote services for which the recipient is required to account for output tax.

Clause 226 amends section 21(2) to clarify that no adjustment may be made in the situations described in the subsection.

Clause 227 amends section 53 to remove the requirement that a company that is a registered person notify the Commissioner of a change in its constitution.

Clause 228 amends section 55(7) by replacing paragraphs (db) and (dc) with new paragraph (db), which provides for the consequences of a company joining a group of companies by reference to the percentage intended use and percentage actual use of supplies by the company for making taxable supplies, for periods before the company joins the group.

KiwiSaver Act 2006

Clause 229 sets out the clauses that affect the KiwiSaver Act 2006.

Clause 230 amends section 4 to add a new exclusion from the definition of salary or wages as a consequence of treating certain unrepaid overpayments as included in the definition of salary or wages in the Income Tax Act 2007.

Clauses 231 amends section 33 to allow over 65 year olds to join KiwiSaver.

Clause 232 and 233 amends sections 59A and 59B as a consequence of allowing over 65 year olds to join KiwiSaver.

Clause 234 amends section 64 to provide 6% and 10% contribution rates.

Clause 235 amends section 104 to reduce the maximum contributions holiday period from 5 years to 1 year.

Clause 236 replaces schedule 1, clause 4 to remove the 5 year lock-in period for people who join KiwiSaver over the age of 60.

Clause 237 refers to amendments in schedule 6 that change the name of the contributions holiday to savings suspension.

Child Support Act 1991

Clause 238 sets out the clauses that affect the Child Support Act 1991.

Clause 239 amends section 35 as a consequence of the changes in new subpart 3B of the Tax Administration Act 1991 related to the requirements for individuals to provide income information.

Clause 240 amends section 81 to reflect the changes related to the requirements for individuals to provide income information.

Clause 241 amends section 163 to correct a cross-reference.

Clause 242 refers to consequential amendments listed in schedule 3.

Student Loan Scheme Act 2011

Clause 243 sets out the clauses that affect the Student Loan Scheme Act 2011.

Clauses 244 to 249(1) amend sections 34, 35, 36, 57, 60, and schedule 2 to make the terminology changes for tailored tax codes.

Clause 249(2) corrects a cross-reference.

Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018

Clause 250 sets out the clauses that affect the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018.

Clauses 251 to 254, and 257 repeal certain provisions that have a late application date and have been overtaken by amendments contained in this Act.

Clauses 255, 256, and 258 update cross-references.

Families Package (Income Tax and Benefits) Act 2017

Clause 259 sets out the clauses that affect the Families Package (Income Tax and Benefits) Act 2017.

Clauses 260 and 261 amend the Families Package (Income Tax and Benefits) Act 2017 to allow for the part-year calculation of family tax credits, as provided by that Act.

Income Tax Act 2004

Clause 262 sets out the clauses that affect the Income Tax Act 2004.

Clauses 263 and 264 correct, in 2 places, a minor historical fault of expression.

Other enactments

Clause 265 amends schedule 4, clauses 16 and 19 of the Accident Compensation Act 2001 to reflect the changes related to the requirements for individuals to provide income information.

Clause 266 amends section 135 of the Intelligence and Security Act 2017 as a consequence of the changes to the rules on information disclosure.

Clause 267 amends section 5 of the Financial Advisers Act 2008 to include representatives and nominated persons to the definition of tax agent.

Clause 268 amends section 4 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 to include representatives and nominated persons to the definition of tax agent.

Clause 269 amends section KD 2AB of the Income Tax Act 1994 to correct a minor historical fault of expression.

Clause 270 updates a cross-reference in section 12 of the Taxation Review Authorities Act 1994 as a consequence of the changes to the rules on information disclosure.

Clause 271 updates a cross-reference in regulation 36 of the Taxation Review Authorities Regulations 1998 as a consequence of the changes to the rules on information disclosure.

Tax Administration (Binding Rulings) Regulations 1991

Clause 272 sets out the clauses that amend the Tax Administration (Binding Rulings) Regulations 1999.

Clause 273 amends regulation 2 to insert a definition of short-process ruling.

Clause 274 inserts in regulation 3 a provision providing for application fees and further fees to be determined by the Commissioner.

Clause 275 consequentially amends regulation 5.

Clause 276 amends regulation 6 to insert a fixed date.