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—2

As reported from the Finance and Expenditure Committee

Commentary

Recommendation

The Finance and Expenditure Committee has examined the Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill and recommends by majority that it be passed with the amendments shown.

About the bill as introduced

This omnibus bill seeks to amend various taxation-related Acts and regulations. It would set the annual rates of income tax for the 2018/19 tax year (with no change from the previous year), and make several other policy and remedial changes.

The changes in the bill seek to modernise and improve the administration of the tax system and to simplify tax obligations for many individuals. The bill would also:

  • introduce a “short process ruling” allowing small businesses to apply for a binding ruling from the Inland Revenue Department on how a taxation law would apply

  • allow people over 65 years to join KiwiSaver, although employers would not be obliged to make contributions for them

  • add new KiwiSaver employee contribution rates of 6% and 10% to the existing rates of 3%, 4%, and 8%.

Proposed amendments include two SOPs

After the bill was introduced, the Minister of Revenue released two Supplementary Order Papers (SOPs) proposing the following amendments to the bill:

  • SOP 74 (released on 14 August 2018) would amend the Income Tax Act 2007 and the Goods and Services Act 1985 to:

    • require non-profit bodies to return GST on supplies of goods and services if they have received GST deductions on those goods and services

    • extend depreciation roll-over relief provisions for the Canterbury earthquakes for a further five years

    • address a technical flaw regarding disregarded hybrid payments in the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018.

  • SOP 135 (released on 16 October 2018) would amend the Income Tax Act and the Tax Administration Act 1994 to give effect to the Government’s policy of encouraging new investment in bloodstock breeding. It would allow for tax deductions on the cost of high-quality horses acquired for breeding.

We have considered the SOPs, and recommend that the amendments proposed in SOP 74 be incorporated into the bill.

We recommend that most of the amendments proposed in SOP 135 be incorporated into the bill, with some minor adjustments which we discuss later in this commentary.

The rest of this commentary covers the main amendments we recommend to the bill. We do not discuss minor or technical amendments.

Commissioner’s extended powers

We recommend removing the clauses that would give the Commissioner of Inland Revenue power to make minor changes to tax legislation.

The bill as introduced would enable the Commissioner to make minor changes to tax legislation without going through the parliamentary process. We consider that a very cautious approach is warranted with respect to these powers to ensure that Parliament’s law-making authority is appropriately respected. We consider that this proposed change requires further consultation with the Legislation Design and Advisory Committee before it is considered again by this committee. This process would take several months and would likely require a redraft of the relevant provisions before their possible inclusion in a future tax bill.

We therefore recommend the removal of clauses 5(30) and (34), 7–11, and 53 from the bill and the deletion of a cross reference in Schedule 3.

Simplification of tax write-off rules

We recommend amending clause 21 (which would insert new subpart 3B in the Tax Administration Act), deleting clause 97, and inserting new clause 102B (amending Schedule 8, part B of that Act) to simplify and clarify the rules for tax write-offs.

The bill as introduced would allow for the write-off of tax debts when an individual had “complied with all of their obligations” or had less than $200 of income withheld at the wrong rate (clause 97, amending section 174 AA).

We recommend that the provisions be simplified so a general write-off would apply when a person has only earned reportable income and the tax owing is $50 or less. We also propose retaining two specific write-offs:

  • where the taxpayer’s only income is derived from income-tested benefits (for example, if WINZ payments were a person’s only source of income)

  • where the taxpayer had tax to pay as a result of having an extra pay period in the income year.

Our proposed changes would provide for a consolidated list of exceptions to the specific write-offs that was more prescriptive but easier to understand than in the bill as introduced. We also propose including flowcharts to clearly explain the process.

Based on 2017 data, we understand that the proposed changes would affect more than 70 percent of reportable income earners who had tax to pay (about 579,000 people), allowing their tax owing to be written off. These changes would ensure that Inland Revenue does not pursue debts that are uneconomic to collect, and which arose by no fault of the taxpayer.

Correcting and finalising account information

Clause 21 would insert new Subpart 3B into the Tax Administration Act. New section 22 H would allow taxpayers to correct information that they have provided to Inland Revenue, while new section 22 G would allow taxpayers who have had their tax position pre-populated to confirm the pre-populated information.

Taxpayers who only earn reportable income such as salary, wages, and interest generally have very little interaction with the tax system and are likely to have their tax position automatically calculated by Inland Revenue. We consider that these taxpayers should not be subject to interest or penalties until after their terminal tax date if their tax is calculated incorrectly, and believe they should have an opportunity to amend incorrect information, not merely to confirm the pre-populated information.

We therefore recommend deleting proposed section 22 G, amending section 22 H, and including new section 22 HB. Our changes would make it clear that accounts could be amended to include missing information, as well as to correct information.

The new sections would allow both individuals and the Commissioner of Inland Revenue to finalise the information in accounts. The final account would be treated as the individual’s return of income and their assessment for the tax year. The date by when the information in the account must be confirmed is set out in section 22 HB(3).

Increase in threshold for short-process binding rulings

Clause 61 would insert section 91 EL into the Tax Administration Act to allow taxpayers with annual gross income below a certain threshold to seek short-process rulings on how a taxation law applies.

In the bill as introduced, taxpayers with a turnover of below $5 million could apply for a short-process binding ruling on how a tax law applies where the tax at stake was less than $1 million. We consider the $5 million threshold too low as it could exclude medium-sized enterprises from the regime.

We therefore recommend amendments to increase the turnover threshold to $20 million, provided the amount of tax at stake remains less than $1 million.

Payments to fire and emergency volunteers

We recommend amending section RD 5 of the Income Tax Act so that some fire and emergency volunteers would no longer be required to file separate income tax returns.

Fire and emergency volunteers are reimbursed for their loss of income when they attend a training course. These payments are treated as a taxable honorarium under the Income Tax Act and are subject to withholding tax as schedular payments. This means some volunteers have to file income tax returns and return ACC levies specifically for these small payments.

This tax treatment acts as a disincentive to volunteering. We therefore recommend inserting clause 195(1B) amending section RD 5 of the Income Tax Act so these payments would be considered “salary and wages”. This would treat these payments as subject to PAYE rules, so volunteers would no longer need to file annual tax returns specifically for these payments.

Hurunui/Kaikōura earthquake roll-over relief

We recommend new clause 128D, which would insert new section CZ 25B into the Income Tax Act, to give roll-over relief to owners of revenue account property affected by the November 2016 Hurunui/Kaikōura earthquake.

We consider this amendment necessary to bring the rules into line with those that apply to revenue account property affected by the 2010–11 Canterbury earthquakes. Owners can defer (roll over) their income tax liabilities arising from the receipt of insurance payments for irreparably damaged or abandoned land and buildings. This ensures that tax provisions do not impede post-earthquake recovery.

Initially there was not seen to be a need for roll-over relief after the Hurunui/Kaikōura earthquake, but the current evidence suggests such a provision is desirable.

Backdated ACC payments

We recommend amending the Income Tax Act to remedy anomalies around the tax treatment of back-dated payments from ACC for attendant care.

ACC makes payments to a number of people (“ACC beneficiaries”) who cannot look after themselves. These payments are treated as schedular payments, subject to a withholding tax rate of 10.5 percent, and are on-paid to carers who provide services to the ACC beneficiaries. The care providers receive a tax credit of 10.5 percent, as this has already been deducted by ACC.

We note that problems arise for both the ACC beneficiary and the care provider where a person has paid for attendant care by themselves, and later receives reimbursement payments from ACC.

To remedy these issues, we recommend several amendments to the Income Tax Act:

  • New clause 123B would mean that reimbursement payments for attendant care are considered exempt income, including those covering an earlier income year.

  • New clause 128E would clarify that this treatment as exempt income extends to payments made since 2008. This would allow ACC beneficiaries to retrospectively claim refunds on additional tax paid in previous years.

  • New Clause 130B would allow persons to claim deductions in relation to reimbursement payments. Deductions could be claimed at the same rate as tax paid on attendant care payments made over a single income year.

  • New Clause 174C would allow persons to claim tax credits in relation to reimbursement payments.

Bright-line test for residential land

The bright-line test requires people to pay tax on residential land if they buy and sell it within a specified period of time.

The bright-line test for residential land was recently extended from two years to five years. This applies to land purchased after 29 March 2018. However, several legislative anomalies remain.

We recommend amendments to clauses 250B–250K, 252B, 254, and 257B amending sections of the Taxation (Annual Rates for 2017-18, Employment and Investment Income, and Remedial Matters) Act 2018. This would change the application dates for the bright-line test for freehold estates converted from leases with a perpetual right of renewal, and land that was purchased off the plans.

For leases with a perpetual right of renewal (Glasgow leases) that are subsequently converted to freehold estates, the application date for the bright-line test is when the freehold interest was first acquired. We consider that the application date should instead be when the leasehold interest was granted. This would align the bright-line test with the treatment of Glasgow leases in other New Zealand tax legislation.

When a purchase is made off the plans, it means that property has been bought before building commences. For these purchases, the bright-line test applies from the date when the land was acquired. We consider that the application date should instead be when the contract to buy was first signed.

We also recommend amendments so that the modified start date for the bright-line period for off-the-plan purchases applies to off-the-plan purchases of leasehold estates. Currently it only applies to freehold estates. We consider that this should be extended to leasehold estates (which are commonly used for city apartments) —this is consistent with the policy rationale for the rule.

Application date for KiwiSaver lock-in

We recommend amending clause 236, which would amend Schedule 1 of the KiwiSaver Act 2006, to change the application date for changes to the KiwiSaver lock-in period transitional rule.

If enacted, the bill would remove the five year lock-in period for people who join KiwiSaver after age 60. This would mean that these people could access their contributions when they reach 65, regardless of how long they have been part of KiwiSaver.

The bill includes a transitional rule, ensuring that over 60 year olds who join before the removal of the lock-in period (effective 1 July 2019) would be required to remain locked in for the duration of the five year period. They would be entitled to receive the member tax credit and compulsory employer contributions for the duration of this period.

We recommend that over 60 year olds that are subject to this transitional rule should be able to exit the lock-in period and make withdrawals on reaching 65 years old. They would forfeit their entitlement to further member tax credits and compulsory employer contributions.

The bill as introduced has an application date for this change of 1 July 2019. We recommend that the ability to exit the transitional lock-in period rule should instead apply from 1 April 2020 to align with the rollout of Inland Revenue’s business transformation programme for KiwiSaver.

Information sharing with the Police

The bill as introduced would allow the Commissioner to share information with “a member of the New Zealand Police” as defined by the Policing Act 2008. This refers only to constables, who are police employees who have taken the constable’s oath.

However, many officers in the Police’s Financial Intelligence Unit are not sworn constables. This unit would be the most likely recipient of information from Inland Revenue. We therefore recommend amendments to allow the Commissioner to disclose information to authorised police officers regardless of whether they are sworn constables.

We therefore recommend amending clause 29 in new Schedule 7 of the Tax Administration Act, which would be inserted by Schedule 1 of the bill.

Bloodstock tax write-offs: SOP 135

SOP 135 would amend the Income Tax Act and the Tax Administration Act to give effect to the Government’s policy of encouraging new investment in bloodstock breeding.

We recommend that most of the changes proposed by SOP 135 be incorporated into the bill. However, we recommend the following amendments.

Registers of bloodstock

Proposed new section EC 39B(1)(c) inserted into the Income Tax Act by clause 133C would set requirements for a horse to be considered “stud-founding bloodstock”.

As proposed by SOP 135, a horse would need to be registered on the New Zealand Register of Thoroughbred Horses or the New Zealand Register of Standardbred Horses to meet the requirements. We recommend that these references be changed to the New Zealand Stud Book and the New Zealand Harness Racing Stud Book. This would ensure that the legislation refers to the appropriate registers.

Registration to breed

We do not support the SOP’s proposed inclusion of new section EC 39B(1)(d). This section would require that high-priced bloodstock be registered to breed before it could be considered stud-founding bloodstock for tax purposes.

In current industry practice, a registration to breed generally occurs several years after a filly or colt is acquired. To ensure the legislation aligns with industry practice, we do not recommend this provision’s inclusion in the bill.

Deemed breeding business

SOP 135 proposes that prospective breeders receive similar tax treatment to investors in an existing breeding business. This would incentivise the establishment of further breeding businesses.

We recommend amending section EC 47C, which would be inserted by clause 133F into the Income Tax Act, to clarify exactly when prospective breeders would be treated as being in a “breeding business” under the proposed regime.

Integrity measures

SOP 135 proposes that deductions would be recovered on high-priced bloodstock that are removed from New Zealand. However, we do not agree that it would be appropriate to recover deductions on a horse that had been genuinely purchased for breeding but that unexpectedly could not be used for this purpose. Reasons could include a temperament change requiring gelding, an injury preventing breeding, or the discovery of infertility subsequent to purchase.

We therefore recommend amending sections CG 8B and CG 8C, which would be inserted into the Income Tax Act by clause 119B. Our amendments would prevent the recovery of deductions on horses that were purchased for breeding but which are subsequently rendered, or found to be, infertile and removed from New Zealand or sold to non-residents.

Price clarification

We recommend clause 151BA to insert section EZ 6B into the Income Tax Act, setting the minimum price thresholds for 2019 for each class of bloodstock. We propose that the threshold for standardbred yearling colts would be $119,000, rather than $109,000 as incorrectly calculated in SOP 135.

Standardbred and thoroughbred clarification

We recommend amending Schedule 1B, which would insert Schedules 18B and 18C into the Income Tax Act. Our amendment would clarify which premier yearling sales can be treated as standardbred sales and which are treated as thoroughbred sales.

Other matters we considered

Age discrimination in KiwiSaver changes

If enacted, clauses 231 and 236 would amend section 33 and Schedule 1 of the KiwiSaver Act to allow people over 65 to join KiwiSaver. However, employers would not be required to make compulsory contributions for them.

It was suggested that this may constitute age discrimination. We note, however, that more than 80 percent of people aged over 65 who are members of a KiwiSaver scheme currently receive employer contributions, even though it is non-compulsory. On this basis, we do not see a need to amend this clause.

Early KiwiSaver withdrawals for people with life-shortening conditions

Through our consideration of this bill, we learned that many individuals with congenital life-shortening conditions are unlikely to reach the KiwiSaver withdrawal age of 65. As these conditions do not meet the criteria of “life-threatening illnesses”, most of these people will never be able to access their KiwiSaver savings.

We heard a compelling case from Mr Tim Fairhall and Ms Joan Fairhall to allow people with congenital life-shortening conditions to withdraw their KiwiSaver savings early. We are pleased to see the Government’s announcement that it is investigating this issue, and look forward to further progress on this matter.

Providing information about offshore payments

Sections 21 and 21BA of the Tax Administration Act 1994 empower Inland Revenue to demand information relating to offshore payments from large multinationals. When that information is not provided, Inland Revenue can conduct assessments with the limited information it does hold. When that assessment leads to court proceedings, information that was previously withheld cannot be introduced and admitted as evidence later.

We considered whether the bill should remove or amend these sections. At this time, we recommend that further policy work be carried out on this issue.

Appendix

Committee process

The Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill was referred to the committee on 3  July 2018. The closing date for submissions was 24 October 2018. We received and considered 55 submissions from interested groups and individuals. We heard oral evidence from 11 submitters.

We received two Supplementary Order Papers on this bill. SOP 74 was received on 14 August 2018 and SOP 135 was received on 16 October 2018. We received 9 submissions on SOP 135 and heard oral evidence from 1 submitter.

We received advice from the Inland Revenue Department and our specialist tax adviser, Therese Turner (Chartered Accountant).

Committee membership

Michael Wood (Chairperson)

Hon Amy Adams

Kiritapu Allan

Andrew Bayly

Rt Hon David Carter

Tamati Coffey

Hon Judith Collins

Ian McKelvie

Willow-Jean Prime

Dr Deborah Russell

David Seymour

Fletcher Tabuteau

Dr Duncan Webb

Key to symbols used

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Hover your cursor over an amendment for information about that amendment. Download the PDF version to see this information in a form that can be printed out.

Hon Stuart Nash

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

Government Bill

72—2

Contents

Commentary
Key
1Title
2Commencement
3Annual rates of income tax for 2018–19 tax year
4Tax Administration Act 1994
5Section 3 amended (Interpretation)
6Section 4A amended (Construction of certain provisions)
7New subpart heading inserted (Subpart 2ACommissioner and department)
8New section 5B inserted (Commissioner of Inland Revenue)
5BCommissioner of Inland Revenue
9Sections 6, 6A, and 6B replaced
6Responsibility of Ministers and officials to protect integrity of tax system
6ACommissioner’s duty of care and management
6BDirections to Commissioner
6CPower to remedy legislative anomalies
6DRestrictions on modifications
6EConsultation on modifications
6FRequirements for modifications
6GStatus and publication of modifications
6HApplication of modifications
10New subpart heading inserted (Subpart 2CFunctions and powers of Commissioner)
11New subpart heading inserted (Subpart 2DModes of communication)
12Section 15 amended (Annual report)
13Section 15B amended (Taxpayer’s tax obligations)
14Part heading and sections 15C to 15Z renumbered
15New subpart 3A inserted (Collection, use, and disclosure of revenue information)
16Purposes of subpart
16BPrinciples on which subpart based
16CKey terms
17Commissioner may obtain information by accessing property or documents
17BCommissioner may require information or production of documents
17CCommissioner’s powers in relation to documents
17DWarrants
17EInformation or documents treated as in persons’ knowledge, possession, or control
17FCommissioner may require information about offshore payments
17GCommissioner may require information from large multinational groups (BEPS)
17HCourt may make order for provision of information
17ICommissioner may conduct inquiries
17JCommissioner may apply for District Court Judge to conduct inquiries
17KQuestions and statements made in inquiries
17LRegulations providing for regular collection of bulk data
17MUse of information
18Confidentiality of sensitive revenue information
18BRequirements for revenue officers and other persons
18CPermitted disclosures
18DDisclosures made in carrying into effect revenue laws
18EDisclosures made under information-sharing arrangements
18FRegulations for information-sharing for public services purposes
18GDisclosures to persons and their representatives
18HDisclosures to other agencies for certain specified purposes
18IDisclosures for international purposes
18JDisclosures for risk of harm purposes
16New subpart heading inserted (Subpart 3AB—Tax advice documents)
17Subpart heading amended (Subpart 3AC—Taxpayers’ obligations to keep records)
18Section 21 repealed (Information requisitions in relation to offshore payments)
19Section 21BA repealed (Information required to be provided by large multinational group)
20Section 22 amended (Keeping of business and other records)
21New subpart inserted (Subpart 3B—Reporting of income information by individuals)
22COutline of subpart
22DKey terms
22EInformation included in pre-populated accounts
22FInformation requirements
22GConfirming accounts
22HAmending accounts for incorrect or missing information
22HBFinalising accounts
22IReturns and assessments
22IBCommissioner’s power in relation to certain amounts of tax payable
22JNo obligation to provide information: de minimis and certain other amounts
22KInformation particulars
22LSetting electronic and non-electronic requirements
22Section 23 amended (Keeping of returns where information transmitted electronically)
23Subparts 3C and 3D amended
24Section 23C amended (Meaning of employment income information)
25Section 23D amended (Employers’ groups for delivery of information)
26Section 24B amended (PAYE tax codes)
27Section 24D amended (Tax codes provided by the Commissioner)
28New section 24DB inserted (Use of unsuitable tax codes)
24DBUse of unsuitable tax codes
29Section 24Q amended (Transfer of payroll donations by employers)
30Section 25A replaced (Use of inconsistent RWT rates)
25AUse of unsuitable RWT rates
31Subpart 3E amended (Subpart 3E—Investment income information)
31BSection 25D amended (Investment income information)
31CSection 28B amended (Notification of investors’ tax file numbers)
32Section 31C amended (Notification requirements for multi-rate PIEs)
33Section 32E amended (Applications for RWT exemption certificates)
34Section 33 amended (Returns of income)
35Sections 33AA, 33C, and 33D repealed
36Section 34B repealed (Commissioner to list tax agents)
37Section 36BB amended (Electronic format for details required for tax pooling intermediaries)
38Section 36BD amended (Electronic filing requirements for registered persons)
39Section 37 amended (Dates by which annual returns to be furnished)
40Section 38 amended (Returns to annual balance date)
41Section 41 amended (Annual returns by persons who receive family assistance credit)
42Section 41A amended (Returns by persons with tax credits for charitable or other public benefit gifts)
43Section 42C amended (Income tax returns by undischarged bankrupt)
44Section 43 amended (Income tax returns and assessments by executors or administrators)
44BSection 46 amended (Employers to make returns as to employees)
45Section 47 amended (ESCT statements provided by employers and others)
46Section 55B amended (Information relating to offshore persons and tax file numbers)
47Part 3A repealed (Part 3A—Income statements)
47BSection 80KA amended (Applications for payment of tax credit by instalment)
48Section 80KM amended (Summary of instalments paid)
48BSection 80KN amended (Payment of tax credit by chief executive)
49Heading and sections 81 to 88 repealed
50Section 89 amended (Commissioner to notify Minister where funds of gift-exempt body applied for non-charitable purpose, etc)
51Section 89C amended (Notices of proposed adjustment required to be issued by Commissioner)
52Section 89D amended (Taxpayers and others with standing may issue notices of proposed adjustment)
52BSection 89N amended (Completing the disputes process)
53New heading and new section 91AAZB inserted
91AAZBDetermination on Commissioner’s approach to interpretation of certain provisions or application of administrative practices
54Section 91C amended (Taxation laws in respect of which binding rulings may be made)
55New sections 91CB and 91CC inserted
91CBBinding rulings on certain matters
91CCBinding rulings on certain determination matters
55BSection 91CB amended (Binding rulings on certain matters)
56Section 91E amended (Commissioner to make private rulings on application)
57Section 91EA amended (Effect of a private ruling)
58Section 91EB amended (Application of a private ruling)
58BSection 91ED amended (Disclosure requirements)
59Section 91EF amended (Assumptions in making a private ruling)
60Section 91EH amended (Content and notification of a private ruling)
61New heading and new sections 91EK to 91ET inserted
91EKCommissioner may make short-process rulings
91ELApplying for short-process ruling
91EMEffect of short-process ruling
91ENApplication of short-process ruling
91EODisclosure requirements
91EPCommissioner may request further information
91EQConditions on which short-process ruling based
91ERRight to consultation
91ESContent and notification of short-process ruling
91ETTreatment of information
62Section 91F amended (Commissioner may make product rulings)
63Section 91FB amended (Application of a product ruling)
64Section 91FC amended (Applying for a product ruling)
65Section 91FF amended (Assumptions in making a product ruling)
66Section 91FH amended (Content and notification of a product ruling)
67Section 91GB amended (Commissioner to make status rulings on application)
68Section 92 amended (Taxpayer assessment of income tax)
69Section 106 amended (Assessment where default made in furnishing returns)
70Section 108 amended (Time bar for amendment of income tax assessment)
70BSection 108B amended (Extension of time bars)
71Section 110 amended (Evidence of returns and assessments)
72Section 111 amended (Commissioner to give notice of assessment to taxpayer)
73Section 113A replaced (Correction of minor errors in subsequent returns)
113ACorrection of certain errors in subsequent returns
74Section 120C amended (Definitions)
75Section 120F amended (Interest priority and rights of Commissioner)
76Section 120KB amended (Provisional tax instalments and due dates generally)
76BASection 120KBB amended (Interest for most standard method and some estimation method provisional taxpayers)
76BSection 120L amended (Meaning of unpaid tax and overpaid tax for provisional tax purposes)
77New section 120VD inserted (Interest on tax credits for charitable or other public benefit gifts)
120VDInterest on tax credits for charitable or other public benefit gifts
78Section 124A renumbered (Application of Part 8)
79New Part 7B inserted (Part 7B—Third-party providers)
124BWhat this Part does
124CTax agents
124DRepresentatives
124EInformation requirements for tax agents and representatives
124FNominated persons
124GRefusal, removal, or disallowance of status of tax agents, representatives, and nominated persons
80Section 124H amended (PAYE intermediaries and listed PAYE intermediaries)
81Sections 124L, 124M, and 124N repealed
82Section 124O amended (Employers’ arrangements with PAYE intermediaries)
83Section 124R repealed (Subsidy claim forms)
84Section 125 amended (Certain rights of objection not conferred)
85Section 135 amended (Powers of Taxation Review Authority on determination of objection or case stated)
86Section 136 amended (When objection may be referred directly to High Court)
87Section 138A amended (Application of this Part)
88Section 138E amended (Certain rights of challenge not conferred)
89Section 139A amended (Late filing penalty for certain returns)
89BSection 139B amended (Late payment penalty)
90Section 141B amended (Unacceptable tax position)
91Section 141B amended (Unacceptable tax position)
92Section 141JA amended (Application of Part 9 to non-filing taxpayers)
93Section 143 amended (Absolute liability offences)
94Section 143A amended (Knowledge offences)
95Section 143C amended (Offence for failure of officers of department to maintain secrecy)
96Sections 143D and 143E replaced
143DOffences related to disclosure of certain information by persons other than revenue officers
143EOffences related to disclosure of certain information to employees
143EBOffences related to disclosure of certain information by employers and directors
96BSection 173L amended (Transfer of excess tax within taxpayer’s accounts)
97Section 174AA amended (Power of Commissioner in respect of small amounts of refunds or tax payable)
98Section 184A amended (Refund of tax paid in excess made by direct credit to bank account)
98BNew section 225AB inserted (Order in Council amending schedule 18B of Income Tax Act 2007)
225ABOrder in Council amending schedule 18B of Income Tax Act 2007
98CNew section 227EB inserted (Transitional provisions: publication requirements related to RWT-exempt status and certain exemption certificates)
227EBTransitional provisions: publication requirements related to RWT-exempt status and certain exemption certificates
99New section 227F inserted (Transitional provisions related to information disclosures)
227FTransitional provisions related to information disclosures
99BNew section 227G inserted (Transitional provision related to individuals’ income information)
227GTransitional provision related to individuals’ income information
100Schedule 4 amended (Reporting of employment income information)
101Schedule 5 amended (Certain tax codes and rates)
101BSchedule 6 amended (Reporting of investment income information)
102New schedules inserted
102BSchedule 8 amended (Reporting of income information by individuals and treatment of certain amounts)
1Writing off certain amounts of tax payable
2Exclusions
3Small amounts of tax payable
103Consequential amendments
104Income Tax Act 2007
104BSection CB 6A amended (Disposal within 5 years: bright-line test for residential land)
105Section CB 9 amended (Disposal within 10 years: land dealing business)
106Section CB 10 amended (Disposal within 10 years: land development or subdivision business)
107Section CB 11 amended (Disposal within 10 years of improvement: building business)
108Section CB 15 amended (Transactions between associated persons)
108BSection CB 15C amended (Council-controlled organisations and other companies)
109New heading and new section CB 15D inserted
CB 15DHousing New Zealand Corporation and wholly-owned group
110Section CB 16A amended (Main home exclusion for disposal within 5 years)
111Section CB 16 amended (Residential exclusion from sections CB 6 to CB 11)
112Section CB 17 amended (Residential exclusion from sections CB 12 and CB 13)
113Section CB 18 amended (Residential exclusion from section CB 14)
114Section CB 27 amended (Income equalisation schemes)
115Section CB 28 amended (Environmental restoration accounts)
116Section CD 3 amended (Meaning of dividend)
117Section CD 5 amended (What is a transfer of value)
118Section CD 6 amended (When is a transfer caused by a shareholding relationship?)
119Section CE 1 amended (Amounts derived in connection with employment)
119BNew sections CG 8B and CG 8C inserted
CG 8BRecoveries after deductions for high-priced bloodstock removed from New Zealand
CG 8CRecoveries after deductions for high-priced bloodstock disposed of to non-residents
120Section CV 1 amended (Group companies)
121Section CV 2 amended (Consolidated groups: income of company in group)
122Section CW 9 amended (Dividend derived from foreign company)
123Section CW 19 amended (Amounts derived during short-term visits)
123BSection CW 35 amended (Personal service rehabilitation payments)
124New section CW 38B inserted (Public purpose Crown-controlled companies)
CW 38BPublic purpose Crown-controlled companies
124BSection CW 41 amended (Charities: non-business income)
125Section CW 42 amended (Charities: business income)
126Section CX 10 amended (Employment-related loans)
127Section CX 27 amended (Assistance with tax returns)
128Section CX 51 amended (Income equalisation schemes)
128BSection CX 60 amended (Intra-group transactions)
128CSection CZ 25 amended (Land and buildings as revenue account property affected by Canterbury earthquakes and replacedinsurance or compensation, Government purchase)
128DNew section CZ 25B inserted (Land and buildings as revenue account property affected by Hurunui/Kaikōura earthquakes and replacedinsurance or compensation)
CZ 25BLand and buildings as revenue account property affected by Hurunui/Kaikōura earthquakes and replaced—insurance or compensation
128ENew section CZ 35 inserted (Treatment of backdated payments for social rehabilitation: 200809 to 201718 income years)
CZ 35Treatment of backdated payments for social rehabilitation: 200809 to 201718 income years
128FSection DB 18AA amended (Square metre rate method)
129Section DB 41 amended (Charitable or other public benefit gifts by company)
130Section DB 46 amended (Avoiding, remedying, or mitigating effects of discharge of contaminant)
130BSection DF 4 amended (Payments for social rehabilitation)
131Section DQ 2 repealed (Adverse event income equalisation scheme)
132Section DV 12 amended (Maori authorities: donations)
133Section DV 19 amended (Association rebates)
133BASection DZ 20 amended (Expenditure incurred while income-earning activity interrupted by Canterbury earthquake)
133BSection EC 39 amended (First income year in breeding business)
133CNew section EC 39B inserted (Stud-founding bloodstock and related terms)
EC 39BStud-founding bloodstock and related terms
133DSection EC 39B amended (Stud-founding bloodstock and related terms)
133ENew section EC 39C inserted (Setting and publication of national minimum price threshold)
EC 39CSetting and publication of national minimum price threshold
133FNew sections EC 47B to EC 47E inserted
EC 47BRemoval of high-priced bloodstock from New Zealand after earlier deductions
EC 47CWhen prospective breeders treated as being in breeding business
EC 47DChange of prospective bloodstock breeders’ expectation or intention after earlier deductions
EC 47EProspective breeders commencing actual breeding businesses
133GSection EE 45 amended (Consideration for purposes of section EE 44)
134Section EE 47 amended (Events for purposes of section EE 44)
135Section EH 1 amended (Income equalisation schemes)
136Section EH 4 amended (Main deposit)
137Section EH 35 amended (Meaning of main maximum deposit)
138Headings and sections EH 37 to EH 62 repealed
139Section EK 2 amended (Persons who may make payment to environmental restoration account)
140Section EK 11 amended (Application for refund)
141Section EK 12 amended (Refund if application or excess balance)
142Section EK 20 amended (Environmental restoration account of consolidated group company)
143Section EK 23 amended (Other definitions)
144Section EW 6 amended (Relationship between financial arrangements and excepted financial arrangements)
145Section EW 14 amended (What spreading methods do)
146Section EW 15E amended (Determination alternatives)
147Section EW 15I amended (Mandatory use of yield to maturity method for some arrangements)
148Section EW 32 amended (Consideration for agreement for sale and purchase (ASAP) of property or services, hire purchase agreement, specified option, or finance lease)
149New section EW 33D inserted (Foreign ASAPs: contingencies)
EW 33DForeign ASAPs: contingencies
149New section EW 33D inserted (Foreign ASAPs: contingencies for business combines)
EW 33DForeign ASAPs: contingencies for business combines
150Section EW 46C amended (Consideration when debt forgiven within economic group)
151Section EX 56 amended (Cost method)
151BANew section EZ 6B inserted (National minimum price threshold for 2019 calendar year)
EZ 6BNational minimum price threshold for 2019 calendar year
151BSection EZ 23B amended (Property acquired after depreciable property affected by Canterbury earthquakes)
151CSection EZ 23BB amended (Interest in property acquired after depreciable property affected by Canterbury earthquakes)
151DSection EZ 70 amended (Insurance for Canterbury earthquake damage of property: treatment as disposal and reacquisition)
151ESection EZ 71 amended (Insurance for Canterbury earthquake damage of property: limit on depreciation recovery income)
151FSection EZ 72 amended (Item treated as available for use if access restricted due to Canterbury earthquake)
151GSection EZ 73 amended (Insurance for Canterbury earthquake damage causing disposal: optional timing rule for income, deductions)
151HSection EZ 74 amended (Insurance for repairs of Canterbury earthquake damage: optional timing rule for income, deductions)
152New heading and new section EZ 80 inserted
EZ 80Transfers of deposits when adverse event income equalisation accounts abolished
153Section FC 2 amended (Transfer at market value)
153BSection FE 5 amended (Thresholds for application of interest apportionment rules)
153CSection FE 16B amended (Total group non-debt liabilities)
153DSection FH 3 amended (Payments under financial instruments producing deduction without income)
153ESection FH 4 amended (Receipts under financial instruments producing deduction without income)
153FSection FH 5 amended (Payments by New Zealand resident or New Zealand deducting branch producing deduction without income)
153GSection FH 10 amended (Expenditure or loss of dual resident company producing double deduction without double income)
153HSection FH 12 amended (Offset of mismatch amounts against surplus assessable income)
153ISection FH 15 amended (Definitions)
154Section FM 9 amended (Amounts that are company’s income)
155Section FM 15 amended (Amortising property and revenue account property)
156Section FM 40 amended (Losing eligibility to be part of consolidated group)
156BSection GB 54 amended (Arrangements involving establishments)
157New heading and new section GB 54GB 55 inserted
GB 54GB 55Arrangements involving tax credits for charitable or other public benefit gifts
157BSection GC 16 amended (Credit rating of borrower: other than insuring or lending person)
157CSection GC 17 amended (Credit rating of borrower: insuring or lending person)
158Section HC 10 amended (Complying trusts)
159Section HC 15 amended (Taxable distributions from non-complying and foreign trusts)
160Section HC 16 amended (Ordering rule for distributions from non-complying and foreign trusts)
161Section HC 27 amended (Who is a settlor?)
162Section HC 30 amended (Treatment of foreign trusts when settlor becomes resident)
163Section HC 36 amended (Trusts and minor beneficiary rule)
164Section HC 37 amended (Testamentary trusts and minor beneficiary rule)
165Section HE 3 amended (Association rebates)
165BSection HG 11 amended (Limitation on deductions by partners in limited partnerships)
166Section HM 2 amended (What is a portfolio investment entity?)
166BSection HM 12 amended (Income types)
167Section HM 28 replaced (When listed PIE no longer meets crediting requirement)
HM 28When listed PIE no longer meets requirements
168Section HR 8 inserted (Transitional residents)
169Cross-heading amended (Financial institution special purposes vehicles)
170Section HR 9 replaced (Financial institution special purpose vehicles are transparent)
HR 9Debt funding special purpose vehicles are transparent if election made by originatorunder section HR 9BA
171New section HR 9BA inserted (Elections to treat debt funding special purpose vehicles as transparent)
HR 9BAElections to treat debt funding special purpose vehicles as transparent
172Section HR 9B replaced (Bankruptcy-remote property during application of section HR 9)
HR 9BBankruptcy-remote property during application of section HR 9
173Section HR 10 replaced (What happens when vehicle stops being financial institution special purpose vehicle?)
HR 10What happens when vehicle stops being transparent debt funding special purpose vehicle?
174Section HR 12 amended (Non-exempt charities: treatment of tax-exempt accumulations)
174BNew sections HZ 9 and HZ 10 inserted
HZ 9Elections to treat existing debt funding special purpose vehicles as transparent
HZ 10What happens when election is made under section HZ 9?
174CSection LB 7 amended (Tax credits related to personal service rehabilitation payments: providers)
175Section LD 1 amended (Tax credits for charitable or other public benefit gifts)
175BSection LD 3 amended (Meaning of charitable or other public benefit gift)
176Section LD 3 amended (Meaning of charitable or other public benefit gift)
177Section LD 4 amended (Tax credits for payroll donations)
178Section MC 6 amended (When person does not qualify)
179Section MD 3 amended (Calculation of family tax credit)
180Section MD 11 amended (Entitlement to parental tax credit)
181Section MD 11 amended (Entitlement to parental tax credit)
182Section MD 11 amended (Entitlement to parental tax credit)
183Section MD 13 amended (Calculation of family credit abatement)
183BSection MF 2 amended (When person not entitled to payment by instalment)
183CSection MF 4 amended (Requirements for calculating instalment of tax credit)
184Section MF 7 amended (Orders in Council)
184BSection MK 2 amended (Eligibility requirements)
185Section MZ 3 amended (Exclusions from determination of family scheme income)
186Section OP 22 amended (Consolidated ICA group company’s credit)
187Section RA 13 amended (Payment dates for terminal tax)
188Section RB 3 amended (Schedular income tax liability for filing taxpayers for non-resident passive income)
189Section RC 3 amended (Who is required to pay provisional tax?)
190Section RC 5 amended (Methods for calculating provisional tax liability)
191Section RC 9 amended (Provisional tax payable in instalments)
192Section RC 10B amended (Calculating amount of instalment for periods using AIM method)
193Section RD 2 amended (PAYE rules and their application)
194Section RD 3 amended (PAYE income payments)
195Section RD 5 amended (Salary or wages)
196Section RD 7 amended (Extra pay)
197Section RD 8 amended (Schedular payments)
198New section RD 8B inserted (Treatment of PAYE-related overpayments)
RD 8BTreatment of PAYE-related overpayments
199Section RD 17 amended ( Payment of extra pay with other PAYE income payments)
200Section RD 22 amended (Providing employment income information to Commissioner)
201Section RD 35 amended (Employment-related loans: value using market interest rates)
202Section RD 64 amended (ESCT rules and their application)
203Section RE 1 amended (RWT rules and their application)
204Section RF 2B amended (Non-residential financial arrangement income: outline and concepts)
205Section RF 2C amended (Meaning of non-residential financial arrangement income)
205BSection RM 2 amended (Refunds for overpaid tax)
205CSection RM 2 amended (Refunds for overpaid tax)
205DSection RM 4 amended (Overpayment on amended assessment)
206Section RM 5 repealed (Overpayments on income statements)
207Section RM 16 amended (Treatment of amounts not refunded)
208Section RM 22 amended (Limits on refunds for Maori authorities)
209Section RM 25 amended (Treatment of amounts not refunded)
210Section RM 31 amended (Treatment of amounts not refunded)
211Section RP 14 amended (Collection, payment, and information requirements)
211BSection RP 17B amended (Tax pooling accounts and their use)
211CSection RP 19 amended (Transfers from tax pooling accounts)
211DSection RP 19B amended (Transfers for certain expected tax liabilities)
212Section RZ 14 amended (Listed PAYE intermediaries: transitional provision)
212BNew section RZ 15 inserted (Treatment of certain refunds made on income statements: 1 April 2008 to 31 March 2019)
RZ 15Treatment of certain refunds made on income statements: 1 April 2008 to 31 March 2019
212CNew section RZ 16 inserted (Treatment of certain refunds not paid within 4-year period: 1 April 2008 to 31 March 2013)
RZ 16Treatment of certain refunds not paid within 4-year period: 1 April 2008 to 31 March 2013
213Section YA 1 amended (Definitions)
213BSection YA 2 amended (Meaning of income tax varied)
214Section YC 12 amended (Public unit trusts)
214BSection YC 18 amended (Reverse takeovers)
214CSection YC 18B amended (Corporate reorganisations not affecting economic ownership)
214DSection YC 18C amended (Railways restructure not affecting Crown economic ownership)
214ESection YC 19B amended (Treatment when certain trusts terminated)
214FSection YD 4 amended (Classes of income treated as having New Zealand source)
214GNew schedules 18B and 18C inserted
215Schedule 19 amended (Expenditure in avoiding, remedying, or mitigating detrimental effects of discharge of contaminant)
216Schedule 28 amended (Requirements for complying fund rules)
217Schedule 29 amended (Portfolio investment entities: listed investors)
218Schedule 32 amended (Recipients of charitable or other public benefit gifts)
219New schedule 35 inserted (Public purpose Crown-controlled companies)
220Consequential amendments
221Goods and Services Tax Act 1985
222Section 2 amended (Interpretation)
223Section 2A amended (Meaning of associated persons)
223BSection 5 amended (Meaning of term supply)
224Section 6 amended (Meaning of term taxable activity)
225Section 10 amended (Value of supply of goods and services)
225BSection 11 amended (Zero-rating of goods)
225CSection 20 amended (Calculation of tax payable)
225DSection 20A amended (Goods and services tax incurred relating to determination of liability to tax)
226Section 21 amended (Adjustments for apportioned supplies)
227Section 53 amended (Registered person to notify change of status)
228Section 55 amended (Group of companies)
228BNew section 88 inserted (Valuation: non-profit body making certain supplies, deregistering, or acquiring certain assets of non-profit body)
88Valuation: non-profit body making certain supplies, deregistering, or acquiring certain assets of non-profit body
229KiwiSaver Act 2006
230Section 4 amended (Interpretation)
230BSection 15 amended (Effect of automatic enrolment)
231Section 33 amended (Certain persons may opt in)
231BSection 36 amended (Effect of opting in by employees)
232Section 59A amended (When this subpart applies)
233Section 59B amended (Initial back-dated validation)
234Section 64 amended (Contribution rate)
234BSection 101C amended (Employee’s requirements)
234CSection 101G amended (Rules: providers)
235Section 104 amended (Granting of contributions holiday)
235BSection 112B amended (Non-deduction notices)
235CNew section 241 inserted (Protection from non-compliance: Taxation (Annual Rates for 201819, Modernising Tax Administration, and Remedial Matters) Act 2018)
241Protection from non-compliance: Taxation (Annual Rates for 201819, Modernising Tax Administration, and Remedial Matters) Act 2018
236Schedule 1 amended (KiwiSaver scheme rules)
4Withdrawal age
237Amendments to KiwiSaver Act 2006 related to nomenclature changes
238Child Support Act 1991
239Section 35 amended (Adjusted taxable income)
240Section 81 amended (Notification requirement of parents)
241Section 163 amended (Payment of deductions to Commissioner)
242Consequential amendments
243Student Loan Scheme Act 2011
244Section 34 amended (Repayment codes for New Zealand-based borrowers who derive salary or wages)
245Section 35 amended (Borrowers with “SL” repayment code must notify employers)
246Section 36 amended (Employer or PAYE intermediary must make standard deductions from salary or wages)
247Section 57 amended (Consequences of exemption from standard deductions)
248Section 60 amended (When exemption from standard deductions ceases to apply)
249Schedule 2 amended (Application of PAYE rules for purposes of section 70)
250Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018
250BSection 6 amended (Section CB 6A (Disposal within 2 years: bright-line test for residential land))
250CSection 7 amended (Section CB 16A (Main home exclusion for disposal within 2 years))
250DSection 45 amended (Section DB 18A (Ring-fenced allocations: disposal of residential land within 2 years))
250ESection 46 amended (Section DB 18AB (Deduction cap: disposal of residential land within 2 years to associated persons))
250FSection 93 amended (Section FB 3A (Residential land))
250GSection 95 amended (Section FC 9 (Residential land transferred to executor, administrator, or beneficiary on death of person))
250HSection 107 amended (Section FO 10 (When property passes on resident’s restricted amalgamation))
250ISection 108 amended (Section FO 17 (Land))
250JSection 110 amended (Section GB 52 (Arrangements involving residential land: companies’ shares))
250KSection 111 amended (Section GB 53 (Arrangements involving residential land: trusts))
251Section 158 amended (Section LD 4 (Tax credits for payroll donations))
252Sections 186, 215, 263, 265, 266, 268, 271, and 283 repealed
252BSection 231 amended (Section RL 1 (Residential land withholding tax))
253Section 240 amended (Section RP 14 (Collection, payment, and information requirements))
254Section 243 amended (Section YA 1 (Definitions))
255Section 261 amended (Section 3 (Interpretation))
256Section 267 amended (Section 15L (Amended monthly schedules))
257Section 285 amended (Section 25A (Use of inconsistent RWT rates))
257BSection 321 amended (Section 54C (Information in relation to payment of RLWT))
258Schedule 2 amended (Consequential amendments to other enactments related to tax administration)
259Families Package (Income Tax and Benefits) Act 2017
260Section 2 amended (Commencement)
261Sections 48 to 51 and 57 repealed
262Income Tax Act 2004
263Section KD 2AB amended (Parental tax credit)
264Section KD 2AB amended (Parental tax credit)
264BSection MD 1 amended (Refund of excess tax)
264CNew section MD 1B inserted (Treatment of certain refunds made on income statements: 200506, 200607, and 200708 income years)
MD 1BTreatment of certain refunds made on income statements: 200506, 200607, and 200708 income years
264DNew section MD 1C inserted (Treatment of certain refunds not paid within 4-year period: 200506, 200607, and 200708 income years)
MD 1CTreatment of certain refunds not paid within 4-year period: 200506, 200607, and 200708 income years
265Schedule 4 amended (Deductions on account of earner levies)
266Section 135 amended (Meaning of restricted information)
267Section 5 amended (Interpretation)
268Section 4 amended (Interpretation)
269Section KD 2AB amended (Parental tax credit)
269BSection MD 1 amended (Refund of excess tax)
269CNew section MD 1B inserted (Treatment of certain refunds made on income statements: 200001, 200102, 200203, and 200304 income years)
MD 1BTreatment of certain refunds made on income statements: 200001, 200102, 200203, and 200304 income years
270Section 12 amended (Officers to maintain secrecy)
271Regulation 36 amended (Reports of decisions)
272Tax Administration (Binding Rulings) Regulations 1999
273Regulation 2 amended (Interpretation)
274Regulation 3 amended (Fees)
275Regulation 5 amended (Indication of time for issue of ruling in certain cases)
276Regulation 6 amended (Waiver of fees)
Legislative history

The Parliament of New Zealand enacts as follows:

1 Title

This Act is the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2018.

2 Commencement

(1)

This Act comes into force on the date on which it receives the Royal assent, except as provided in this section.

(1B)

Sections 269B and 269C are treated as coming into force on 1 April 2000.

(2)

Section 269 is treated as coming into force on 1 July 2002.

(3)

Sections 263, 264B, 264C, and 264D isare treated as coming into force on 1 April 2005.

(4)

Section 264 is treated as coming into force on 26 April 2005.

(5)

Section 76 is treated as coming into force on 1 October 2007.

(6)

Sections 107(1) and (3), 108(1), (3), and (4), 111, 112, 113, 117, 118, 128E, 133, 150, 151, 156, 161(1) and (5), 165B, 175B,180, 199, 205B, 207, 208, 209, 210, 212B, 212C, 213(21), and 214 are treated as coming into force on 1 April 2008.

(7)

Section 166 is treated as coming into force on 1 April 2010.

(7B)

Sections 128C, 151B, and 151C are treated as coming into force on 4 September 2010.

(8)

Section 228 is Sections 223B(2), 225(1AB), 225D, and 228 are treated as coming into force on 1 April 2011.

(9)

Sections 129, 132, and 174(7) are treated as coming into force on 14 April 2014.

(10)

Sections 181, 214B, 214C, 214D, and 214E is are treated as coming into force on 1 April 2015.

(10B)

Section 108B is treated as coming into force on 1 September 2015.

(11)

Sections 104B and 110 isare treated as coming into force on 1 October 2015.

(12)

Sections 133BA, 151D to 151H, and 182 isare treated as coming into force on 1 April 2016.

(12B)

Sections 205C and 205D are treated as coming into force on 3 May 2016.

(13)

Section 225(1) and (2) is treated as coming into force on 1 October 2016.

(14)

Sections 123 and 128D isare treated as coming into force on 30 March 2017.

(14B)

Sections 76BA and 128F are treated as coming into force on 1 April 2017.

(15)

Sections 105, 106, 107(2), 108(2), 109, 120, 121, 154, and 155 are treated as coming into force on 1 July 2017.

(16)

Sections 260 and 261 are treated as coming into force on 20 December 2017.

(17)

Sections 44B, 46, and 186, 250B to 250K, 252B, 254(2), and 257B are treated as coming into force on 29 March 2018.

(18)

Sections 31C, 89B, 90, 115, 123B, 130, 130B, 139, 140, 141, 142, 143, 174C, 213(6) and (26C), 215, and 218(1) and (2) are treated as coming into force on 1 April 2018.

(19)

Section 75 is treated as coming into force on 17 April 2018.

(19B)

Sections 223B(1) and (3), 225C(2), and 228B are treated as coming into force on 15 May 2018.

(20)

Section 134 is treated as coming into force on the date of introduction of this Act.

(21)

Sections 47B, 48B, 56(3B), 58B, 153B, 153C, 153D, 153E, 153F, 153G, 153H, 153I, 156B, 157B, 157C, 178, 179, 183, 183B, and 184, 213B, 214F, and 225C(1) come into force on 1 July 2018.

(21BA)

Section 218(1B) is treated as coming into force on 4 September 2018.

(21B)

Sections 98B, 119B, 133B, 133C, 133F, 151BA, 213(13B), (18B), (24B), (24C), and (30B), and 214G come into force on 1 January 2019.

(22)

Sections 5(3), (21), (24), (24B), (25), (26), (37), (38B), (43), (48B), (49), (52), (58), (60), (61), and (62), 6, 13, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30, 34, 35, 39, 40, 41, 42, 42(1) and (5), 43, 44, 45, 47, 48, 51, 52, 54(4), 68, 69, 70, 70B, 71, 72, 74, 76B, 77, 84, 87, 88, 89, 92, 93, 94, 96B, 97, 98, 98B, 98C, 99B, 100, 101, 102(b), 119, 124B, 125, 126, 127, 128B, 157, 174(1) to (6) and (8) to (11), 176(1), 177, 183C, 187, 188, 189, 190, 191, 192, 193(2), 194, 195, 196, 197, 198, 200, 201, 206, 211, 211B, 211C, 211D, 213(7), (11), (14), (19), (22), (24), (32), and (33), 230, 234, 235, 235C, 237, 239, 240, 241, 244, 245, 246, 247, 248, 249, 255, 256, 258, and 265 come into force on 1 April 2019.

(23)

Sections 184B, 216, 230B, 231, 231B, 232, 233, 234B, 234C, 235B, and 236(1) come into force on 1 July 2019.

(23BA)

Sections 5(11), (46), and (56), 55B, 57, 61, 273, 274, and 275 come into force on 1 October 2019.

(23B)

Sections 133D and 133E come into force on 1 January 2020.

(24)

Sections 31, 31B, 37, 38, 42(2), (3), (4), and (6), 54(5), 80(1) and (3), 81, 83, 101B, 102B, 125, 176(2) and (3), 193(3), 203(2), and 212, and 236(2) come into force on 1 April 2020.

Part 1 Annual rates of income tax

3 Annual rates of income tax for 2018–19 tax year

Income tax imposed by section BB 1 (Imposition of income tax) of the Income Tax Act 2007 must, for the 2018–19 tax year, be paid at the basic rates specified in schedule 1 of that Act.

Part 2 Amendments to Tax Administration Act 1994

4 Tax Administration Act 1994

Part 2 amends the Tax Administration Act 1994.

5 Section 3 amended (Interpretation)

(1)

This section amends section 3(1).

(2)

Insert, in appropriate alphabetical order:

accident compensation legislation is defined in section 143E(5) for the purposes of that section

(3)

Insert, in appropriate alphabetical order:

adjusted account, for an individual and a tax year, is defined in section 22D(5) for the purposes of Part 3, subpart 3B and schedule 8

(4)

Insert, in appropriate alphabetical order:

agency is defined in section 18E(5) for the purposes of that section and section 18F

(5)

Insert, in appropriate alphabetical order:

applicant is defined in schedule 7, part C, subpart 2, clause 47(6) for the purposes of that clause

applicant information is defined in schedule 7, part C, subpart 2, clause 47(6) for the purposes of that clause

(6)

Replace the definition of approved credit reporting agency with:

approved credit reporting agency is defined in schedule 7, part C, subpart 1, clause 34(10) for the purposes of that clause

(7)

Replace the definition of authorised officer with:

authorised officer is defined in the following clauses for the purposes of that clause:

(a)

schedule 7, part C, subpart 1, clause 26(4):

(b)

schedule 7, part C, subpart 2, clause 42(9):

(c)

schedule 7, part C, subpart 2, clause 44(8):

(d)

schedule 7, part C, subpart 2, clause 46(7)

(8)

Insert, in appropriate alphabetical order:

authorised officer of the Ministry is defined in schedule 7, part C, subpart 2, clause 45(6) for the purposes of that clause

authorised officer of the Police is defined in schedule 7, part C, subpart 2, clause 45(6) for the purposes of that clause

(9)

Replace the definition of beneficiary with:

beneficiary is defined in schedule 7, part C, subpart 2, clause 42(9) for the purposes of that clause

(10)

Replace the definition of beneficiary information with:

beneficiary information is defined in schedule 7, part C, subpart 2, clause 42(9) for the purposes of that clause

(11)

In the definition of binding ruling, after paragraph (b), insert:

(bb)

short-process ruling made under section 91EK:

(12)

Insert, in appropriate alphabetical order:

chief executive is defined in the following clauses for the purpose of that clause:

(a)

schedule 7, part C, subpart 1, clause 36(4):

(b)

schedule 7, part C, subpart 2, clause 44(8)

(13)

Insert, in appropriate alphabetical order:

Commission is defined in schedule 7, part C, subpart 1, clause 36(4) for the purposes of that clause

(14)

Insert, in appropriate alphabetical order:

company is defined in schedule 7, part C, subpart 1, clause 36(4) for the purposes of that clause

(15)

Replace the definition of Corporation with:

Corporation is defined in schedule 7, part C, subpart 2, clause 42(9) for the purposes of that clause

(16)

Replace the definition of credit report with:

credit report is defined in schedule 7, part C, subpart 1, clause 34(11) for the purposes of that clause

(17)

Repeal the definition of duty of the Commissioner.

(18)

Insert, in appropriate alphabetical order:

earnings as a private domestic worker is defined in schedule 7, part C, subpart 2, clause 43(3) for the purposes of that clause

earnings as a self-employed person is defined in schedule 7, part C, subpart 2, clause 43(3) for the purposes of that clause

earnings as a shareholder-employee is defined in schedule 7, part C, subpart 2, clause 43(3) for the purposes of that clause

earnings as an employee is defined in schedule 7, part C, subpart 2, clause 43(3) for the purposes of that clause

earnings as an employer is defined in schedule 7, part C, subpart 2, clause 43(3) for the purposes of that clause

(19)

Replace the definition of earnings related compensation with:

earnings-related compensation is defined in schedule 7, part C, subpart 2, clause 42(9) for the purposes of that clause

(20)

Replace the definition of employee with:

employee

(a)

is defined in section 46(7) for the purposes of that section:

(b)

is defined in section 143E(5) for the purposes of that section

(20B)

Replace the definition of employer with:

employer

(a)

in section 47, has the same meaning as in paragraphs (c) and (d) of the definition of that term in section YA 1 of the Income Tax Act 2007:

(b)

is defined in schedule 7, part C, subpart 2, clause 43(3) for the purposes of that clause

(21)

Insert, in appropriate alphabetical order:

final account, for an individual and a tax year, is defined in section 22D(6) for the purposes of Part 3, subpart 3B, and sections 4A, 33, 37, 38, 42C, 89D, 106, 110, and 143, and the definitions of tax return and taxpayer’s tax position

(22)

Insert, in appropriate alphabetical order:

fines defaulter is defined in schedule 7, part C, subpart 2, clause 44(8) for the purposes of that clause

fines defaulter information is defined in schedule 7, part C, subpart 2, clause 44(8) for the purposes of that clause

(23)

In the definition of full and complete inspection, in paragraph (b), replace “section 16B” with sections 17C and 17G17D.

(24)

In the definition of gift-exempt body, replace “sections 32, 58, and 89” with sections 18K, 32, and 58”.

(24B)

Insert, in appropriate alphabetical order:

income other than reportable income, for the purposes of Part 3, subpart 3B and the definition of tax position, has the same meaning as other income

(25)

Repeal the definition of income statement.

(26)

Insert, in appropriate alphabetical order:

individual, for a person, is defined in section 22D(1) of the Tax Administration Act 1994 for the purposes of Part 3, subpart 3B, sections 4A, 15B, 22, 33, 37, 38, 42C, 89D, 92, 106, 110, 143, 143A, and 174AA,and 227G, and schedule 58, and the definitions of final account, pre-populated account, tax return, and taxpayer’s tax position

(27)

Insert, in appropriate alphabetical order:

information demand means a notice under section 17B

(28)

Repeal the definition of information requisition.

(29)

Repeal the definition of Inland Revenue officer.

(30)

Insert, in appropriate alphabetical order:

integrity of the tax system is defined in section 6 for the purposes of that section and section 6C

(31)

Replace the definition of issuing officer with:

issuing officer is defined in section 17D(6) for the purposes of that section

(32)

Insert, in appropriate alphabetical order:

large multinational group, for an income year or a period set by the Commissioner under section 78G, means a consolidated accounting group that, in the income year or period,—

(a)

has a member resident in New Zealand or income with a source in New Zealand; and

(b)

has a member resident in a country or territory other than New Zealand; and

(c)

in the preceding income year or period, has annual consolidated group revenue equal to or exceeding the exemption threshold referred to in paragraph 5.53 of the OECD transfer pricing guidelines

(33)

Replace the definition of legal personal representative with:

legal personal representative is defined in schedule 7, part B, clause 15(2) for the purposes of that clause

(34)

Insert, in appropriate alphabetical order:

legislative anomaly is defined in section 6C(4) for the purposes of that section and sections 6D and 91AAZB

(35)

Insert, in appropriate alphabetical order:

Ministry is defined in schedule 7, part C, subpart 2, clause 45(6) for the purposes of that clause

(36)

Insert, in appropriate alphabetical order:

nominated person means a person who—

(a)

is nominated under section 124F by another person to act on their behalf in relation to—

(i)

their tax affairs:

(ii)

their social policy entitlements and obligations; and

(b)

is treated by the Commissioner as a nominated person; and

(c)

does not later have their status as a nominated person disallowed by the Commissioner

(37)

Insert, in appropriate alphabetical order:

non-filing taxpayer, for a person and a tax year, means—

(a)

a person who derives assessable income for the tax year that consists solely of

(i)

reportable income:

(ii)

a de minimis amount referred to in section 22J(1); or

(b)

a person whose only income having a source in New Zealand for the tax year is a schedular payment derived in their capacity as a non-resident entertainer and who chooses not to file a return of income for the tax year; or

(c)

a person who for the tax year, derives only non-resident passive income referred to in section RF 2(3) of the Income Tax Act 2007; or

(d)

a person whose only income having a source in New Zealand for the tax year is a payment derived in their capacity as a non-resident seasonal worker

(38)

In the definition of offshore payment, replace “section 21(8)” with section 17F(7).

(38B)

Insert in appropriate alphabetical order:

other income is defined in section 22D(3) for the purposes of Part 3, subpart 3B, and section 141JA, and schedule 8

(39)

Insert, in appropriate alphabetical order:

parental leave is defined in schedule 7, part C, subpart 2, clause 47(6) for the purposes of that clause

(40)

Insert, in appropriate alphabetical order:

permitted disclosure is defined in section 16C(5) for the purposes of subpart 3A and schedule 7

(41)

Repeal the definitions of person incorrectly assumed to be a provisional taxpayer, person to whom this section applies, and person with access to restricted information.

(42)

Insert, in appropriate alphabetical order:

personal information is defined in schedule 7, part C, subpart 2, clause 46(7) for the purposes of that clause

(43)

Insert, in appropriate alphabetical order:

pre-populated account, for an individual and a tax year, is defined in section 22D(4) for the purposes of Part 3, subpart 3B, and sections 4A, 80KM, 106 and 143A, and 106, schedule 8, and section CX 27 of the Income Tax Act 2007

(43B)

Insert, in appropriate alphabetical order:

private domestic worker is defined in schedule 7, part C, subpart 2, clause 43(3) for the purposes of that clause

(44)

Replace the definition of private dwelling with:

private dwelling is defined in section 17(5) for the purposes of that section and section 17D

(45)

Insert, in appropriate alphabetical order:

property or documents is defined in section 17(5) for the purposes of that section and sections 16 and 16B

(46)

In the definition of proscribed question, in paragraph (b), replace “refers to a person’s purpose or intention” with “refers to a person’s purpose or intention, other than in relation to the test of principal purpose of making taxable supplies as described in section 91CB(3)(c).

(47)

Insert, in appropriate alphabetical order:

provider of digital services means a person who provides digital services to enable another person who is a user of the services to communicate information to, and receive information from, the Commissioner

(48)

Insert, in appropriate alphabetical order:

public services is defined in section 18E(4) for the purposes of that section and sections 16B and 18F

(48B)

Insert, in appropriate alphabetical order:

qualifying individual is defined in section 22D(1B) for the purposes of Part 3, subpart 3B, sections 4A, 22, and 120C, in the definition of date interest starts, paragraph (a), and schedule 8

(49)

Insert, in appropriate alphabetical order:

reportable income is defined in section 22D(2) for the purposes of this Act and the Income Tax Act 2007

(50)

Replace the definition of reportable unpaid tax with:

reportable unpaid tax is defined in schedule 7, part C, subpart 1, clause 34(12) for the purposes of that clause

(51)

Insert, in appropriate alphabetical order:

representative means a person who—

(a)

is eligible under section 124D(2) to act as a representative; and

(b)

is approved by the Commissioner as a representative; and

(c)

does not later have their approval of representative status disallowed by the Commissioner

(52)

In the definition of resident foreign trustee, in paragraph (a), delete “that is not registered as a charitable entity under the Charities Act 2005”.

(53)

Insert, in appropriate alphabetical order:

responsible department is defined in schedule 7, part C, subpart 2, clause 47(6) for the purposes of that clause

(54)

Insert, in appropriate alphabetical order:

revenue information is defined in section 16C(2) for the purposes of Part 3, subpart 3A and schedule 7

revenue law is defined in section 16C(1) for the purposes of Part 3, subpart 3A and schedule 7

revenue officer is defined in section 16C(4) for the purposes of Part 3, subpart 3A and schedule 7

(54B)

Insert, in appropriate alphabetical order:

self-employed person is defined in schedule 7, part C, subpart 2, clause 43(3) for the purposes of that clause

(55)

Insert, in appropriate alphabetical order:

sensitive revenue information is defined in section 16C(3) for the purposes of Part 3, subpart 3A and schedule 7

serious threat is defined in section 18J(2) for the purposes of that section

sex offence is defined in schedule 7, part C, subpart 2, clause 45(6) for the purposes of that clause

(56)

Insert, in appropriate alphabetical order:

short-process ruling means a short-process ruling under sections 91EK to 91ET

(57)

Insert, in appropriate alphabetical order:

social security agreement is defined in schedule 7, part C, subpart 2, clause 46(7) for the purposes of that clause

(58)

In the definition of tax,—

(a)

repeal paragraph (a)(xi):

(b)

repeal paragraph (ca)(iii).

(59)

In the definition of tax agent,—

(a)

replace “section 34B(2)” with section 124C(3):

(b)

replace paragraph (b) with:

(b)

is listed by the Commissioner as a tax agent; and

(60)

In the definition of tax position,—

(a)

replace paragraph (l) with:

(l)

whether the taxpayer must provide information to the Commissioner on the income other than reportable income that they derive for a tax year:

(b)

replace paragraph (m) with:

(m)

the application of Part 3, subpart 3B:

(61)

In the definition of tax return, after paragraph (a), insert:

(ab)

includes an individual’s final account that is treated under section 22I(1)(a) as a return of income; and

(62)

In the definition of taxpayer’s tax position, replace paragraph (a)(ii) with:

(ii)

an individual’s final account that is treated under section 22I(1)(a) as a return of income; or

(63)

Insert, in appropriate alphabetical order:

victim is defined in schedule 7, part C, subpart 2, clause 45(6) for the purposes of that clause

(64)

Insert, in appropriate alphabetical order:

workplace legislation means—

(a)

Electricity Act 1992:

(b)

Employment Relations Act 2000:

(c)

Equal Pay Act 1972:

(d)

Gas Act 1992:

(e)

Hazardous Substances and New Organisms Act 1996:

(f)

Health and Safety in Employment Act 1992:

(g)

Health and Safety at Work Act 2015:

(h)

Holidays Act 2003:

(i)

Machinery Act 1950:

(j)

Minimum Wage Act 1983:

(k)

Parental Leave and Employment Protection Act 1987:

(l)

Volunteers Employment Protection Act 1973:

(m)

Wages Protection Act 1983:

(n)

WorkSafe New Zealand Act 2013:

(o)

an Act under or in relation to which a labour inspector or an employee of WorkSafe New Zealand or designated agency exercise their functions:

(p)

any regulations made under the Acts listed in paragraphs (a) to (o)

6 Section 4A amended (Construction of certain provisions)

(1)

Replace section 4A(1)(ca) with:

(ca)

a provision referring to a tax position taken under Part 3, subpart 3B refers to a tax position taken explicitly or implicitly in an individual’s final account for a tax year, whether or not the tax position arises from information included by the Commissioner in the individual’s pre-populated account:

(2)

Subsection (1) applies for the 2018–19 and later income years.

7 New subpart heading inserted (Subpart 2ACommissioner and department)

Before section 5, insert as a subpart heading, Subpart 2ACommissioner and department.

8 New section 5B inserted (Commissioner of Inland Revenue)

After section 5, insert:

5B Commissioner of Inland Revenue

The person appointed as chief executive of the department under the State Sector Act 1988 is designated the Commissioner of Inland Revenue.

9 Sections 6, 6A, and 6B replaced

Replace sections 6, 6A, and 6B with:

Subpart 2BCare and management of tax system

6 Responsibility of Ministers and officials to protect integrity of tax system
Best endeavours to protect integrity of tax system

(1)

Every Minister and every officer of any government agency having responsibilities under this Act or any other Act in relation to the collection of tax and for the other functions under the Inland Revenue Acts must at all times use their best endeavours to protect the integrity of the tax system.

Definition of integrity of tax system

(2)

Without limiting its meaning, the integrity of the tax system includes

(a)

the public perception of that integrity; and

(b)

the rights of persons to have their liability determined fairly, impartially, and according to law; and

(c)

the rights of persons to have their individual affairs kept confidential and treated with no greater or lesser favour than the tax affairs of other persons; and

(d)

the responsibilities of persons to comply with the law; and

(e)

the responsibilities of those administering the law to maintain the confidentiality of the affairs of persons; and

(f)

the responsibilities of those administering the law to do so fairly, impartially, and according to law.

6A Commissioner’s duty of care and management
Care and management

(1)

The Commissioner is charged with the care and management of the taxes covered by the Inland Revenue Acts and with such other functions as may be conferred on the Commissioner.

Highest net revenue practicable within the law

(2)

In collecting the taxes committed to the Commissioner’s charge, and despite anything in the Inland Revenue Acts, it is the duty of the Commissioner to collect over time the highest net revenue that is practicable within the law having regard to

(a)

the resources available to the Commissioner; and

(b)

the importance of promoting compliance, especially voluntary compliance, by all persons with the Inland Revenue Acts; and

(c)

the compliance costs incurred by persons.

6B Directions to Commissioner
Order for directions

(1)

The Governor-General may, by Order in Council and with due regard to this subpart and the provisions of the State Sector Act 1988 and the Public Finance Act 1989, issue directions to the Commissioner in relation to the administration of the Inland Revenue Acts.

Limitations

(2)

Subsection (1) does not authorise the giving of directions concerning the tax affairs of individual persons or the interpretation of tax law.

Order published

(3)

Every order made under subsection (1) must, as soon as practicable after it is made,

(a)

be published in a publication chosen by the Commissioner; and

(b)

be laid before the House of Representatives together with any accompanying statement of the reasons for the order and any advice of the Commissioner in relation to it.

Binding after 7 days

(4)

An order made under subsection (1) becomes binding on the Commissioner on the 7th day after the date on which it is made.

6C Power to remedy legislative anomalies
Actions to remedy legislative anomalies

(1)

In addition to the discharge of the duty of care and management referred to in section 6A(2), the Commissioner may remedy a legislative anomaly in the Inland Revenue Acts by making or doing 1 of the following in a way that is consistent with the intended purpose or object of the relevant provisions:

(a)

recommend to the Minister of Revenue that a regulation be made and approved by the Governor-General by an Order in Council under subsection (2):

(b)

make a determination that, because of the anomaly, the Commissioner’s approach to the interpretation or application of the relevant provisions, or to the application of an administrative practice, is to be treated in some other way:

(c)

undertake an administrative action, including

(i)

notifying a class of persons that the Commissioner intends to treat the gap or inconsistency caused by the anomaly in a particular way when the gap or inconsistency could place a disproportionate burden on the class or another class of persons:

(ii)

granting an exemption from, or making a direction for, compliance with the relevant provisions when the gap or inconsistency caused by the anomaly could place a disproportionate burden on a class of persons:

(iii)

declaring the validity of an established administrative practice relating to a function conferred on the Commissioner by the relevant provisions.

Orders in Council

(2)

In relation to a recommendation made under subsection (1)(a), the Governor-General may by Order in Council made on the recommendation of the Minister of Revenue approve a regulation made for the purposes of this section to remedy an anomaly in the relevant provisions.

Considerations

(3)

Before a modification under subsection (1) or (2) is made, regard must be had to all the following considerations:

(a)

the integrity of the tax system:

(b)

the intended purpose or object of the relevant provisions:

(c)

the impact of the legislative anomaly, either for the public generally or for a particular class of persons:

(d)

the cost of complying with the unmodified provisions and whether that cost is disproportionate to the intended purpose or object of the relevant provisions:

(e)

the interests of the public or a particular class of persons:

(f)

whether the issue can be addressed or resolved by the Commissioner in another way at the time of the identification of the legislative anomaly.

Meaning of legislative anomaly

(4)

For the purposes of this section and sections 6D and 91AAZB, a legislative anomaly means an unintended outcome caused by a gap or inconsistency in the relevant provisions that arises in relation to either the purpose or the object of a specific provision or specific set of provisions, or by a gap or inconsistency between the relevant provisions and Inland Revenue practice, which

(a)

produces the result that the wording does not, or may not, sufficiently reflect the intended purpose or object of the relevant provisions; and

(b)

does not materially affect either the intended scope of the relevant provisions or the operation of the relevant provisions, whether in the past or the future.

Ascertaining the intended purpose or object of relevant provisions

(5)

For the purposes of this section, in the analysis of the intended purpose or object of the relevant provisions,

(a)

consideration may be given to extrinsic material that does not form part of the relevant provisions if the material can assist in ascertaining the meaning of the relevant provisions, whether or not the particular words under consideration are ambiguous or obscure:

(b)

primacy is not required to be given to the text of the relevant provisions.

Determinations

(6)

For the purposes of subsection (1)(b), the Commissioner may make a determination under section 91AAZB as to how the Commissioner’s approach to the interpretation or application of the relevant provisions, or to the application of an administrative practice that is affected by the anomaly, is to be treated.

6D Restrictions on modifications

Before a modification under section 6C is made, the Commissioner must be satisfied that

(a)

the modification would not cause detriment to the tax system; and

(b)

the extent of the modification to be made is not broader than is reasonably necessary to address the legislative anomaly that gave rise to the modification; and

(c)

the modification is not inconsistent with the intended purpose or object of the relevant provisions.

6E Consultation on modifications
Consultative process

(1)

Before a modification under section 6C(1)(a) or (b) is made, the Commissioner must undertake a consultative process that includes the distribution to persons or organisations that represent taxpayers with whom the Commissioner considers it is reasonable to consult for the purposes of that section of

(a)

the modification in draft form; and

(b)

an explanation of how the modification would be consistent with the intended purpose or object of the relevant provisions; and

(c)

confirmation that the Commissioner has applied section 6D.

Period of consultation

(2)

The process referred to in subsection (1) must provide a period of consultation of at least 4 weeks.

6F Requirements for modifications

For the purposes of section 6C,

(a)

the documentation relating to a modification made by the Commissioner must include statement explaining the reason for the modification, and how it complies with sections 6C to 6E; and

(b)

the modification must be expressed to be for a period of not more than 3 years from the date on which the modification is to come into force; and

(c)

the Commissioner must review the modification during the period referred to in paragraph (b) to determine if the modification should be included in an amendment to the relevant provisions; and

(d)

the Commissioner must provide in the department’s annual report to Parliament details relating to the modifications made for a tax year, including the number of times, and the circumstances in which, the power to make modifications was exercised.

6G Status and publication of modifications
Regulations approved by Order in Council

(1)

A modification under section 6C(1)(a) and (2)

(a)

is a legislative instrument and a disallowable instrument for the purposes of the Legislation Act 2012; and

(b)

must be presented to the House of Representatives under section 41 of that Act; and

(c)

must be published under section 6 of that Act.

Determinations and administrative actions

(2)

A modification under section 6C(1)(b) and (c)

(a)

is neither a legislative instrument nor a disallowable instrument for the purposes of that Act and does not have to be presented to the House of Representatives under section 41 of that Act; and

(b)

must, as soon as practicable after being made, be published on an internet site maintained by or on behalf of the Commissioner.

6H Application of modifications
General application unless stated

(1)

A modification applies generally unless it is expressly stated that it applies only to a particular class of persons or only in particular circumstances.

Person’s election to apply

(2)

A person may choose whether or not to apply a modification, and if they choose not to apply the modification, the law applies to the person as if the modification did not exist.

Hearing authorities’ determinations

(3)

When a hearing authority has made a determination under section 138P, a determination made under section 6C(1)(b) or an administrative action undertaken under section 6C(1)(c) must be made in such a way that it conforms to the hearing authority’s determination.

10 New subpart heading inserted (Subpart 2CFunctions and powers of Commissioner)

Before section 7, insert as a subpart heading, Subpart 2CFunctions and powers of Commissioner.

11 New subpart heading inserted (Subpart 2DModes of communication)

Before section 14, insert as a subpart heading, Subpart 2DModes of communication.

12 Section 15 amended (Annual report)

Renumber section 15 as section 13C.

13 Section 15B amended (Taxpayer’s tax obligations)

Repeal section 15B(h) and (i).

14 Part heading and sections 15C to 15Z renumbered

(1)

Repeal the Part heading before section 15C.

(2)

Sections 15C to 15Z are renumbered, and headings are inserted, as indicated in schedule 4.

15 New subpart 3A inserted (Collection, use, and disclosure of revenue information)

Replace the cross-heading before section 16, and sections 16 to 19 with:

Subpart 3A—Collection, use, and disclosure of revenue information

16 Purposes of subpart

The purposes of this subpart are—

(a)

to provide the Commissioner with the necessary powers to enable—

(i)

the collection of all taxes or duties imposed by the Inland Revenue Acts:

(ii)

the carrying into effect of any of the Inland Revenue Acts:

(iii)

the carrying out of functions lawfully conferred on the Commissioner:

(b)

to enable the collection by the Commissioner of revenue information, including the power to—

(i)

gain access to property or documents; and

(ii)

remove documents to make copies; and

(iii)

remove and retain documents for review:

(c)

to require a person or entity to produce documents or to provide or allow access to information to the Commissioner:

(d)

to set out the Commissioner’s powers to copy, remove, or retain documents:

(e)

to provide a regulation-making power for the regular collection of bulk data:

(f)

to describe how revenue information may be used:

(g)

to protect the confidentiality of sensitive revenue information:

(h)

to facilitate efficient and effective government administration and law enforcement by allowing permitted disclosures of sensitive revenue information for certain specific or appropriate purposes.

16B Principles on which subpart based
Purpose of collection of revenue information

(1)

The collection of revenue information may be made for 1 or more of the following purposes:

(a)

to protect the integrity of the tax system:

(b)

to carry into effect the revenue laws:

(c)

to carry out or support a function lawfully conferred on the Commissioner:

(d)

to encourage compliance with the revenue laws:

(e)

for any other function lawfully conferred on the Commissioner.

Necessary or relevant for stated purposes

(2)

In collecting revenue information, the Commissioner may access property or documents only if taking that action is—

(a)

necessary or relevant for a purpose set out in subsection (1); and

(b)

considered likely to provide the information required.

Protection of information

(3)

Revenue information that is held by the Commissioner must be protected by such security safeguards as it is reasonable in the circumstances to take, against—

(a)

loss:

(b)

unauthorised instances of access, use, modification, or disclosure:

(c)

misuse.

Non-disclosure of sensitive revenue information

(4)

A revenue officer may not disclose sensitive revenue information unless the disclosure is a permitted disclosure made—

(a)

for the purposes of carrying into effect a revenue law or carrying out a function lawfully conferred on the Commissioner:

(b)

under certain agreements or regulations:

(c)

to a person in relation to their own revenue information or in a general case:

(d)

for the following and certain other specified purposes:

(i)

public services purposes:

(ii)

international purposes:

(iii)

risk of harm purposes.

Collection of information

(5)

For the purposes of subsection (2), the collection of information includes the compilation, collation, synthesis, or generation of information by the Commissioner.

Commissioner, authorised officers, accompanying persons, and particular offices

(6)

For the purposes of this subpart, and section 227F,—

(a)

a reference to the Commissioner includes a reference to an officer of the department authorised by the Commissioner:

(b)

a reference to the Commissioner in sections 17(1) and (2) and 17C(1)(d) includes a reference to an accompanying person:

(c)

when a provision requires information to be produced, filed, or delivered to the Commissioner, the Commissioner may require that the information is produced, filed, or delivered to a particular office of the department.

16C Key terms
Meaning of revenue law

(1)

For the purposes of this subpart and schedule 7, revenue law means—

(a)

the Inland Revenue Acts:

(b)

the Accident Compensation Act 2001, the Accident Insurance Act 1998, the Accident Rehabilitation and Compensation Insurance Act 1992, or the Accident Compensation Act 1982:

(c)

the New Zealand Superannuation Act 1974:

(d)

any Act that imposes taxes or duties payable to the Crown.

Meaning of revenue information

(2)

For the purposes of this subpart and schedule 7, revenue information means information that is acquired, obtained, accessed, received by, or disclosed to, or held by the Commissioner—

(a)

under or for the purposes of a revenue law:

(b)

under an information-sharing rightagreement.

Meaning of sensitive revenue information

(3)

For the purposes of this subpart and schedule 7, sensitive revenue information

(a)

means revenue information that relates to the affairs of a person or entity—

(i)

that identifies, or is reasonably capable of being used to identify, the person or entity, whether directly or indirectly; or

(ii)

that might reasonably be regarded as private, commercially sensitive, or otherwise confidential; or

(iii)

the release of which could result in loss, harm, or prejudice to a person to whom or to which it relates:

(b)

does not include aggregate or statistical data that may contain information about the person or entity to the extent to which the information does not meet the requirements of paragraph (a).

Meaning of revenue officer

(4)

For the purposes of this subpart and schedule 7, a revenue officer

(a)

means a person who is employed in, or seconded to, or connected with the service of Inland Revenue; and

(b)

includes—

(i)

a person employed in the service of the Government of an overseas country or territory who is for the time being seconded to, or connected with the service of Inland Revenue:

(ii)

a person formerly employed in, or seconded to, or connected with the service of Inland Revenue.

Meaning of permitted disclosure

(5)

AFor the purposes of this subpart and schedule 7, permitted disclosure means the disclosure of an item of sensitive revenue information to another person as an exception to the rule of confidentiality set out in section 18. The purposes for which a revenue officer may disclose sensitive revenue information are set out in sections 18D to 18J and schedule 7.

New Zealand superannuation

(6)

For the purposes of subsection (1)(c), the New Zealand Superannuation Act 1971 includes Part 1 of the Superannuation Schemes Act 1976, and the New Zealand Superannuation Corporation includes the National Provident Fund Board in relation to its functions under that Part.

Collection of information

17 Commissioner may obtain information by accessing property or documents
Access to property or documents

(1)

Despite anything in any other Act but subject to subsection (2), the Commissioner may access any property or documents for the purpose of inspecting a document, property, process, or matter that the Commissioner considers—

(a)

is necessary or relevant for the purposes and principles set out in sections 16 and 16Bof this section:

(b)

is likely to provide information that would otherwise be required for the purposes of the Inland Revenue Acts and any function lawfully conferred on the Commissioner.

Consents or warrants required for private dwellings

(2)

The Commissioner must not enter a private dwelling to access any property or documents except with the consent of an occupier or under a warrant issued under section 17D.

Providing assistance and answering questions

(3)

Despite section 103(3)(b)(ii) and (7) of the Search and Surveillance Act 2012, the occupier of land, or a building, or a place that the Commissioner enters, or proposes to enter, must—

(a)

provide the Commissioner with all reasonable facilities and assistance for the effective exercise of the powers under this section and section 17C; and

(b)

answer all proper questions relating to the effective exercise of the powers under this section as, and in the manner, required by the Commissioner.

Accompanying persons

(4)

A person whose presence at a place is considered by the Commissioner to be necessary for the effective exercise of the powers under this section may accompany the Commissioner to a place.

Definitions for this section

(5)

In this section, and sections 16, 16B, and 17D,—

property or documents includes—

(a)

all lands, buildings, places, or other premises:

(b)

a document, whether in the custody or under the control of a public officer, or a body corporate, or any other person

private dwelling means a building or part of a building occupied as residential accommodation, and includes—

(a)

a garage, shed, and other building used in connection with the private dwelling; and

(b)

any business premises that are, or are within, a private dwelling.

17B Commissioner may require information or production of documents
Requiring information or production of documents

(1)

A person must, when notified by the Commissioner in an information demand, provide any information that the Commissioner considers necessary or relevant for any purpose relating to—

(a)

the administration or enforcement of an Inland Revenue Act:

(b)

the administration or enforcement of any matter arising from, or connected with, a function lawfully conferred on the Commissioner.

Documents included

(2)

In this section and in sections 17, 17G, and 17H, a requirement to provide information includes a requirement to produce a document.

Requirements

(3)

The Commissioner may require that information provided under this section be—

(a)

verified by statutory declaration or otherwise:

(b)

provided to a particular office of the Commissioner:

(c)

provided in a manner acceptable to the Commissioner.

Persons included

(4)

For the purposes of this section, a person includes—

(a)

an officer employed in, or in connection with, a department of the government or a public authority:

(b)

any other public officer.

Particular requirements for information demands and inquiries

(5)

Sections 17E 17F to 17K set out some particular requirements for information demands and inquiries.

17C Commissioner’s powers in relation to documents
Taking extracts, making copies, removing for inspection

(1)

In relation to a document accessed under section 17 or provided under section 17B or 17G, the Commissioner may—

(a)

take an extract from the document:

(b)

make a copy of the document:

(c)

remove the document from a place to make a copy:

(d)

remove the document from a place and retain it for a full and complete inspection.

Copying and returning documents

(2)

When a document is removed and a copy made under subsection (1)(c), the copy must be made and the document then returned as soon as practicable.

Removing documents with consent or under warrant

(3)

The Commissioner may remove and retain a document under subsection (1)(d) for a full and complete inspection for as long as is necessary to undertake the inspection if the Commissioner has—

(a)

the consent of an occupier:

(b)

a warrant issued under section 17D.

No charge for copies

(4)

For the purposes of subsection (1)(a) to (c), the Commissioner may take an extract from or make a copy of a document without charge.

Owner’s inspection

(5)

The owner of a document that is provided, accessed, or removed under subsection (1) may inspect and obtain a copy of the document at the premises to which it is removed—

(a)

at the time the document is removed to the premises:

(b)

at all reasonable times subsequently.

Evidence

(6)

A copy of a document certified by or on behalf of the Commissioner is admissible in evidence in court as if it were the original.

17D Warrants
When this section applies

(1)

This section applies for the purposes of sections 17 and 17C when—

(a)

an application is made for a search warrant under Part 4, subpart 3 of the Search and Surveillance Act 2012 for a warrant to enter a private dwelling or to remove and retain a document from a place; and

(b)

an issuing officer is satisfied that the issue of the warrant is required for the exercise of a function lawfully conferred on the Commissioner.

Warrants for entry

(2)

The issuing officer may issue a warrant to the Commissioner to enter a private dwelling when physical access to the dwelling is required.

Warrants for removal of documents

(3)

The issuing officer may issue a warrant to the Commissioner to remove a document from a place and retain it when a full and complete inspection of the document is required.

Exercising warrants

(4)

A person exercising the power of entry conferred by a warrant issued under subsection (2) or a warrant for removal of a document under subsection (3) must produce the warrant and evidence of their identity on first entering the private dwelling or the place and whenever subsequently reasonably required to do so.

Relationship with Search and Surveillance Act 2012

(5)

For the purposes of this section, and in section 17(3), the provisions of subparts 1, 3, 4, 7, 9, and 10 of part 4 of that Act, other than sections 102, 103(3)(b)(ii), 103(4)(g), 103(7), 115(1)(b), 118, 119, and 130(4) apply.

Definition for this section

(6)

In this section, issuing officer has the meaning given in section 3 of that Act.

17E Information or documents treated as in persons’ knowledge, possession, or control
Non-residents

(1)

For the purposes of sections 17B(1), 143(2), and 143A(2), information or a document that is in the knowledge, possession, or control of a non-resident is treated as being in the knowledge, possession, or control of a New Zealand resident if the New Zealand resident controls, directly or indirectly, the non-resident. For this purpose,—

(a)

a New Zealand resident is treated as holding anything held by a person who—

(i)

is resident in New Zealand and is associated with the New Zealand resident:

(ii)

is a controlled foreign company and is associated with the New Zealand resident:

(b)

a law of a foreign country that relates to the secrecy of information is ignored.

Large multinational groups

(2)

For the purposes of sections 17B(1), 139AB, 143(2), and 143A(2), information or a document is treated as being in the knowledge, possession, or control of a member of a large multinational group in an income year, disregarding any law of a foreign country relating to the secrecy of information, if the information or document is relevant to the taxation of the large multinational group and is in the knowledge, possession, or control of the member or another member of the large multinational group.

Particular information demands and inquiries

17F Commissioner may require information about offshore payments
When this section applies

(1)

This section applies when—

(a)

the Commissioner notifies a person in an information demand that they are required under section 17B to provide information relating to an offshore payment for which a deduction may be allowed; and

(b)

the person fails to provide a response, or a sufficient response, to the information demand by the date that is 3 months after the information demand (the demand date).

Deduction disallowed

(2)

The Commissioner may disallow the deduction, in whole or in part, in the course of making an assessment, and the person who has the deduction (person A) may not dispute the assessment in proceedings under Part 8 or Part 8A unless they establish in the proceedings that they did provide a sufficient response to the information demand was provided within 3 months of the demand date, whether the response was provided by them or another person to whom an information demand was given.

Information not admissible in evidence

(3)

In relation to an assessment referred to in subsection (2), when the information demand was given to person A, or to another person (person B) with a copy provided to person Ato a person other than the person A (person B), the information is not admissible in proceedings under Part 8 or Part 8A in which a deduction for an offshore payment is at issue, except to the extent to which the evidence—

(a)

is provided or identified in either person A or person B’s response to the information demand:

(ab)

is provided or identified in person A’s response to the copy of the information demand as described in subsection (6):

(b)

is contained in other material in the possession of the Commissioner at the time the Commissioner issued the information demand and can reasonably be verified by the Commissioner.

Notice of insufficient response

(4)

The rule against admissibility in subsection (3) applies only if the Commissioner gives person A a separate notice, before or at the time of making the assessment, stating that the Commissioner does not consider that either person A or person B has provided a sufficient response to the information demand.

Commissioner’s evidence

(5)

Subsection (3) does not apply to prevent the Commissioner from producing any evidence in any proceedings.

Notices

(6)

When a notice under subsection (1), (3), or (4) is given to person B, a copy must be provided to person A.

Meaning of offshore payment

(7)

For the purposes of this section, an offshore payment, for a person, means an amount of expenditure or loss incurred or purportedly incurred by them to—

(a)

a person outside New Zealand; or

(b)

a person, whether in or outside New Zealand, associated with, acting for or on behalf of, or in a fiduciary capacity in relation to, a person outside New Zealand; or

(c)

a person in New Zealand who, in the opinion of the Commissioner, may in consequence of the expenditure or loss incurred by the taxpayer, whether or not in consequence of any other thing and whether or not as an immediate or eventual consequence, make a payment to—

(i)

a person outside New Zealand; or

(ii)

a person in New Zealand making a payment as described in this paragraph.

17G Commissioner may require information from large multinational groups (BEPS)
When this section applies

(1)

This section applies when the Commissioner notifies a member of a large multinational group in an information demand that the member is required under section 17B to provide information relating to the large multinational group or to a member of the large multinational group, and the member—

(a)

fails to provide by the date that is 3 months after the information demand (the demand date), a response to the information demand:

(b)

provides, by the demand date, a response that the Commissioner considers to be misleading because it contains misleading information or omits relevant information:

(c)

provides, by the demand date, a response that the Commissioner considers omits, information, whether or not in the knowledge, possession, or control of the member, required by the information demand for the calculation of—

(i)

an arm’s length amount for a cross-border transaction:

(ii)

an amount of profit attributable to a permanent establishment in New Zealand of the member or another member of the large multinational group:

(d)

provides, by the demand date, a response that the Commissioner considers does not fulfil the requirements of the information demand.

Consequences of failing to provide satisfactory responses

(2)

The Commissioner must notify the member by a further notice that if the member does not provide a satisfactory response to the information demand before the date (the information deadline) that is 1 month after the date of the further notice,—

(a)

the Commissioner may rely on the information held by the Commissioner in exercising the Commissioner’s power to prosecute, penalise, assess, or reassess the member or other members of the large multinational group for a tax year to which the information required by the information demand relates; and

(b)

information required by the information demand and not provided to the Commissioner by the information deadline will not be allowed as evidence for use by the member or other members of the large multinational group in a dispute concerning an action of the Commissioner referred to in paragraph (a).

Treatment of information in disputes

(3)

If a member of a large multinational group disputes a prosecution, imposition of a penalty, assessment, or reassessment, relating to a tax year, and information that is required by an information demand and relates to the tax year is not provided to the Commissioner before the information deadline, the information that is not the subject of a court order under subsection (4) is not—

(a)

allowed as evidence for use by the member in a disputes procedure under Part 4A:

(b)

admissible as evidence for the member in proceedings under Part 8 or Part 8A, or other proceedings.

When court overrules treatment of information

(4)

A member of a large multinational group is allowed to use information in a way that would otherwise be prevented by subsection (3) if a court or Authority—

(a)

determines that obtaining the information in response to the information demand would have required an investment by the member of time and resources that would have been unreasonable in relation to the relevance of the information to the tax issues involved; and

(b)

determines that admission of the evidence is necessary to avoid manifest injustice to the member; and

(c)

orders that the information be allowed or admissible as evidence in the proceedings.

17H Court may make order for provision of information
Applying to Court for orders

(1)

When a person does not fully comply with an information demand under section 17B or does not provide a tax return required under the Inland Revenue Acts, the Commissioner may apply to the District Court for an order requiring the person to provide the information or the tax return, as applicable.

Application as alternative remedy

(2)

The Commissioner may make an application under subsection (1) as well as, or instead of, prosecuting the person.

Notifying persons affected

(3)

The Commissioner must notify the person in relation to whom the order is sought of the application, and must notify any other person, as the Court directs.

Hearing

(4)

The Commissioner and every person notified of the application is entitled to appear and be heard on the hearing of the application.

Court review

(5)

The Court may—

(a)

order the information to be provided to the Court; and

(b)

review the information to determine—

(i)

whether to make an order requiring the person to provide the information to the Commissioner; and

(ii)

whether the information is the subject of legal professional privilege, whether within the meaning of section 20 or otherwise at law; and

(iii)

whether the information is contained in a tax advice document, and if so, whether it is required to be disclosed under section 20E, 20F, or 20G.

Court orders

(6)

The Court may order the person named in the application to provide the information, or a part of the information, to the Commissioner if and to the extent to which the Court is satisfied that the information—

(a)

is likely to be relevant for a purpose relating to the administration or enforcement of a revenue law or a matter arising from, or connected with, a function lawfully conferred on the Commissioner; and

(b)

is not the subject of legal professional privilege, whether within the meaning of section 20 or otherwise at law.

Returns

(7)

The Court may order the person named in the application to provide a tax return.

Undocumented information

(8)

A person who is required to provide information under this section must, if the information is not kept in a document, make the necessary arrangements to ensure that the information can be viewed and copied.

Overriding provision

(9)

This section applies despite any enactment or rule of law that may oblige a person to keep information secret, or not to disclose information, or not to perform an obligation. Compliance with a court order under this section is not a breach of the enactment, rule, or obligation.

No excuse

(10)

A person is not excused from having to comply with this section on the ground that—

(a)

providing the information could or might prove a breach of a tax obligation or subject the person to a fine, penalty, or conviction; or

(b)

the person could claim another privilege in relation to the provision of the information in proceedings in a court.

Offences

(11)

For offences under this section, see section 143G.

17I Commissioner may conduct inquiries
When this section applies

(1)

This section applies for the purposes of obtaining information—

(a)

in relation to a person’s tax liability under an Inland Revenue Act:

(b)

that is required—

(i)

for the purposes of the administration or enforcement of an Inland Revenue Act:

(ii)

in carrying out a function lawfully conferred on the Commissioner.

Inquiry by Commissioner

(2)

The Commissioner may notify a person that they are required to attend and provide information to the Commissioner or to produce documents in their possession or control that contain the information or that the Commissioner considers are likely to contain the information.

Evidence

(3)

The Commissioner may require a person to give evidence on oath, and orally or otherwise, and for that purpose, the Commissioner or an authorised officer may administer an oath.

Offences

(4)

For offences under this section, see section 143F.

17J Commissioner may apply for District Court Judge to conduct inquiries
When this section applies

(1)

This section applies when the Commissioner considers that an inquiry is necessary for the purposes of obtaining information—

(a)

in relation to a person’s tax liability under an Inland Revenue Act:

(b)

that is required—

(i)

for the purposes of the administration or enforcement of an Inland Revenue Act:

(ii)

in carrying out a function lawfully conferred on the Commissioner.

Inquiries before District Court Judge

(2)

The Commissioner may apply to a District Court Judge to hold an inquiry for the purposes of obtaining the information.

Summoning and examination of persons

(3)

The Judge may—

(a)

summon a person that the Commissioner or another interested person requires to be examined; and

(b)

examine the person on oath in chambers regarding any matter relevant to the subject matter of the inquiry.

Judge’s jurisdiction and person’s rights

(4)

The Judge has all jurisdiction and authority in relation to the summons and examination of the person that they would have in relation to a witness in a civil action within the Judge’s ordinary jurisdiction. Subject to the Inland Revenue Acts, the person has all the rights that the person would have and is subject to the liabilities that the person would be if the person were the witness.

Commissioner’s powers

(5)

The Commissioner—

(a)

may cross-examine a person summoned:

(b)

may be represented by a barrister or solicitor who may examine, cross-examine, and re-examine a person summoned according to ordinary practice.

Persons interested

(6)

A person interested in the subject matter of the inquiry may be represented and may examine, cross-examine, and re-examine a person summoned according to ordinary practice.

Statements

(7)

The statement of a person examined under this section must be recorded in a document, signed by the person in the presence of the Judge, and delivered to the Commissioner. The statement does not form part of court records.

Offences

(8)

For offences under this section, see section 143F.

17K Questions and statements made in inquiries
When this section applies

(1)

This section applies when a person is summoned and examined by either the Commissioner under section 17I or a District Court Judge under section 17J.

No excuse

(2)

No person summoned or examined is excused from answering a question on the ground that the answer may incriminate them or render them liable to a penalty or forfeiture.

Statements not admissible in evidence

(3)

A statement made by a person in answer to a question put to them is not admissible in criminal proceedings against the person, except on a charge of perjury. The provisions of the Crimes Act 1961 which relate to perjury are applicable to an inquiry by the Commissioner under section 17I.

Travelling expenses

(4)

A person who has been summoned is entitled to receive an amount on account of travelling expenses and loss of time. The amount is a reasonable amount determined by the Commissioner or the Judge, as applicable.

Offences

(5)

For offences under this section, see section 143F.

Regulations

17L Regulations providing for regular collection of bulk data
What this section does

(1)

This section provides a regulation-making power in relation to the administration of this Act and the other Inland Revenue Acts to authorise the Commissioner to collect bulk information in the form of datasets from a person who is the holder of the information if the collection of the information is considered necessary or relevant for revenue purposesa purpose relating to the administration or enforcement of a matter arising from or connected with a function lawfully conferred on the Commissioner.

Orders in Council

(2)

The Governor-General may, by Order in Council on the recommendation of the Minister of Revenue, make regulations—

(a)

authorising the Commissioner to collect on a continuing and regular basis, information in the form of datasets from a person, or a class of persons:

(b)

prescribing—

(i)

the type of information that may be collected:

(ii)

the person or the class of persons to whom the regulations apply:

(iii)

the frequency of reporting by the person or class of persons:

(iv)

the form of the information:

(v)

the specifications for the reporting method that must be used:

(bb)

setting out the way in which the information is necessary for the purposes set out in subsection (1):

(c)

specifying a person or class of persons who may be given an exemption from some or all of a requirement under paragraph (a) or, (b), or (bb):

(d)

prescribing how provisions of this Act or another Inland Revenue Act must be applied or modified for the purpose set out in section 17B.

Requirements

(3)

The Minister may recommend the making of regulations under this section only if satisfied that—

(a)

the regulations are necessary for a purpose relating to—

(i)

the administration or enforcement of any of the Inland Revenue Acts:

(ii)

the administration or enforcement of any matter arising from or connected with a function lawfully conferred on the Commissioner; and

(b)

the proposed use of the information is consistent with the purposes of the Inland Revenue Acts; and

(bb)

the type and quantity of information collected is no more than is necessary for a purpose relating to

(i)

the administration or enforcement of any of the Inland Revenue Acts:

(ii)

the administration or enforcement of any matter arising from or connected with a function lawfully conferred on the Commissioner; and

(bc)

the regulations do not unreasonably impinge on the privacy of individuals, and contain safeguards that adequately protect the privacy of individuals; and

(c)

a consultative process has been undertaken that—

(i)

includes the distribution of draft regulations and an explanation of the way in which the regulations would meet the requirements of paragraphs (a), and (b), (bb), and (bc) to the Privacy Commissioner, information holders, and other persons or organisations with whom the Commissioner considers it is reasonable to consult for the purposes of this section; and

(ii)

provides a period of consultation of at least 46 weeks.

Review

(4)

Within the period of time set out in subsection (5), the Commissioner must—

(a)

review the operation of this section; and

(b)

assess the impact of this section, in consultation with the Privacy Commissioner; and

(c)

consider whether amendments to the law are necessary or desirable, and in particular, whether this section is needed; and

(d)

report the findings to the Minister of Revenue.

Timing of review

(5)

The review must occur after the expiry of 5 years from the commencement of this section but before the expiry of 6 years from that datethe commencement of this section.

Use of information

17M Use of information
Purposes

(1)

Despite anything in any other Act, nothing prevents the Commissioner from—

(a)

using information obtained under this Act for the purposes of—

(i)

carrying into effect any of the Inland Revenue Acts:

(ii)

carrying out or supporting a function lawfully conferred on the Commissioner; or

(b)

using information obtained under any of the Inland Revenue Acts for the purposes of—

(i)

carrying into effect the provisions of this Act:

(ii)

carrying out or supporting a function lawfully conferred on the Commissioner.

Permitted disclosures

(2)

For the purposes of subsection (1), the use of information by the Commissioner includes its use in a permitted disclosure.

Re-use of information

(3)

In this section, the use of information includes the re-use of the information.

Confidentiality of information

18 Confidentiality of sensitive revenue information
Confidentiality requirements for revenue officers

(1)

A revenue officer must keep confidential all sensitive revenue information and must not disclose the information unless the disclosure is a permitted disclosure that meets the requirements of sections 18D to 18J.

Confidentiality requirements for other persons

(2)

A person, other than a revenue officer, who has access to, or obtains sensitive revenue information must keep it confidential and must not disclose the information unless the disclosure is—

(a)

authorised by the Commissioner as a permitted disclosure that meets the requirements of sections 18D to 18J:

(ab)

authorised by the Commissioner for a purpose, and only to the extent authorised:

(b)

permitted under the agreement under which the information is accessed or obtained.

Other revenue information

(3)

Despite sections 18D to 18J and schedule 7, the Commissioner is not required to disclose any item of revenue information if the release of the information would adversely affect the integrity of the tax system or would prejudice the maintenance of the law.

Offences and penalties

(4)

For the offences and related penalties,—

(a)

by revenue officers, see section 143C:

(b)

by persons other than revenue officers, see sections 143D to 143EB.

18B Requirements for revenue officers and other persons
Declarations by revenue officers

(1)

For the purposes of section 18(1), before a revenue officer performs their first official duty as an officer, they must complete a declaration of confidentiality as prescribed by the Commissioner.

Certificates by other officers

(2)

For the purposes of section 18(2), a person, other than a revenue officer, who acquires, obtains, or has access to revenue information must complete a certificate of confidentiality as prescribed by the Commissioner. The certificate must be kept in a form acceptable to the Commissioner by the person, entity, or agency that employs, appoints, or contracts services from, the person.

Making declarations

(3)

The declaration under subsection (1) may be made before—

(a)

the Commissioner; or

(b)

a revenue officer; or

(c)

a person authorised by or under the Oaths and Declarations Act 1957 to take statutory declarations.

Revenue officers treated as making declaration

(4)

A revenue officer who has made a declaration described in subsection (1) under an earlier taxation secrecy or fidelity provision corresponding to this provision, or who was treated as making that declaration under an earlier provision, is treated as having made a declaration under this section.

Other persons treated as making declaration

(5)

A person other than a revenue officer who has completed a certificate as described in subsection (2) under an earlier taxation secrecy or fidelity provision corresponding to this provision, or who was treated as completing that certificate under an earlier provision, is treated as having completed a certificate under this section.

Permitted disclosures

18C Permitted disclosures

Sections 18D to 18J provide exceptions to the rule of confidentiality set out in section 18. These exceptions are permitted disclosures.

18D Disclosures made in carrying into effect revenue laws
Carrying into effect revenue law

(1)

Section 18 does not apply to a disclosure of sensitive revenue information that is made for the purpose of carrying into effect a revenue law as set out in schedule 7, part A.

Carrying out function conferred on Commissioner

(2)

Section 18 does not apply if—

(a)

a disclosure of sensitive revenue information is made in carrying out or supporting a function lawfully conferred on the Commissioner to—

(i)

administer the tax system:

(ii)

implement the tax system:

(iii)

improve, research, or reform the tax system; and

(b)

the Commissioner considers the disclosure is reasonable for the purposes described in paragraph (a), having regard to—

(i)

the Commissioner’s obligation at all times to use best endeavours to protect the integrity of the tax system; and

(ii)

the importance of promoting compliance with the law, especially voluntary compliance; and

(iii)

the impact of the disclosure, personally or commercially or in some other way; and

(iv)

the resources available to the Commissioner; and

(v)

the public availability of the information.

Disclosures in co-located environments

(3)

Section 18 does not apply to a disclosure of sensitive revenue information that a revenue officer—

(a)

makes—

(i)

to a person who is a revenue officer or a person to whom section 18B(2) applies; and

(ii)

at a place, and in conditions relating to the confidentiality of information, in which the Commissioner expects revenue officers to perform their duties; and

(b)

does not intend, and takes the care that is reasonable in the place and conditions to prevent, the receipt of the information by the person receiving it.

Disclosures for court proceedings

(4)

Section 18 does not apply to—

(a)

prevent the disclosure of sensitive revenue information to a court or tribunal if the disclosure is necessary for the purpose of carrying into effect a revenue law:

(b)

require a revenue officer to produce a document in a court or tribunal, or to disclose to a court or tribunal a matter or thing that comes to their notice in the performance of their duties.

18E Disclosures made under information-sharing arrangements
Disclosure under agreements and regulations

(1)

Section 18 does not apply to a disclosure of sensitive revenue information and other information, as applicable, that is made for the purpose of a disclosure under—

(a)

an approved agreement under subsection (2):

(b)

an agreement made under subsection (3):

(c)

regulations made under section 18F.

Approved information-sharing agreements

(2)

The Commissioner may provide information under an information-sharing agreement approved by an Order in Council made under section 96J of the Privacy Act 1993. The information-sharing agreement—

(a)

may relate to information that is sensitive revenue information being personal information and other non-personal information:

(b)

may extend a restricted information-sharing provision in an Inland Revenue Act, as contemplated by the Privacy Act 1993, without further authority than this section:

(c)

includes an existing approved information-sharing agreement made under the authority of this Act that continues to be in force.

Disclosure by agreement when consent obtained

(3)

The Commissioner may enter into an agreement to share certain information if—

(a)

the agreement—

(i)

is made for public services purposes; and

(ii)

relates to the disclosure of sensitive revenue information held about a person or entity; and

(iii)

specifies appropriate conditions for the security and use of the information; and

(iv)

stipulates a process to ensure the consent is properly obtained and recorded; and

(ab)

the Commissioner has consulted the Privacy Commissioner on the terms of the agreement, and the Privacy Commissioner agrees that the disclosure is appropriate; and

(b)

the person or entity consents to the disclosure of the information.

Inquiry into provenance of types of data

(3B)

Before proposing a new information-sharing agreement under subsection (2), a new consent agreement under subsection (3), or new regulations under section 18F, the Commissioner must

(a)

inquire into, and make an assessment of, the likely provenance of the types of data proposed to be shared; and

(b)

consider whether particular conditions are required to be specified for the security and use of the information.

Meaning of public service

(4)

In this section and sections 16B and 18F, public service means a public function or duty that is conferred or imposed on an agency described in subsection (5)

(a)

by or under law; or

(b)

by a policy of the Government.

Meaning of agency

(5)

For the purposes of this section and section 18F, agency

(a)

has the meaning given in section 2 of the Privacy Act 1993 as it applies for the purposes of Part 9A of that Act:

(b)

includes a private sector agency and a public sector agency as those terms are defined in section 96C of that Act.

18F Regulations for information-sharing for public services purposes
Regulations relating to provision of public services

(1)

This section provides a regulation-making power for matters relating to the provision of public services in the sharing of revenue information or other information, as applicable, when—

(a)

the sharing of the information is intended to improve the ability of the government to deliver efficient and effective services or enforce the law:; and

(b)

the information is more easily or more efficiently obtained from, or verified by, the Commissioner:; and

(c)

it is not unreasonable or impractical to require the Commissioner to deliver the information:; and

(d)

the nature of the sharing is proportionate, taking into account the purpose for which the information is proposed to be shared:; and

(e)

the person, entity, or agency receiving the information has adequate protection for the information:; and

(f)

the sharing of the information will not unduly inhibit the future provision of information to the Commissioner.

Regulations

(2)

The Governor-General may, by Order in Council on the recommendation of the Minister of Revenue, make regulations—

(a)

providing for the sharing of revenue information that the Commissioner holds with an agency:; and

(b)

prescribing—

(i)

the classes or types of revenue information that may be shared:

(ii)

how the information is to be provided or accessed:

(iii)

how the information is to be used:

(iv)

how the information must be stored, kept secure, or disposed of:; and

(bb)

providing that the information-sharing arrangements under the regulations are monitored by the Privacy Commissioner; and

(c)

specifying—

(i)

whether further disclosure of the information is permitted:

(ii)

whether review requirements are to be stipulated, including instances of breaches of confidentiality.

Requirements for making of regulations

(3)

The Minister may recommend the making of regulations under this section only if satisfied that—

(a)

the regulations are necessary to achieve the purpose set out in subsection (1); and

(ab)

the type and quantity of information to be shared under the regulations are no more than is necessary to facilitate the provision of effective and efficient services or enforce the law; and

(ac)

the regulations do not unreasonably impinge on the privacy of individuals and contain safeguards that adequately protect the privacy of individuals; and

(ad)

the mechanism used to share the information is the most appropriate mechanism, taking into account the type and quantity of the information to be shared; and

(b)

a consultative process has been undertaken that—

(i)

includes the distribution of draft regulations and an explanation of the way in which the regulations would meet the requirements of paragraphs (a) to (ad) to the Privacy Commissioner and other persons or organisations with whom the Commissioner considers it is reasonable to consult for the purposes of this section; and

(ii)

provides a period of consultation of at least 4 weeks.

Government agency communication

(4)

An Order in Council made under the authority of this Act under section 81BA as repealed by the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2018, to the extent to which it continues to be in force, is treated as a regulation made under this section.

18G Disclosures to persons and their representatives

Section 18 does not apply to a disclosure of sensitive revenue information made to a person in relation to whom the information is held. The disclosure may be made to the person and also to the person’s representative as set out in schedule 7 part B.

18H Disclosures to other agencies for certain specified purposes

Section 18 does not apply to a disclosure of sensitive revenue information to certain agencies when the disclosure is made for certain specified purposes as set out in schedule 7 part C.

18I Disclosures for international purposes

Section 18 does not apply to a disclosure of sensitive revenue information that is made for the purposes of an international obligation of the Commissioner as set out in schedule 7 part D.

18J Disclosures for risk of harm purposes
Serious threat to health and safety

(1)

Section 18 does not apply to a disclosure of sensitive revenue information that is made when disclosure is necessary to prevent or lessen a serious threat to—

(a)

public health or public safety:

(b)

the life or health of a person.

Meaning of serious threat

(2)

For the purposes of this section, serious threat means a threat that the Commissioner reasonably believes to be serious having regard to—

(a)

the likelihood of the threat being realised; and

(b)

the severity of the consequences if the threat is realised; and

(c)

the time at which the threat may be realised.

16 New subpart heading inserted (Subpart 3AB—Tax advice documents)

Before section 20, insert a new subpart heading,“ Subpart 3AB—Tax advice documents”.

17 Subpart heading amended (Subpart 3AC—Taxpayers’ obligations to keep records)

Replace the subpart heading “Subpart 3B—Taxpayer’s obligations to keep records” with “Subpart 3AC—Taxpayers’ obligations to keep records”.

18 Section 21 repealed (Information requisitions in relation to offshore payments)

Repeal section 21.

19 Section 21BA repealed (Information required to be provided by large multinational group)

Repeal section 21BA.

20 Section 22 amended (Keeping of business and other records)

(1)

In section 22(2)(ke), replace section 24Q with “section 169B”.

(2)

Replace section 22(3) with:

(3)

An individual to whom Part 3, subpart 3B applies, andA qualifying individual who is required by subsection (2) to retain records of their assessable income, must retain those records for a period of 12 months after the end of the income year in which the individual derived the income.

(3)

Subsection (2) applies for the 201819 and later income years.

21 New subpart inserted (Subpart 3B—Reporting of income information by individuals)

(1)

After section 22B, insert—

Subpart 3B—Reporting of income information by individuals

22C Outline of subpart
What this subpart does

(1)

This subpart provides the administrative settings that underpin an individual’s obligations under sections BB 2, BC 1 to BC 6, and BC 8 of the Income Tax Act 2007 to calculate and satisfy their income tax liability for a tax year. It sets out the requirements for the provision of information about an individual’s income, including—

(a)

the obligations of individuals to provide certain income information to the Commissioner:

(b)

what is meant by certain key terms such as reportable income, other income, pre-populated account, adjusted account, and final account:

(c)

when and how information must be provided to the Commissioner:

(d)

the treatment of an individual’s final account at the end of a tax year:

(e)

when and how an individual’s assessment point arisesis made:

(eb)

when certain amounts of tax payable may be written off:

(f)

how reporting errors in accounts may be corrected:

(g)

the permitted de minimis amounts:

(h)

the information particulars.

Income types

(2)

For the purposes of this Act and the Income Tax Act 2007, income that an individual derives for a tax year is categorised as either—

(a)

their reportable income; or

(b)

their other income.

Relationship with other provisions

(3)

For the provisions related to—

(a)

returns of income, see sections 33 and 37:

(b)

returns related to family assistance credits, see section 41:

(c)

donations tax credits, see section 41A:

(d)

disputes, see sections 89C(l) and 89D:

(e)

assessments, see sections 92, 106, and 113:

(f)

late filing penalties, see section 139A:.

(g)

amounts of tax to pay and refunds, see section 174AA.

Flowchart 1: Scheme of subpart 3B

Flowchart 1: Scheme of subpart 3B
22D Key terms
Meaning of individual

(1)

For the purposes of this subpart and sections 4A, 22, 33, 37, 38, 42C, 89D, 92, 106, 110, 143, 143A, and 174AA,and 227G, and schedule 8, individual

(a)

means a natural person; and

(b)

includes a natural person who is non-resident, other than a person whose only income for the corresponding income year is non-residents’ foreign-sourced income; and

(c)

excludes, from the date of their death, a deceased natural person.

Meaning of qualifying individual

(1B)

For the purposes of this subpart and sections 4A, 22, and 120C, definition of date interest starts, paragraph (a), and schedule 8, qualifying individual means

(a)

an individual who derives only reportable income for an income year; and

(b)

has no other income information that must be provided to the Commissioner under this subpart for the income year.

Meaning of reportable income

(2)

For the purposes of this subpart and section 33Act and the Income Tax Act 2007, reportable income, for an individual and a tax year, means an amount of income paid or payable to the individual for the corresponding income year—

(a)

that is—

(i)

a PAYE income payment:

(ii)

a payment of resident passive income:

(iii)

a payment of non-resident passive income:

(iv)

a benefit under an employee share scheme described in schedule 4, table 1, rows 4 and 7; and

(b)

for which the person paying the amount has been provided the individual’s tax file number, however this requirement does not apply if the amount is income derived jointly with another person and the Commissioner is able to allocate an amount to the individual for the income year; and

(c)

in relation to which information must be provided under this Act to the Commissioner by 31 May in the next tax year.

Meaning of other income

(3)

For the purposes of this subpart and section 33141JA and schedule 8, other income or income other than reportable income, for an individual and a tax year, means an amount of income paid or payable to, or treated as income of, the individual for the corresponding income year other than that is not their reportable income.

Meaning of pre-populated account

(4)

For the purposes of this subpart, and sections 4A, 80KM, 143A, 106, and CX 27 of the Income Tax Act 2007, a pre-populated account, for an individual and a tax year, means the account—

(a)

provided by the Commissioner for the tax year; and

(b)

containing the information held by the Commissioner on the reportable income derived for the corresponding income year and any other amount that the Commissioner considers the individual has derived for the income year.

(b)

containing the income information held by the Commissioner, including any income information provided by the individual, quantifying

(i)

the amount of reportable income derived for the corresponding income year; and

(ii)

any other amount that the Commissioner considers the individual has derived for the income year.

Meaning of adjusted account

(5)

For the purposes of this subpart, section 106, and schedule 8, an adjusted account, for an individual and a tax year, means the pre-populated account for the tax year in relation to which the individual has provided information on

(a)

the other income that they derive for the corresponding income year:

(b)

a deduction, credit of tax, or other amount set out in schedule 8, table 2.

Meaning of final account

(6)

For the purposes of this subpart, and sections 4A, 33, 37, 38, 42C, 89D, 106, 110, and 143, a final account, for an individual and a tax year, means a pre-populated account finalised under section 22HB.

(a)

a pre-populated account for the tax year if

(i)

the individual has confirmed the account under section 22G(1) as correct and complete:

(ii)

the Commissioner has notified the individual as described in section 22I(2)(b) that the Commissioner is satisfied that their pre-populated account correctly and completely records their income for the corresponding income year:

(b)

a zero pre-populated account referred to in section 22E(3) if, through the passage of time, the account is treated as an assessment under section 22I(2)(c):

(c)

an adjusted account for the tax year if

(i)

the individual has confirmed the account under section 22G(2) as correct and complete:

(ii)

the Commissioner has notified the individual under section 22I(2)(b) that the Commissioner is satisfied that their adjusted account correctly and completely records their income for the corresponding income year:

(iii)

through the passage of time, the account is treated as an assessment under section 22I(2)(c).

22E Information included in pre-populated accounts
Pre-populated accounts

(1)

The Commissioner must include in an individual’s pre-populated account for a tax year all the information held by the Commissioner for the tax year relating to an amount of reportable income derived for the corresponding income year and any other amount that the Commissioner considers the individual has derived for the income year.

(1)

The Commissioner must include in an individual’s pre-populated account for a tax year

(a)

all the income information held by the Commissioner for the tax year relating to an amount of reportable income derived for the corresponding income year; and

(b)

all the income information on other amounts that the Commissioner considers the individual has derived for the income year, including any income information provided by the individual.

Limits

(2)

Subsection (1) applies only to the extent to which the information—

(a)

is available; and

(b)

is relevant for the individual in making an assessment for the tax year.

Zero pre-populated accounts

(3)

If the Commissioner has no information for a tax year on an individual’s reportable or other income, the individual is treated as having a zero pre-populated account.

Accounts with zero balance

(3)

An individual who has no reportable income for a tax year may ask the Commissioner to make available a pre-populated account with a zero balance in order that they may provide their income information for the tax year.

22F Information requirements
Obligations for information on other income

(1)

Subject to section 22J(1), an individual must provide information to the Commissioner for a tax year on the total amount of assessable income that they derive for the corresponding income year to the extent to which the amount is not reportable income, see schedule 8, part A, table 1.

Obligations for reportable income information

(2)

No obligation to provide information for a tax year arises in relation to an amount of reportable income that is not included in an individual’s pre-populated account for the tax year unless the individual knows, or might reasonably be expected to have known, that the amount should properly be included in their final account for the tax year.

Additional amounts

(3)

An individual may provide information for a tax year on an amount set out in schedule 8, part A, table 2.

Changes to information

(4)

An individual may change the information contained in their pre-populated account or their adjusted account at any time before

(a)

the account is confirmedfinalised under section 22G22HB; or

(b)

the assessment is made under section 22I(2).

Benefits under employee share schemes

(5)

Subsection (1) does not apply to an amount of income that is a benefit that a person receives under an employee share scheme to the extent to which their employer has included information relating to the benefit in their employment income information under section 23K and schedule 4, table 1, rows 4 and 7.

Information provided on behalf of deceased individuals

(6)

In order to finalise the account of a deceased individual under section 22HB, the Commissioner may allow a person appearing on the list described in subsection (7) to provide, to the best of their knowledge, income information on behalf of the deceased individual.

List of classes of persons

(7)

The Commissioner must publish a list of the classes of persons who are considered likely to have a relationship with a deceased individual and that the Commissioner considers may be the sort of person who is best placed to provide income information on behalf of a deceased individual.

22G Confirming accounts
Pre-populated accounts

(1)

An individual who derives only reportable income for a tax year may, at any time in the assessment period, confirm their pre-populated account for the tax year once they are satisfied that the account is correct and complete.

Adjusted accounts

(2)

An individual who derives income other than reportable income for a tax year may confirm their adjusted account for the tax year at any time in the assessment period once

(a)

they have provided the information required in relation to their other income; and

(b)

they are satisfied that the account is correct and complete.

22H Amending accounts for incorrect or missing information
When this section applies

(1)

This section applies for an individual and a tax year when incorrect information relating to the individual has been provided to the Commissioner, or information relating to the individual is missing.

Correction of pre-assessment errors by individuals

(1B)

An individual may amend income information in their pre-populated account at any time before the account is finalised under section 22HB.

Correction of post-assessment errors by qualifying individuals

(1C)

Despite subsection (1B), a qualifying individual, or an individual who is treated as a qualifying individual, may amend the income information in their final account at any time before their terminal tax date for the tax year. Any earlier assessment for the tax year is regarded as not having been made.

When amended information incorrect

(1D)

Subsection (1C) does not apply if the Commissioner has reason to believe that the amended information is incorrect. The Commissioner may decide not to accept all the information as correct and provide an assessment for the individual under section 106.

Correction of pre-assessment errors by Commissioner

(2)

The Commissioner may amend information contained in the individual’s pre-populated account or adjusted account for the tax year to correct errors in the information. The Commissioner must immediately notify the individual of the amendment.

Correction of post-assessment errors by Commissioner: qualifying individuals

(3)

The Commissioner may amend information contained in thein a qualifying individual’s final account for the tax year to correct errors in the information at any time before the end of the period referred to in section 108(1), notifying the individual of the amendment.

Correction of post-assessment errors by Commissioner: other individuals

(3B)

If the Commissioner wishes to make an adjustment in relation to the information of an individual other than a qualifying individual, the Commissioner must issue a notice of proposed adjustment under section 89B subject to the exceptions set out in section 89C.

RequestsLater requests for changes by individuals

(4)

After their terminal tax date, anAn individual may ask the Commissioner to amend information contained in their final account for the tax year under section 113.

22HB Finalising accounts
Pre-populated accounts: qualifying individuals

(1)

If the Commissioner is satisfied that the income information of a qualifying individual for a tax year as set out in their pre-populated account correctly and completely records their income for the corresponding income year, the Commissioner may finalise the individual’s account for the tax year.

Pre-populated accounts: other individuals

(2)

An individual other than a qualifying individual may, at any time before the date set out in subsection (3),

(a)

adjust their pre-populated account for the tax year by providing the income information required under section 22F(1) in relation to their other income; and

(b)

correct any errors in their reportable income information; and

(c)

finalise the account by confirming that the income information in the account as adjusted correctly and completely records their income for the corresponding income year.

Requests for information from qualifying individuals

(2B)

If the Commissioner requests income information from a qualifying individual in relation to their pre-populated account, the individual may

(a)

correct any errors in their reportable income information; and

(b)

finalise the account by confirming that the income information in the account as adjusted correctly and completely records their income for the corresponding income year.

Due dates

(3)

The date referred to in subsection (2) is

(a)

7 July in the following tax year, as set out in section 37(1):

(b)

for an individual who has, under section 37(3) to (5), an extension of time to file a return of income, by the later date in the next tax year.

22I Returns and assessments
Final account treated as return of income and assessment

(1)

In relation to their final account for a tax year, an individual is treated as having made—

(a)

a return of income for the tax year under section 33; and

(b)

an assessment under section 92 in relation to the return referred to in paragraph (a); and

(c)

a statement of a taxpayer’s tax position for the tax year, unless the individual asks the Commissioner under section 22H(3)(4) for an amendment to be made to the information contained in their final account.

Assessment points

(2)

For the purposes of subsection (1)(b), the date on which an assessment arises is the earliest date in the assessment period on which

(a)

the individual confirms that the information contained in their pre-populated account or their adjusted account for the tax year is correct and complete:

(b)

the Commissioner notifies the individual that the Commissioner is satisfied that the information contained in their pre-populated account or their adjusted account for the tax year is correct and complete:

(c)

the Commissioner

(i)

notifies the individual that the Commissioner is not satisfied that the information contained in their pre-populated account or their adjusted account for the tax year is correct or complete, or both; and

(ii)

issues a default assessment under section 106.

Date of assessment

(2)

For the purposes of subsection (1)(b), the date on which an assessment is treated as being made is the date on which an individual’s pre-populated account for the tax year is finalised under section 22HB.

Date of default assessment

(2B)

If an individual does not satisfy the Commissioner that the income information in their pre-populated account for the tax year correctly and completely records their income for the corresponding income year, the date on which the assessment is treated as being made is the date on which the Commissioner provides a default assessment under section 106.

Assessment period

(3)

For the purposes of this section, and section 22G, an individual’s assessment period is the period of 3 or more months that

(a)

starts on 1 April in the tax year that follows the tax year (the next tax year) for which the income was derived; and

(b)

ends,

(i)

on 7 July in the next tax year; or

(ii)

for an individual who has, under section 37, an extension of time to file a return of income, by the later date in the next tax year.

Notification requirements

(4)

The Commissioner must notify an individual affected when an assessment is treated as having been made under subsection (2) or (2B).

Flowchart 2: Process for writing off amounts of tax to pay

Flowchart 2: Process for writing off amounts of tax to pay
22IB Commissioner’s power in relation to certain amounts of tax payable
When amounts written off

(1)

For the purposes of this subpart, the Commissioner may write off an amount of tax payable by a qualifying individual for a tax year if the requirements of schedule 8, part B are met.

Reversing write offs

(2)

The Commissioner may reverse a write off made under this section if, for the tax year and the individual,

(a)

it is established through a reassessment that the requirements of schedule 8, part B are not met:

(b)

during the tax year, the individual ceases to be a qualifying individual.

Order in Council amending schedule 8

(3)

The Governor-General may, by Order in Council made on the recommendation of the Minister, amend schedule 8 by

(a)

adding an item of information to, or omitting an item of information from, part A, table 1 or table 2:

(b)

adding an amount of tax to, or omitting an amount of tax from, part B, clause 1:

(c)

adding a type of income to, or omitting a type of income from, part B, clause 2.

Consultation

(4)

Before the Minister makes a recommendation under subsection (3), a consultative process must be undertaken that includes the distribution of the proposed amendments to schedule 8 to persons or representatives of persons that it is considered reasonable to consult for the purposes of this section.

22J No obligation to provide information: de minimis and certain other amounts
Small amounts of income

(1)

No obligation to provide information for a tax year arises if an individual derives income other than reportable income for the corresponding income year of $200 or less.

Information about certain amounts

(2)

No obligation to provide information for a tax year arises if the only income derived by an individual for the corresponding income year is

(a)

income derived by an individual as a non-resident seasonal worker:

(b)

income derived by an individual as a provider of standard-cost household services who derives exempt income under section CW 61(1) of the Income Tax Act 2007:

(c)

income derived by an individual from providing personal services for which personal service rehabilitation payments are made when the taxable income of the individual is not more than $14,000 for the income year and tax is withheld at the rate of 10.5% from the personal services rehabilitation payment:

(d)

non-resident passive income described in section RF 2(3) derived by a non-resident individual.

Other specific provisions may override this section

(3)

A specific provision in an Inland Revenue Act requiring an individual to provide information in a particular circumstance overrides this section.

22K Information particulars
Items of other income

(1)

Without limiting the list, theThe items of information related to amounts of an individual’s income other than reportable income are set out in the table in schedule 8, part A, table 1.

What may be included in information

(2)

The information may include information on the items set out in schedule 8, part A, table 2.

22L Setting electronic and non-electronic requirements
Prescribing forms for, and means and modes of, delivery

(1)

For the delivery of information on an individual’s income other than reportable income, the Commissioner must prescribe—

(a)

an electronic form and means of electronic communication:

(b)

a form or mode of delivery other than by electronic means.

Particular requirements and conditions

(2)

The requirements relating to a form, means, or mode of communication may relate to an individual, a class of individuals, or all individuals, and may be subject to the conditions specified by the Commissioner, whether generally or in a specific case.

(2)

Subsection (1) applies for the 2018–19 and later income years.

22 Section 23 amended (Keeping of returns where information transmitted electronically)

Renumber section 23 as section 22AAC.

23 Subparts 3C and 3D amended

Subparts 3C and 3D are amended as described in schedule 5, tables 1 and 2, for the sections listed in column 1, by inserting the subsection headings in column 4 before the subsections listed in column 3.

24 Section 23C amended (Meaning of employment income information)

In section 23C(1)(a), replace “sections 23E to 23H and 23K to 23M” with “sections 23E to 23M”.

25 Section 23D amended (Employers’ groups for delivery of information)

In section 23D(4), replace “sections 23E to 23H” with “sections 23E to 23H, 23J, and 23K”.

26 Section 24B amended (PAYE tax codes)

In section 24B(3)(bb), (c), (d), and (e), replace “annual income is” with “total PAYE income payments are” in each place where it appears.

27 Section 24D amended (Tax codes provided by the Commissioner)

(1)

In section 24D, replace the section heading with Tax codes provided by Commissioner.

(2)

In section 24D, in the words before paragraph (a), replace “for” with “for, or the Commissioner may recommend for the employee,”.

(3)

In section 24D(1)(a), replace “special tax code” with “tailored tax code”.

28 New section 24DB inserted (Use of unsuitable tax codes)

After section 24D, insert:

24DB Use of unsuitable tax codes

For the purposes of section 24D and schedule 5, if the Commissioner considers that a more suitable or more accurate tax code could be, or could have been used, in relation to a PAYE income payment to an employee, the Commissioner—

(a)

may recommend a prospective change of tax code to the employee; and

(b)

with the consent of the employee, notify the employer of the change.

29 Section 24Q amended (Transfer of payroll donations by employers)

(1)

Repeal the cross-heading before section 24Q.

(2)

Renumber section 24Q as section 169B, and insert the cross-heading Payroll donations before it.

30 Section 25A replaced (Use of inconsistent RWT rates)

Replace section 25A with:

25A Use of unsuitable RWT rates

(1)

If the Commissioner considers that a more suitable or more accurate RWT rate could have been used in relation to a payment of resident passive income consisting of interest, the Commissioner—

(a)

may recommend a prospective change of RWT rate to the payee; and

(b)

with the consent of the payee, notify the payer of the change.

(i)

if the payee consents; or

(ii)

if no objection is raised by the payee, on the expiry of 20 working days after the date of making the recommendation.

(2)

The payer must use the RWT rate provided by the Commissioner in relation to the payee as soon as reasonably practicable after the date of notification. However, if the payee subsequently notifies the payer of a different RWT rate, the payer must apply the rate notified by the payee.

31 Subpart 3E amended (Subpart 3E—Investment income information)

Subpart 3E is amended as described in schedule 5, table 3, for the sections listed in column 1, by inserting the subsection headings in column 4 before the subsections listed in column 3.

31B Section 25D amended (Investment income information)

In section 25D(4)(c), replace unless the partners are not required with unless the partnership is not required.

31C Section 28B amended (Notification of investors’ tax file numbers)

Replace section 28B(2) with:

(2)

Subsection (1) does not apply to

(a)

an investor who

(i)

is non-resident; and

(ii)

does not have a tax file number; and

(iii)

provides the equivalent of their tax file number for the country or territory where they reside for tax purposes, or a declaration if they are unable to provide this number:

(b)

an investor in a multi-rate PIE that is listed on a recognised exchange in New Zealand.

32 Section 31C amended (Notification requirements for multi-rate PIEs)

In section 31C(5), replace “sections HM 56 to HM 59” with “sections HM 56 to HM 58”.

33 Section 32E amended (Applications for RWT exemption certificates)

In section 32E(2)(k), replace “CW 38(2),” with “CW 38(2), CW 38B(2),”.

34 Section 33 amended (Returns of income)

(1)

Replace section 33(1) with:

(1)

In each tax year, a person must file a return of income for a tax year in the form and with the particulars prescribed by the Commissioner.

(2)

After section 33(1C), insert:

(1D)

An individual must provide information to the Commissioner on their assessable income for a tax year under Part 3, subpart 3B. The individual is treated as having made a return of income in their final account for the tax year under section 22I(1).

(3)

Subsections (1) and (2) apply for the 2018–19 and later income years.

35 Sections 33AA, 33C, and 33D repealed

(1)

Repeal sections 33AA, 33C, and 33D.

(2)

Subsection (1) applies for the 2018–19 and later income years.

36 Section 34B repealed (Commissioner to list tax agents)

Repeal section 34B.

37 Section 36BB amended (Electronic format for details required for tax pooling intermediaries)

In section 36BB, replace “sections 15N to 15S” with sections 124O to 124S and 124ZB.

38 Section 36BD amended (Electronic filing requirements for registered persons)

In section 36BD(5), replace “employer” with “registered person”.

39 Section 37 amended (Dates by which annual returns to be furnished)

(1)

After section 37(1), insert:

(1B)

For the purposes of this section, an annual return of income for an individual to whom Part 3, subpart 3B applies, means a final account described in section 22D(6) containing the full income information of the individual for the tax year.

(2)

After section 37(3), insert:

(3B)

Subject to subsection (5), an extension of time to a date advised by the Commissioner is available to a person or a class of persons if

(a)

a systems issue arises for an Inland Revenue digital platform resulting in a person or class of persons being prevented from, or being otherwise hindered or disadvantaged in, providing the required return or income information; and

(b)

a proportionate extension of time is considered proper in the circumstances.

(3)

Subsections (1) and (2) apply for the 201819 and later income years.

40 Section 38 amended (Returns to annual balance date)

(1)

In section 38(1), replace “(other than a person who meets the requirements of section 33AA(1), or is issued an income statement or required to request or be issued an income statement,)” with “(other than an individual referred to in subsection (1C))”.

(2)

After section 38(1B), insert:

(1C)

The person is an individual whose final account for the tax year is treated under section 22I(1)(b) as an assessment under section 92.

(3)

Subsection (1) applies for the 2018–19 and later income years.

41 Section 41 amended (Annual returns by persons who receive family assistance credit)

(1)

After section 41(3), insert:

(3B)

For the purposes of subsections (3) and (4), a person who is not required to furnish a return of income for a tax year includes a person to whom Part 3, subpart 3B applies whose only income for the tax year is

(a)

reportable income; or

(b)

an amount that consists of

(i)

reportable income; and

(ii)

other income that is less than the de minimis amount under section 22J(1); or

(c)

other income that is less than the de minimis amount under section 22J(1).

(1)

In section 41(4), replace the person derived income in the tax year with the person derived income in the tax year and despite the application of Part 3, subpart 3A,.

(2)

Subsection (1) applies for the 2018–19 and later income years.

42 Section 41A amended (Returns by persons with tax credits for charitable or other public benefit gifts)

(1)

In the heading to section 41A replace by persons with tax credits with in relation to.

(2)

Replace section 41A(1) with:

(1)

A person who has a tax credit under sections LD 1 to LD 3 of the Income Tax Act 2007 may apply for a refund by—

(a)

providing the information on the total amount of the charitable or other public benefit gifts they have made for a tax year with the information provided under Part 3, subpart 3B:

(b)

notifying the Commissioner by electronic means in relation to an amount of charitable or other public benefit gift that they have made during the tax year to which the application relates:

(c)

completing the form prescribed by the Commissioner.

(3)

In section 41A(5), delete “be signed by the person,”.

(4)

After section 41A(6), insert:

(6B)

For the purposes of section 108(1),—

(a)

the payment of a refund under this section is treated as an assessment; and

(b)

the 4-year period starts at the end of the tax year in which the person applies for the refund.

(5)

After section 41A(15), insert:

(16)

The Commissioner must publish, from time to time, in a publication chosen by the Commissioner a list of the names of entities that

(a)

have provided the information required under subsection (18):

(b)

the Commissioner considers appropriate to include on the list (for example: an entity registered under the Charities Act 2005).

(17)

Despite subsection (16), the name of an entity must not be published on the list if the Commissioner determines that the entity is not described in section LD 3(2)(a), (ab), (b), (c), or (d) of the Income Tax Act 2007.

(18)

An entity may request that their name is included on the list by providing information to the Commissioner in the form prescribed by the Commissioner.

(6)

Subsections (2) to (5) apply for the 201819 and later income years.

(5)

Repeal section 41A(14) and (15).

(6)

After section 41A(13), insert:

(14)

The Commissioner must publish, from time to time, in a publication chosen by the Commissioner a list of the names of entities that

(a)

have provided the information required under subsection (16):

(b)

the Commissioner considers appropriate to include on the list (for example: an entity registered under the Charities Act 2005).

(15)

Despite subsection (14), the name of an entity must not be published on the list if the Commissioner determines that the entity is not described in section LD 3(2)(a), (ab), (b), (c), or (d) of the Income Tax Act 2007.

(16)

An entity may request that their name is included on the list by providing information to the Commissioner in the form prescribed by the Commissioner.

(7)

Subsection (2) applies for the 201819 and later income years.

43 Section 42C amended (Income tax returns by undischarged bankrupt)

(1)

In section 42C, replace “if not relieved of the requirement by section 33AA” with “unless the person is an individual whose final account for the tax year is treated under section 22I(1)(b) as an assessment under section 92.

(2)

Subsection (1) applies for the 2018–19 and later income years.

44 Section 43 amended (Income tax returns and assessments by executors or administrators)

(1)

Repeal section 43(4) and (5).

(2)

Subsection (1) applies for the 2018–19 and later income years.

44B Section 46 amended (Employers to make returns as to employees)

In section 46(8), replace section 200 with section 275.

45 Section 47 amended (ESCT statements provided by employers and others)

In section 47(2), replace “sections 23E to 23H” with “sections 23E to 23H, 23J, and 23K”.

46 Section 55B amended (Information relating to offshore persons and tax file numbers)

(1)

Replace section 55B(1) with:

(1)

The Commissioner must not allocate a tax file number requested by an offshore person until the Commissioner—

(a)

receives a current bank account number for the offshore person:

(b)

is satisfied that the information available to the Commissioner relating to the offshore person provides the Commissioner with an assurance of the identity and background of the offshore person.

(2)

Subsection (1) applies for applications for tax file numbers made on or after 1 October 2015 to which former section 24BA(1) applied or section 55B applies.

47 Part 3A repealed (Part 3A—Income statements)

(1)

Repeal Part 3A.

(2)

Subsection (1) applies for the 2018–19 and later income years.

47B Section 80KA amended (Applications for payment of tax credit by instalment)

Replace section 80KA(2) with:

(2)

An application by a person who wants to be paid their tax credit, other than a parental tax credit, by instalment must not be made after the selected period starts, unless the first day of the selected period is on or after the first day of the tax year in which the application is made.

48 Section 80KM amended (Summary of instalments paid)

In section 80KM(3)(b), replace “on the same date that the Commissioner issues the person with an income statement” with “on the date that the Commissioner provides a pre-populated account for the person under section 22E.

48B Section 80KN amended (Payment of tax credit by chief executive)

(1)

In section 80KN(2), replace payment with payment, unless the chief executive and the Commissioner agree that the Commissioner will, and the chief executive will not, pay to the person, or each person in a class of persons to which the person belongs, the WFF tax credit that they are entitled to receive.

(2)

After section 80KN(2), insert:

(3)

An agreement between the chief executive and the Commissioner referred to in subsection (2) may be terminated by agreement between the chief executive and the Commissioner.

49 Heading and sections 81 to 88 repealed

Repeal the Part heading before section 81 and sections 81 to 88.

50 Section 89 amended (Commissioner to notify Minister where funds of gift-exempt body applied for non-charitable purpose, etc)

Renumber section 89 as section 18K.

51 Section 89C amended (Notices of proposed adjustment required to be issued by Commissioner)

Replace section 89C(l) with:

(l)

the assessment results from an amendment made under section 22H(3); or

52 Section 89D amended (Taxpayers and others with standing may issue notices of proposed adjustment)

Replace section 89D(2B) with:

(2B)

For a taxpayer who is an individual, when an assessment for a tax year is made as described in section 22I(2)(c)22(2B), the taxpayer may dispute the assessment only by making an adjustment to their final account for the tax year.

52B Section 89N amended (Completing the disputes process)

Replace section 89N(1)(c)(ix) with:

(ix)

the disputant and the Commissioner agree, recording their agreement in a document, to suspend the disputes process pending a decision in a test case referred to in section 89O.

53 New heading and new section 91AAZB inserted

After section 91AAZ, insert:

Determinations relating to legislative anomalies

91AAZB Determination on Commissioner’s approach to interpretation of certain provisions or application of administrative practices

(1)

The Commissioner may determine that a legislative anomaly in 1 or more provisions of an Inland Revenue Acts, or in relation to an administrative practice for a provision, has arisen and specify the modification to remedy the anomaly.

(2)

In making the determination, the Commissioner must have regard to the principles relating to the duty of care and management of the tax system set out in Part 2, subpart 2B.

(3)

The determination may set out the income year or income years for which it is to apply, but may not apply for income years before the 201819 income year.

(4)

The determination may provide for the change, extension, limitation, variation, suspension, or cancellation of an earlier determination.

(5)

Within 30 days of issuing, changing, extending, limiting, varying, suspending, or cancelling a determination under this section, the Commissioner must publish in a publication chosen by the Commissioner

(a)

the determination:

(b)

details of a changed, extended, limited, varied, suspended, or cancelled determination.

(6)

For the purposes of this section, a person may rely on, and the Commissioner is bound by, a modification made under section 6C(1)(b).

54 Section 91C amended (Taxation laws in respect of which binding rulings may be made)

(1)

In section 91C(1)(ec)(i), replace “arrangement; or” with “arrangement, other than as permitted by section 91CC; or”.

(2)

After section 91C(1A), insert:

(1B)

The Commissioner may make a binding ruling on how the record-keeping requirements of this Act apply. The provisions are—

(a)

section 15M:

(b)

section 21BA:

(c)

section 22:

(d)

section 22AA:

(e)

section 22AAB:

(f)

section 22A:

(g)

section 22B:

(h)

section 24:

(i)

section 26:

(j)

section 32:

(k)

section 87:

(l)

section 152.

(3)

In section 91C(1B), replace paragraph (b) with:

(b)

section 17G:

(4)

Replace section 91C(1B) with:

(1B)

The Commissioner may make a binding ruling on how the record-keeping requirements of this Act apply. The provisions are—

(a)

section 15M:

(b)

section 17G:

(c)

section 22:

(d)

section 22AA:

(e)

section 22AAB:

(f)

section 22A:

(g)

section 22B:

(h)

section 26:

(i)

section 32:

(j)

section 87:

(k)

section 152.

(5)

Repeal section 91C(1B)(a) and (h).

55 New sections 91CB and 91CC inserted

After section 91C, insert:

91CB Binding rulings on certain matters

(1)

The Commissioner may make a private ruling or a short-process ruling on whether a person meets the requirements of the Income Tax Act 2007 to be

(a)

a petroleum miner under section CT 6:

(b)

a Maori authority under section CV 11:

(c)

a local or regional promotional body under section CW 40:

(d)

a person who derives income as a trustee in trust for charitable purposes under section CW 41(1)(a) or CW 42(1):

(e)

a society or institution established and maintained exclusively for charitable purposes and not carried on for the private pecuniary profit of any individual under section CW 41(1)(b) or CW 42(1):

(f)

a community housing trust or company under section CW 42B:

(g)

a promoter under section CW 46:

(h)

a scientific research body under section CW 49:

(i)

a controlled foreign company under section EX 1:

(j)

a foreign investment fund under section EX 28:

(k)

a mutual association under subpart HE:

(l)

a person who carries on business through a fixed establishment as defined in section YA 1:

(m)

a life insurer as defined in section YA 1:

(n)

a look-through company as defined in section YA 1:

(o)

a New Zealand resident or a non-resident as defined in section YA 1:

(p)

a non-resident contractor as defined in section YA 1:

(q)

a portfolio investment entity as defined in section YA 1:

(r)

a public authority as defined in section YA 1:

(s)

a unit trust as defined in section YA 1:

(t)

an associated person under subpart YB:

(u)

for the purposes of a double tax treaty,

(i)

a resident or a non-resident:

(ii)

a person who has a permanent establishment in New Zealand.

(1)

The Commissioner may make a private ruling on whether a person meets the requirements of the Income Tax Act 2007 or the Goods and Services Tax Act 1985 that affect or define the status of a person for the purposes of either or both those Acts. Examples include

(a)

whether a person carries on business through a permanent establishment or a fixed establishment:

(b)

whether a person is resident or non-resident:

(c)

whether 2 persons are associated:

(d)

whether a person is a non-profit body for the purposes of the Goods and Services Tax Act 1985:

(e)

whether a person is a unit trust:

(f)

whether a person is a portfolio investment entity.

(2)

The Commissioner may make a binding ruling on whether an item of property is—

(a)

trading stock as that term is defined in section YA 1 of that Act:

(b)

revenue account property as that term is defined in section YA 1 of that Act.

(3)

The Commissioner may make a binding ruling as to whether—

(a)

an amount that a person derives from disposing of personal property is income of the person under section CB 4 of that Act:

(b)

an amount that a person derives from disposing of land is income of the person under section CB 6 or CB 7 of that Act:

(c)

despite paragraph (b) of the definition of proscribed question, the test of principal purpose of making taxable supplies in sections 5(13A), 10(3A), 20A(4), and 21HB(1) of the Goods and Services Tax Act 1985 is met.

(4)

Despite sections 91E to 91EJ, and 91F to 91FK, a binding ruling made under this section does not require a reference to an arrangement in order for the application of the ruling to be effective.

91CC Binding rulings on certain determination matters

(1)

For the purposes of the financial arrangements rules in subpart EW of the Income Tax Act 2007, the Commissioner may make a binding ruling on how a taxation law applies, or would apply, to a person and an arrangement in relation to the following matters:

(a)

whether an amount is solely attributable to an excepted financial arrangement under section EW 6:

(b)

the use of a spreading method described in section EW 14(2)(aa) to (e) for the purposes of sections EW 15E and EW 15I:

(c)

the value of property or services referred to in section EW 32(6).

(2)

For the purposes of subsection (1), it does not matter whether the arrangement is a single or recurring arrangement.

55B Section 91CB amended (Binding rulings on certain matters)

In section 91CB(1), replace a private ruling with a private ruling or a short-process ruling.

56 Section 91E amended (Commissioner to make private rulings on application)

(1)

After section 91E(1), insert:

(1B)

The Commissioner may make a private ruling on the status of a person, item, or matter under section 91CB otherwise than in relation to an arrangement.

(2)

In section 91E(3)(a), replace “assumptions were made” with “conditions were stipulated”.

(3)

In section 91E(4)(a), replace “a proscribed question; or” with “a proscribed question, other than a matter referred to in section 91CB(3); or”.

(3B)

In section 91E(4A), replace sections GC 6 to GC 14 with sections GC 6 to GC 19.

(4)

After section 91E(4A), insert:

(4B)

In this section and sections 91EA to 91ED, 91EH, and 91EI, a reference to an arrangement is ignored for the purposes of a ruling by the Commissioner under section 91CB on the status of a person, item, or matter.

57 Section 91EA amended (Effect of a private ruling)

()

In section 91EA(1), replace in accordance with the ruling with in accordance with the ruling or, for a ruling under section 91CB, in relation to the status of the person.

(2)

After section 91EA(1A), insert:

(1B)

For the purposes of a ruling under section 91CB, the Commissioner must apply the taxation law in relation to the status of a person, item, or matter in accordance with the ruling.

58 Section 91EB amended (Application of a private ruling)

After section 91EB(2), insert:

(3)

For the purposes of subsection (2), a private ruling ceases to apply to the person in relation to an arrangement and a tax type for the arrangement, from the date on which the relevant event described in subsection (2)(a), (b), and (d) occurs unless the ruling expressly provides otherwise.

58B Section 91ED amended (Disclosure requirements)

In section 91ED(1B), replace sections GC 6 to GC 14 with sections GC 6 to GC 19.

59 Section 91EF amended (Assumptions in making a private ruling)

(1)

In section 91EF, replace the section heading with Conditions on which private ruling based.

(2)

In section 91EF(1), replace “assumptions being made” with “conditions being stipulated”.

(3)

Replace section 91EF(1)(a) with:

(a)

stipulate the conditions on which the Commissioner bases the ruling; or

(4)

Repeal section 91EF(2).

(5)

In section 91EF(3),—

(a)

replace “make assumptions” with “stipulate conditions”:

(b)

replace “making those assumptions” with “stipulating the conditions”.

60 Section 91EH amended (Content and notification of a private ruling)

(1)

Repeal section 91EH(1)(e).

(2)

Repeal section 91EH(1B).

61 New heading and new sections 91EK to 91ET inserted

After section 91EJ, insert:

Short-process rulings

91EK Commissioner may make short-process rulings

(1)

The Commissioner may make a short-process ruling on how a taxation law applies, or would apply, to a person in relation to their particular circumstances.

(2)

The Commissioner may decline to make a short-process ruling if it is considered that the question asked, because of its nature or in the circumstances set out in the application, make it inappropriate for a response under a shortened process, for example, when an application—

(a)

raises an issue involving an apparent gap or deficiency in policy settings:

(b)

is directly in opposition to an existing policy of the Commissioner or technical position taken by the Commissioner:

(c)

raises an issue that has, or would have, significant implicationimplications or wide effect as a precedent:

(d)

fails to provide sufficient information:

(e)

raises a question that is better answered by the Commissioner through another process.

(3)

The Commissioner may also decline to make a short-process ruling for a reason set out in section 91E(3), (3B), (4), and (4A).

91EL Applying for short-process ruling

(1)

A person who meets the requirements of subsection (3) may apply, in their own right or on behalf of a person who is yet to come into legal existence, to the Commissioner for a short-process ruling on how a taxation law applies, or would apply, to the person in relation to a particular set of circumstances and a tax type to which the circumstances relate.

(2)

Two or more persons may apply jointly for a short-process ruling under subsection (1).

(3)

The requirements are—

(a)

the person’s annual gross income for the tax year before that in which the application is made is $5,000,000$20,000,000 or less; and

(b)

the person is seeking the ruling on a matter concerning a tax (other than provisional tax), duty, or levy that is expected to amount to less than $1,000,000.

(3B)

For the purposes of subsection (3)(a),

(a)

if the person applying is part of a group of companies, the group must meet the threshold requirement:

(b)

if persons apply jointly for a short-process ruling, each person must meet the threshold requirement:

(c)

if a person applies for a short-process ruling on behalf of another person, the other person must meet the threshold requirement:

(d)

if the person applying is not yet in legal existence, the person must have a reasonable expectation of meeting the threshold requirement for the tax year to which the ruling relates.

(4)

For the purposes of subsection (3)(b), if the expected amount is unknown, the person must state this fact in the application, and the Commissioner may then consider under section 91EK(2) whether a short-process ruling is appropriate in the circumstances.

(5)

The application must meet the requirements of section 91EO.

(6)

The person may withdraw the application at any time by notifying the Commissioner.

(7)

The amounts specified in subsection (3)(a) and (b) may be varied from time to time by the Governor-General by Order in Council.

91EM Effect of short-process ruling

(1)

This section applies, despite anything in another Act, when—

(a)

a short-process ruling on a taxation law applies to a person in relation to a particular set of circumstances and a tax type to which the circumstances relate; and

(b)

the person applies the taxation law for the tax type in the way stated in the ruling.

(2)

The Commissioner must apply the taxation law in relation to the person, the particular circumstances, and the tax type as provided in the ruling.

(3)

Subsection (2) does not apply if a person has issued the Commissioner with a notice of proposed adjustment to change the effect of a ruling that the person has previously applied.

91EN Application of short-process ruling

(1)

A short-process ruling on a taxation law applies to a person in relation to a particular set of circumstances and a tax type to which the circumstances relate only for—

(a)

the taxation law expressly referred to in the ruling; and

(b)

the period or the tax year for which the ruling applies.

(2)

A short-process ruling does not apply to a person in relation to the particular circumstances and the related tax type to the extent to which—

(a)

the circumstances are materially different to the circumstances described in the ruling; or

(b)

a material omission or misrepresentation was made in connection with the application for the ruling; or

(c)

the ruling is based on an express understanding about a future event or other matter, and the understanding subsequently proves to be materially incorrect; or

(d)

the Commissioner stipulates a condition that is not met.

91EO Disclosure requirements

An application for a short-process ruling must—

(a)

identify the person applying for the ruling; and

(b)

describe the circumstances on which the ruling is sought; and

(c)

disclose all relevant facts and documents relating to the circumstances described; and

(d)

state the general tax outcome in relation to which the ruling is sought.

91EP Commissioner may request further information

The Commissioner may at any time request further relevant information from a person applying for a short-process ruling.

91EQ Conditions on which short-process ruling based

(1)

If the Commissioner considers that the correctness of a short-process ruling would depend on conditions stipulated about a future event or other matter, the Commissioner may—

(a)

state the conditions on which the Commissioner bases the ruling; or

(b)

decline to make the ruling.

(2)

The Commissioner may stipulate conditions about the answer to a proscribed question, and stipulating those conditions is treated as not determining the proscribed question for the purposes of section 91E(4)(a).

91ER Right to consultation

Before the Commissioner makes a short-process ruling, the Commissioner must give the person applying for the ruling a reasonable opportunity to be consulted if the content of the proposed ruling differs from that for which the application is made.

91ES Content and notification of short-process ruling

(1)

A short-process ruling must state—

(a)

that it is a short-process ruling made under section 91EK; and

(b)

the identity of the person, the taxation law, and the particular set of circumstances to which the ruling applies; and

(c)

how the taxation law applies to the person, the circumstances, and the related tax type; and

(d)

the period or tax year for which the ruling applies; and

(e)

any conditions stipulated by the Commissioner.

(2)

The Commissioner must notify the person who applied for the ruling of the content of the ruling by sending a copy of the ruling to the person.

91ET Treatment of information

(1)

Information supplied to the Commissioner by the applicant for a short-process ruling is the factual basis on which the Commissioner makes the ruling.

(2)

Despite subsection (1), the Commissioner—

(a)

may, as part of the process of making the ruling, inquire into the correctness or existence of the facts contained in the information supplied before making the ruling:

(b)

is not stopped by the process of making the ruling or by the use of the information as the basis of the ruling from denying, outside the process of making the ruling or after making the ruling, the correctness or existence of the facts contained in the information supplied.

62 Section 91F amended (Commissioner may make product rulings)

(1)

After section 91F(1), insert:

(1B)

The Commissioner may make a product ruling on the status of a person, item, or matter under section 91CB(2) or (3), whether in relation to an arrangement or not.

(2)

In section 91F(3)(a), replace “assumptions were made” with “conditions were stipulated”.

(3)

In section 91F(4)(a), replace “a proscribed question; or” with “a proscribed question, other than a matter referred to in section 91CB(3); or”.

63 Section 91FB amended (Application of a product ruling)

(1)

In section 91FB(1), replace “applies to an arrangement” with “applies, whether in relation to an arrangement or otherwise,”.

(2)

In section 91FB(2), replace “tax type for an arrangement” with “tax type, whether in relation to an arrangement or otherwise”.

(3)

After section 91FB(2), insert:

(3)

For the purposes of subsection (2), a product ruling ceases to apply to the person in relation to an arrangement and a tax type for the arrangement, from the date on which the relevant event described in subsection (2)(a), (b), and (d) occurs unless the ruling expressly provides otherwise.

64 Section 91FC amended (Applying for a product ruling)

In section 91FC(1)(b), replace “and to the arrangement.” with “and to the arrangement; or”, and insert:

(c)

to the person.

65 Section 91FF amended (Assumptions in making a product ruling)

(1)

In section 91FF, replace the section heading with Conditions on which product ruling based.

(2)

In section 91FF(1), replace “assumptions being made” with “conditions being stipulated”.

(3)

Replace section 91FF(1)(a) with:

(a)

stipulate the conditions on which the Commissioner bases the ruling; or

(4)

Repeal section 91FF(2).

(5)

Replace section 91FF(3) with:

(3)

The Commissioner may stipulate conditions about the answer to a proscribed question other than a matter referred to in section 91CB(3), and stipulating those conditions is treated as not determining the proscribed question for the purposes of section 91F(4)(a).

66 Section 91FH amended (Content and notification of a product ruling)

(1)

Repeal section 91FH(1)(f).

(2)

Repeal section 91FH(1B).

67 Section 91GB amended (Commissioner to make status rulings on application)

Replace section 91GB(3)(b) with:

(b)

the Commissioner considers that the correctness of a private or product ruling would depend on an understanding about a future event or other matter; or

68 Section 92 amended (Taxpayer assessment of income tax)

(1)

After section 92(2), insert:

(2B)

For the purposes of subsections (1) and (2), an assessment of a taxpayer who is an individual to whom Part 3, subpart 3B applies is treated as made under section 22I(1)(b) on the relevant date set out in section 22I(2).

(2)

Subsection (1) applies for the 2018–19 and later income years.

69 Section 106 amended (Assessment where default made in furnishing returns)

(1)

Replace section 106(1A), (1B), and (1C) with:

(1A)

If the Commissioner considers that the information provided in an individual’s final account for a tax year is not likely to be correct, the Commissioner may make an assessment of the amount on which the Commissioner considers tax ought to be imposed and of the amount of that tax.

(1B)

Tax assessed under subsection (1A) in relation to an individual is payable by the individual unless the individual disputes the assessment and complies with the requirements of section 89D.

(1C)

Subsection (1A) applies if the individual to whom Part 3, subpart 3B applies considers an error has arisen in a pre-populated, adjusted, or final account but does not notify the Commissioner of the reasons why the individual does not consider the account correct or provide the information necessary to correct the account.

(2)

Subsection (1) applies for the 2018–19 and later income years.

70 Section 108 amended (Time bar for amendment of income tax assessment)

(1)

Repeal section 108(1A).

(2)

In section 108(1C)—

(a)

in paragraph (a), replace “a taxpayer furnishes” with “a taxpayer”:

(b)

in paragraph (a)(i), replace “a return” with “provides a return”:

(c)

in paragraph (a)(ii),—

(i)

replace “a statement” with “provides a statement”:

(ii)

replace “by the taxpayer; and” with “by the taxpayer:”:

(d)

after paragraph (a)(ii), insert:

(iii)

makes an application for a refund made under section 41A in relation to a tax credit for a charitable or other public benefit gift; and

(e)

in paragraph (b), replace “furnished the return or statement” with “provided the return or statement, or made the application”.

(3)

Subsections (1) and (2) apply for the 2018–19 and later income years.

70B Section 108B amended (Extension of time bars)

(1)

In section 108B(1)(a), replace for not more than 12 months with for 12 months.

(2)

In section 108B(3)(d), replace section 108(1), (1A), (1B) and (1C) with section 108(1), (1B), and (1C).

71 Section 110 amended (Evidence of returns and assessments)

(1)

In section 110(1), delete “, income statement,”.

(2)

After section 110(1), insert:

(1B)

For the purposes of subsection (1), a return or assessment includes the final account of an individual relating to the information that is held by the Commissioner on their assessable income.

(3)

Subsections (1) and (2) apply for the 2018–19 and later income years.

72 Section 111 amended (Commissioner to give notice of assessment to taxpayer)

(1)

Replace section 111(1)(ba) with:

(ba)

the assessment is made after a failure by the taxpayer to comply with their obligations under Part 3, subpart 3B; or

(2)

In section 111(1)(bb), replace “under Part 3A” with “under Part 3, subpart 3B.

(3)

In section 111(7), replace “who accepts under section 80F an income statement as correct” with “who confirms the amount of their income tax liability under section 22G22HB.

(4)

Subsections (1) to (3) apply for the 2018–19 and later income years.

73 Section 113A replaced (Correction of minor errors in subsequent returns)

Replace section 113A with:

113A Correction of certain errors in subsequent returns

(1)

This section applies for the purposes of this Act and the Goods and Services Tax Act 1985 when—

(a)

a person has provided a return in which the assessment of their liability for income tax, fringe benefit tax, or goods and services tax contains 1 or more minor errors; and

(b)

for a single return, the total discrepancy in the assessment that is caused by the error is $1,000 or less.

(2)

This section also applies for the purposes of this Act and the Goods and Services Tax Act 1985 when a person has provided a return in which the assessment of their liability for income tax, fringe benefit tax, or goods and services tax contains an error that, for the person, is not a material error.

(3)

The person may correct the error in the next return that is due after the discovery of the error.

(4)

For the purposes of subsection (2) and in relation to a single return of a person, an error is not material if the total discrepancy in the assessment is equal to or less than the lower of—

(a)

$10,000 of the person’s taxableannual gross income or output tax, as applicable; and

(b)

2% of the person’s taxableannual gross income or output tax, as applicable.

(5)

Subsection (3) does not apply to a person who applies the materiality threshold in subsection (4) in relation to an assessment of their liability for income tax, fringe benefit tax, or goods and services tax if their main purpose in applying the threshold is to delay the payment of tax.

74 Section 120C amended (Definitions)

(1A)

In section 120C(1), in the definition of date interest starts, paragraph (a), replace subparagraph (ii) with:

(ii)

if the Commissioner refunds or applies tax that should be kept and taken into account in satisfying a taxpayer’s tax liability at a due date, the day after the day on which the Commissioner refunds or applies the tax, unless subparagraph (iib) applies to the taxpayer; and

(iib)

for a qualifying individual, if the Commissioner refunds, amends the amount of a refund, or applies tax that should be kept and taken into account in satisfying the individual’s tax liability at a due date, the day after the due date for payment of the tax; and

(1)

In section 120C(1), in the definition of date interest starts, replace paragraph (b)(iii) with:

(iii)

for a taxpayer whose assessment for a tax year is made under Part 3, subpart 3B, the date on which their assessment arises under section 22I(2)or (2B); and

(1)

Subsections (1A) and (1) apply for the 201819 and later income years.

75 Section 120F amended (Interest priority and rights of Commissioner)

(1)

Replace section 120F(1) with:

(1)

The Commissioner must apply amounts paid on account of a taxpayer’s liability for unpaid tax and interest for a return period using the following pattern and order:

(a)

apply against interest on the amount of unpaid tax that arises first for the return period (the earliest unpaid tax) until that interest is paid; then

(b)

apply against the earliest unpaid tax, until that tax is paid; then

(c)

apply against the interest on the amount of unpaid tax that arises next for the return period (the next unpaid tax) until that interest is paid; then

(d)

apply against the next unpaid tax, until that tax is paid; then

(e)

apply to each later arising interest and unpaid tax amount, interest first, in time order that relevant unpaid tax amount arises for the return period, until they are paid.

(2)

After section 120F(5), insert:

Example for section 120F(1) (illustrative only )

On 1 September 2019, an assessment of $100 tax to pay is raised for the 2018-19 tax year. This amount incurs $5 use of money interest. On 1 September 2020 a re-assessment of $120 tax to pay is raised for the 2018-19 tax year along with an additional amount of $3 UOMI. The taxpayer pays the balance of $128. Payments are applied against the $5 use of money interest (i.e. interest on the earliest unpaid amount), then against the $100 tax. Next, payments are applied against the $3 use of money interest on $20 tax to pay, then against the $20 tax.

76 Section 120KB amended (Provisional tax instalments and due dates generally)

(1)

After section 120KB(2), insert:

(2B)

Despite subsection (2), a provisional taxpayer’s residual income tax is due and payable in 3 instalments, on the dates of instalments B, D, and F for their corresponding income year, if section RC 13(1)(b) or RC 14(1)(b) of the Income Tax Act 2007 applies to the taxpayer.

(2)

Subsection (1) applies for the 2008–09 and later income years. However it does not apply to a person to the extent to which, before the introduction of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Bill, the person takes a tax position in a return of income that is consistent with section 120KB has interest cancelled ignoring the amendment in subsection (1).

76BA Section 120KBB amended (Interest for most standard method and some estimation method provisional taxpayers)

(1)

In section 120KBB(2), in the words before the paragraphs, replace section 120KB(2) with section 120KB(2) and (2B).

(2)

In section 120KBB(3), in the words before the paragraphs, replace section 120KB(2) with section 120KB(2) and (2B).

(3)

Subsection (1) applies for the 201718 and later income years.

76B Section 120L amended (Meaning of unpaid tax and overpaid tax for provisional tax purposes)

(1)

Replace section 120L(2) and (3) with:

(2)

If the taxpayer makes a payment in relation to provisional tax before the due date for instalment F, the Commissioner must apply the payment towards the provisional tax that is due on an instalment date that

(a)

is specified by the taxpayer, if the taxpayer specifies an instalment; or

(b)

the Commissioner considers the payment relates to, if the taxpayer does not specify an instalment.

(3)

Subsection (2) does not apply for provisional tax payable for the AIM method under section RC 9(4B) of the Income Tax Act 2007.

(2)

Subsection (1) applies for provisional tax paid on or after 1 April 2019 for the 201819 and later income years.

77 New section 120VD inserted (Interest on tax credits for charitable or other public benefit gifts)

After section 120VC, insert:

120VD Interest on tax credits for charitable or other public benefit gifts

No interest shall be payable by the Commissioner under section 120D(3) on an amount of tax credit calculated under section LD 1 of the Income Tax Act 2007.

78 Section 124A renumbered (Application of Part 8)

Renumber section 124A as section 125A.

79 New Part 7B inserted (Part 7B—Third-party providers)

Before new section 125A insert:

Part 7B Third-party providers

124B What this Part does
What this subpart does

(1)

This Part sets out the classes of persons who—

(a)

may apply to the Commissioner to be listed or approved, or may notify or inform the Commissioner of their status as, a provider of services to other persons in relation to—

(i)

their tax affairs:

(ii)

their social policy entitlements and obligations:

(b)

may be nominated by a person to act on their behalf in relation to—

(i)

their tax affairs:

(ii)

their social policy entitlements and obligations:

(c)

may notify the Commissioner of their intermediary status in relation to certain tax types.

Classes

(2)

The classes are—

(a)

tax agents, see section 124C:

(b)

representatives, see section 124D:

(c)

nominated persons, see section 124F:

(d)

PAYE intermediaries, see sections 124H to 124R:

(e)

tax pooling intermediaries, see sections 124S to 124X:

(f)

approved AIM providers, see sections 124Y to 124ZE:

(g)

RWT proxies, see section 124ZF.

Tax agents, representatives, and nominated persons

124C Tax agents
Listing

(1)

The Commissioner must compile and maintain a list of persons who are tax agents.

Applying for listing as tax agent

(2)

A person may apply to the Commissioner to be listed as a tax agent if they—

(a)

meet the requirements of subsection (3); and

(b)

for a person who is not a natural person, provide the information required under section 124E.

Eligibility requirements

(3)

A person is eligible to be listed as a tax agent if they—

(a)

prepare the returns of income required to be filed for 10 or more other persons; and

(b)

are—

(i)

a person carrying on a professional public practice:

(ii)

a person carrying on a business, occupation, or employment in which returns of income are prepared and filed:

(iii)

a person employed by a company that is a member of a group of companies, and returns of income are prepared and filed by the company for the group:

(iv)

the Maori Trustee.

Requirement to list

(4)

The Commissioner must list the person as a tax agent if the Commissioner is satisfied by the available information that—

(a)

the person meets the requirements of subsection (3); and

(b)

listing the person as a tax agent would not adversely affect the integrity of the tax system.

Notification of listing

(5)

The Commissioner must notify the person when they are listed and the listing takes effect on a date set out in the notice.

Notification of refusal to list

(6)

For the notification requirements applying when a person does not meet the eligibility requirements, or does not provide the required information under subsection (2)(b) or meet the requirements of subsection (4)(b), see section 124G(1) and (5).

124D Representatives
Requirements for representatives

(1)

A person (a representative) may represent another person, acting on their behalf in relation to their tax affairs or their social policy entitlements and obligations, or both, if they—

(a)

meet the requirements of subsection (2); and

(b)

for a person who is not a natural person, provide the information required under section 124E(1) and (3); and

(c)

are approved as a representative by the Commissioner under subsection (3).

Eligibility requirements

(2)

A person is eligible to be a representative if they—

(a)

have signed authorities to act for 10 or more other persons in relation to their tax affairs or social policy entitlements and obligations, or both; and

(b)

are—

(i)

a person in a business, occupation, or employment in which they act on behalf of other persons in relation to their tax affairs or social policy entitlements and obligations, or both:

(ii)

a person carrying on a professional public practice dealing in matters relating to tax and social policy assistance:

(iii)

a person in a business, occupation, or employment in which they provide budget advisory services to other persons or claim entitlements to social policy assistance on behalf of other persons.

Requirement to approve

(3)

The Commissioner must approve the person as representing another person if the Commissioner is satisfied by the available information that—

(a)

the person meets the requirements of subsection (2); and

(b)

approving the person as a representative would not adversely affect the integrity of the tax system.

Notification of approval

(4)

The Commissioner must notify the person when they have been approved as a representative under subsection (3), and the approval takes effect on a date set out in the notice.

Notification of removal of status

(5)

For the notification requirements applying when a person does not meet the eligibility requirements, or does not provide the required information under subsection (1)(b) or meet the requirements of subsection (3)(b), see section 124G(2) and (6).

Examples

For the purposes of section 124D(2)(b), examples of the activities that might be undertaken by a representative are:

  • filing and preparing tax returns

  • setting up instalment arrangements

  • managing a person’s correspondence with Inland Revenue.

124E Information requirements for tax agents and representatives
Information requirements for certain entities

(1)

If the person applying to be a tax agent or a representative is not a natural person, they must provide the Commissioner with the names of the following:

(a)

for an entity that is a body corporate other than a closely-held company, each person who has the duties of tax manager, chief financial officer, chief executive officer, or director:

(b)

for a closely-held company, each shareholder:

(c)

for a partnership, each partner:

(d)

for an unincorporated body, each member.

No previous information or inaccurate information

(2)

Subsection (1) also applies when a tax agent or a representative is a person other than a natural person who—

(a)

has not previously provided the information referred to in subsection (1) to the Commissioner:

(b)

has previously provided the information referred to in subsection (1) but the information is no longer accurate.

Further information

(3)

In relation to both natural persons and persons other than natural persons, before deciding whether to list a person as a tax agent or to approve a person as a representative, the Commissioner may ask them for further information in relation to their application, and may obtain information relating to them from other persons. The information must be provided by the end of the 12-month period that starts on the first day on which the information most recently provided to the Commissioner under subsection (1) is no longer accurate.

Changes in information

(4)

In relation to the requirement to provide names under subsection (1), the person must notify the Commissioner of any changes in the information held by the Commissioner. The notification must be made within 12 months after the date of the change of person, shareholder, partner, or member, as applicable.

124F Nominated persons
Requirements for nominated persons

(1)

A person may nominate another person (a nominated person) to act for them in relation to their tax affairs or social policy entitlements and obligations, or both, by—

(a)

informing the Commissioner of the nomination; and

(b)

providing the following information—

(i)

their name, contact address, and tax file number; and

(ii)

the name, contact address, tax file number, and date of birth of the nominated person, and any other information that may lead the Commissioner to be satisfied about the identity of the nominated person; and

(iii)

the relevant tax types or social policy entitlements and obligations in relation to which the nominated person intends to act for them; and

(iv)

the relevant start and end dates, as applicable, applying in relation to the tax types and social policy entitlements and obligations.

When person making nomination is not natural person

(2)

For the purposes of subsection (1), if the person making the nomination is not a natural person, additional information is required on they must provide the name and position of a natural person for the person who is making the nomination.

124G Refusal, removal, or disallowance of status of tax agents, representatives, and nominated persons
Refusal to list persons as tax agents

(1)

The Commissioner must refuse to list a person on the list of tax agents if the Commissioner is satisfied that—

(a)

the person does not meet a requirement of section 124C(3):

(b)

listing the person would adversely affect the integrity of the tax system.

Discretion to remove or to disallow persons’ as tax agents or representatives

(2)

The Commissioner may remove a person from the list of tax agents, or may disallow a person’s approval as a representative, if the Commissioner considers that—

(a)

the person does not meet the relevant eligibility requirements:

(b)

continuing to allow the person to act on behalf of another person in relation to their tax affairs or their social policy entitlements and obligations, or both, would adversely affect the integrity of the tax system.

Discretion to disallow persons as nominated persons

(3)

The Commissioner may disallow a person’s status as a nominated person if the Commissioner considers that—

(a)

the person is not a person other than a person referred to inexcluded under subsection (4) but who is acting—

(i)

in a fee-earning or other professional capacity for another person:

(ii)

for multiple persons, whether in a fee-earning or other capacity; and

(b)

continuing to allow the person to act on behalf of another person in relation to their tax affairs or their social policy entitlements and obligations, or both, would adversely affect the integrity of the tax system.

Certain family members excluded

(4)

For the purposes of subsection (3)(a), the persons excluded are—

(a)

a spouse, civil union partner, or de facto partner:

(b)

a relative, that is, another person connected with the person within 2 degrees of a relationship, whether by blood relationship or by adoption.

Notification of refusal to list

(5)

For the purposes of subsection (1), the Commissioner must—

(a)

notify the person of the refusal:

(b)

consider any arguments that are provided within 30 days from the date of the notice or, if appropriate in the circumstances, a later date set by the Commissioner.

Notification of exercise of discretion to remove or disallow

(6)

For the purposes of subsection (2) or (3), the Commissioner must—

(a)

notify the person of the reasons for the exercise of the discretion:

(b)

consider any arguments against the exercise of the discretion that are provided within 30 days from the date of the notice or, if appropriate in the circumstances, a later date set by the Commissioner.

Notification exceptions

(7)

The requirement to notify a person under subsection (5)(a) or (6)(a) may be disregarded if the Commissioner considers it necessary in the circumstances to protect the integrity of the tax system.

Effective date

(8)

The Commissioner must notify a person on taking an action described in subsection (5) or (6). The removal, refusal, or disallowance, as applicable, takes effect on the date of the notice.

80 Section 124H amended (PAYE intermediaries and listed PAYE intermediaries)

(1)

In section 124H, replace the section heading with PAYE intermediaries.

(2)

In section 124H(1), replace “section 15F may apply under section 15D” with section 124K may apply under section 124I.

(3)

Repeal section 124H(2).

81 Sections 124L, 124M, and 124N repealed

Repeal sections 124L, 124M, and 124N.

82 Section 124O amended (Employers’ arrangements with PAYE intermediaries)

(1)

After section 124O(1), insert:

(1B)

The notification requirements in subsection (1) are met if the PAYE intermediary provides the information set out in paragraphs (a) to (d).

(2)

Repeal section 124O(4).

83 Section 124R repealed (Subsidy claim forms)

Repeal section 124R.

84 Section 125 amended (Certain rights of objection not conferred)

(1)

In section 125(j)(iii), replace “sections 33, 89” with “sections 18K, 33”.

(2)

In section 125(j)(iv),—

(a)

replace “21 to 23” with 17F, 17G, 18I, 21B to 23”:

(b)

delete “88,”.

85 Section 135 amended (Powers of Taxation Review Authority on determination of objection or case stated)

In section 135(2),—

(a)

replace “a determination” with “a determination or binding ruling” in each place where it appears:

(b)

replace “alter the determination” with “alter the determination or ruling” in each place where it appears:

(c)

replace “fresh determination” with “fresh determination or ruling”.

86 Section 136 amended (When objection may be referred directly to High Court)

In section 136(18),—

(a)

replace “a determination” with “a determination or binding ruling” in each place where it appears:

(b)

replace “alter the determination” with “alter the determination or ruling” in each place where it appears:

(c)

replace “fresh determination” with “fresh determination or ruling”.

87 Section 138A amended (Application of this Part)

(1)

In section 138A(1)(b), replace “section 124A(2)(a)” with “section 125A(2)(a)”.

(2)

In section 138A(2), replace “section 124A” with “section 125A”.

88 Section 138E amended (Certain rights of challenge not conferred)

(1)

In section 138E(1)(e)(iii), replace “sections 33, 89” with “sections 18K, 33”.

(2)

In section 138E(1)(e)(iv),—

(a)

replace “21 to 23, 34B with 17F, 17G, 18I, 21B to 23”:

(ab)

replace 120A to 120U, 138I(2B) with 120A to 120U, Part 7B, 138I(2B):

(b)

delete “88,”.

89 Section 139A amended (Late filing penalty for certain returns)

After section 139A(9), insert:

(10)

Despite subsection (2)(a)(i), a taxpayer is not liable to pay a late filing penalty if the Commissioner considers that, in a particular case or class of cases, a penalty should not be imposed. However the Commissioner’s discretion may be exercised only if—

(a)

it is necessary because of resource constraints imposed on the Commissioner during the period of co-existence of 2 Inland Revenue software platforms; and

(b)

the taxpayer’s non-compliance is not serious or unreasonable.

89B Section 139B amended (Late payment penalty)

After section 139B(2B)(b), insert:

(bb)

further income tax under section OB 65, OB 66, OK 21, or OK 22 of the Income Tax Act 2007 imposed for the 201819 and later income years:

(bc)

imputation additional tax under section OB 71 or OB 72 of that Act imposed for the 201819 and later income years:

90 Section 141B amended (Unacceptable tax position)

In section 141B(1F)(a), replace “section 45D” with section 15Z.

91 Section 141B amended (Unacceptable tax position)

In section 141B(1F)(a), replace section 15Z with section 124ZE.

92 Section 141JA amended (Application of Part 9 to non-filing taxpayers)

(1)

Replace section 141JA(b) with:

(b)

is required to provide information under Part 3, subpart 3B on their other income, and the Commissioner considers that the information is likely to be correct.

(2)

Subsection (1) applies for the 201819 and later income years.

93 Section 143 amended (Absolute liability offences)

(1)

In section 143(4), replace “an income statement” with “an individual’s final account under Part 3, subpart 3B.

(2)

Subsection (1) applies for the 201819 and later income years.

94 Section 143A amended (Knowledge offences)

After section 143A(1)(b), insert:

(bb)

knowingly takes no action in relation to an incorrectly pre-populated account referred to in section 22E with the result that the information about an individual’s taxable income for a tax year is incorrect or incomplete; or

95 Section 143C amended (Offence for failure of officers of department to maintain secrecy)

(1)

In section 143C, replace the section heading with Offences related to disclosure of sensitive revenue information by revenue officers.

(2)

In section 143C(1), replace “section 81” with section 18(1).

96 Sections 143D and 143E replaced

Replace sections 143D and 143E with:

143D Offences related to disclosure of certain information by persons other than revenue officers

(1)

This section applies in relation to a disclosure of information that the Commissioner has obtained under the Inland Revenue Acts or information that is obtained through a function lawfully conferred on the Commissioner to a person who is—

(a)

a person who acquires, has access to, or is given the information through—

(i)

the agency of the Commissioner under schedule 7, part A, clauses 7, 10, 11, and 12, and part C, clauses 22, 23, 35, 42, 44, and 47; or

(ii)

their access to the digital storage systems of the department; or

(iii)

their access to the information under an approved information-sharing agreement referred to in section 18E(2); or

(b)

a person, other than a revenue officer, who is employed by or provides services to a government agency and is required by the agency to perform their duties, and with facilities, shared with revenue officers who are expected by the Commissioner to perform their duties in the place and with the facilities; or

(c)

a person who, by the nature of their physical access to the premises or digital storage systems of the department, may have, or is likely to have access to the information, and has been required by the Commissioner to sign a certificate under section 18B(2); or

(d)

a person who accompanies the Commissioner as described in section 16B(6)(b) to a place where the person may or is likely to have access to the information; or

(e)

a person employed in the department responsible for the administration of the Public Records Act 2005 or a person employed by or in a repository approved under section 26 of that Act has access to public records in relation to which a confidentiality obligation exists under section 18(1).

(2)

The person commits an offence if they—

(a)

knowingly fail to comply with section 18B(2) before they acquire, obtain, or have access to the information; or

(b)

despite complying with section 18B(2), knowingly discloses the information.

(3)

A person who is convicted of an offence under this section is liable to—

(a)

imprisonment for a term not exceeding 6 months; or

(b)

a fine not exceeding $15,000; or

(c)

both.

143E Offences related to disclosure of certain information to employees

(1)

For the purposes of section 18(2), a person described in subsection (4) commits an offence if they—

(a)

are a person who has access to, acquires, or obtains, information on a matter relating to a revenue law described in section 16C(1)(a) to (c); and

(b)

are an employer or principal of an agent (the employer); and

(c)

knowingly or negligently allow an employee to acquire, have access to, or be given the information before the employee has signed a certificate of confidentiality referred to in section 18B(2).

(2)

For the purposes of section 18(2) a person commits an offence if they—

(a)

are a person who has access to, acquires, or obtains, information on a matter relating to a revenue law described in section 16C(1)(a) to (c); and

(b)

are a director, manager, secretary, member, or principal officer of the employer (the director), or is a person purporting to act in 1 or more of those capacities; and

(c)

knowingly allow an employee to acquire, have access to, or be given revenue information before the employee has signed a certificate of confidentiality referred to in section 18B(2).

(3)

A person who is convicted of an offence under subsection (1) or (2) is liable to a fine not exceeding $15,000.

(4)

The person is—

(a)

a person who is or has been a member of, or who is appointed or employed by, the Accident Compensation Corporation; or

(b)

a person who is or has been appointed or employed by the Regulator under the Accident Insurance Act 1998; or

(c)

a person, association, company, firm, body, or institution to which powers and functions have been delegated or sub-delegated under accident compensation legislation; or

(d)

an officer, employee, or agent of the person or other entity referred to in paragraph (c); or

(e)

a person who is or has been a member of or who is or has been appointed or employed by the New Zealand Superannuation Corporation; or

(f)

a person or entity referred to in paragraph (c) to which powers and functions have been delegated or sub-delegated under the New Zealand Superannuation Act 1974.

(5)

For the purposes of this section,—

(a)

an employee includes an officer or agent of the employer:

(b)

accident compensation legislation means the Accident Compensation Act 1982, the Accident Rehabilitation and Compensation Insurance Act 1992, the Accident Insurance Act 1998, the Accident Compensation Act 2001.

143EB Offences related to disclosure of certain information by employers and directors

(1)

A person referred to in section 143E(1) or (2) as the employer or the director commits an offence if they disclose information on matters relating to a revenue law described in section 16C(1)(a) to (c) that comes to their knowledge through the agency of the Commissioner unless the disclosure is for the purpose of carrying into effect the relevant revenue law.

(2)

A person who is convicted of an offence under this section is liable to—

(a)

imprisonment for a term not exceeding 6 months; or

(b)

a fine not exceeding $15,000; or

(c)

both.

96B Section 173L amended (Transfer of excess tax within taxpayer’s accounts)

Replace section 173L(3) with:

(3)

Despite subsection (2)(b) and (bb)

(a)

a taxpayer who has an early balance date must, for tax withheld or deducted on their behalf or a tax credit for expenditure on research and development, choose a day after the end of the tax year in which the amount was withheld or deducted or the tax year corresponding to the accounting year to which the credit relates:

(b)

a taxpayer who has excess tax withheld or deducted on their behalf and has filed a tax return for the tax year in which the excess tax arises before the end of that tax year must, for the excess tax, choose the day after the date that the return is filed.

97 Section 174AA amended (Power of Commissioner in respect of small amounts of refunds or tax payable)

(1)

Replace section 174AA, section heading, with Power of Commissioner in relation to refunds or tax payable.

(2)

Replace section 174AA(b) with:

(b)

for an individual, the amount of tax payable arises

(i)

despite the correct application of a withholding liability:

(ii)

despite the application of a rate of tax that corresponds to the individual’s correct marginal rate:

(iii)

in relation to income of less than $200 when tax was withheld from the income incorrectly:

(iv)

in relation to an additional payment for an underpaid amount when the individual is entitled to receive a benefit, grant, or other social assistance payment from the Ministry of Social Development:

(v)

in relation to a payment to a provider of standard-cost household services who derives exempt income under section CW 61(1) of the Income Tax Act 2007:

(vi)

in relation to a payment to a non-resident seasonal worker.

98 Section 184A amended (Refund of tax paid in excess made by direct credit to bank account)

(1)

In section 184A(2), replace “When a taxpayer claims a refund, the taxpayer” with “To enable a payment to be made by direct credit under this section, a taxpayer”.

(2)

After section 184A(5)(a), insert:

(ab)

an amount of income tax:

98B New section 225AB inserted (Order in Council amending schedule 18B of Income Tax Act 2007)

After section 225A, insert:

225AB Order in Council amending schedule 18B of Income Tax Act 2007

(1)

This section provides a power to amend, by Order in Council, the list of sales of bloodstock yearlings in schedule 18B of the Income Tax Act 2007 that meet the definition of a premier yearling sale in section EC 39B(4) of that Act.

(2)

The Governor-General may, by Order in Council made on the recommendation of the Minister of Revenue, amend schedule 18B of that Act by

(a)

adding the name of a sale of bloodstock yearlings:

(b)

substituting the name of a sale of bloodstock yearlings in recognition of a change in its name:

(c)

removing the name of a sale of bloodstock yearlings.

(3)

Before recommending the making of an Order in Council to

(a)

add the name of a sale of bloodstock yearlings to schedule 18B of that Act, the Minister of Revenue must be satisfied that the sale

(i)

is of bloodstock yearlings of interest to New Zealand resident and non-resident prospective buyers; and

(ii)

will be held in New Zealand:

(b)

remove the name of a sale of bloodstock yearlings from schedule 18B of that Act, the Minister of Revenue must be satisfied that the sale

(i)

is no longer of bloodstock yearlings of interest to New Zealand resident and non-resident prospective buyers:

(ii)

will no longer be held in New Zealand.

(4)

Before making a recommendation under subsection (2), the Minister of Revenue must

(a)

consult the Minister for Racing on the proposed amendment; and

(b)

be satisfied that consultation has been undertaken on the proposed amendment that is appropriate and reasonable for the purposes of this section.

98C New section 227EB inserted (Transitional provisions: publication requirements related to RWT-exempt status and certain exemption certificates)

After section 227E, insert:

227EB Transitional provisions: publication requirements related to RWT-exempt status and certain exemption certificates

(1)

For the transitional period referred to in section 227E(1), the Commissioner may

(a)

create an electronic register of persons who hold an RWT exemption certificate for the purposes of establishing their RWT-exempt status; and

(b)

publish a person’s tax file number and the start date and, if applicable, the end date recorded on the person’s RWT exemption certificate.

(2)

A reference in a document to an RWT exemption certificate or to a person holding an RWT exemption certificate is to be read as including a reference to RWT-exempt status or to the person having RWT-exempt status, as applicable, to the extent necessary to reflect sensibly the intent of the document.

(3)

A reference in a document to an exemption certificate for a schedular payment or to the provision of a copy of an exemption certificate is to be read as including a reference to a notice of the Commissioner under schedule 5, part C, clause 6 that a person is entitled to receive payment for which no amount of tax is to be withheld or to the provision of evidence of the notice, as applicable, to the extent necessary to reflect sensibly the intent of the document.

99 New section 227F inserted (Transitional provisions related to information disclosures)

After section 227E, insert:

227F Transitional provisions related to information disclosures

(1)

Subpart 3A, sections 16 to 17K are sections 16 to 19, 21 and 21BA of the Tax Administration Act 1994 in rewritten form and are intended to have the same effect. Subsection (3) overrides this subsection.

(2)

Unless a limit in subsection (3) applies, in circumstances where the meaning of a taxation law that comes into force at the commencement of this Act (the new law) is unclear or gives rise to absurdity—

(a)

the wording of a taxation law that is replaced in part by section 15 of this Act and that corresponds to a new law (the old law) must be used to determine the correct meaning of the new law; and

(b)

it can be assumed that a corresponding old law provision exists for each new law provision.

(3)

Subsections (1) and (2) do not apply in the case of a new law that is amended after the commencement of this Act, with effect from the date on which the amendment comes into force.

(4)

For the avoidance of doubt, in relation to permitted disclosures under schedule 7, the authorisation of a specific disclosure under an exception set out in the schedule does not affect the general rule that confidentiality, as set out in section 18, applies only to sensitive revenue information.

99B New section 227G inserted (Transitional provision related to individuals’ income information)

After section 227F, insert:

227G Transitional provision related to individuals’ income information

For income years in the period from the 200001 income year to the 201920 income year, an individual who may have or may have had an entitlement under the family scheme under sections MD 1 and ME 1 of the Income Tax Act 2007, and the equivalent provisions in the Income Tax Act 2004 and the Income Tax Act 1994, but who was not required to provide a return of income for a tax year in that period, may, despite section 108, choose to file a return of income for the tax year.

100 Schedule 4 amended (Reporting of employment income information)

In schedule 4, table 1, row 4, item g, replace “earner premium” with “earner levy”.

101 Schedule 5 amended (Certain tax codes and rates)

(1)

In schedule 5, part A, clause 1(2), replace “special tax code” with “tailored tax code”.

(2)

In schedule 5, part A, clause 4, rows 3, 4, 5, and 6 of the table, replace “annual income is” with “total PAYE income payments” are in each place where it appears.

(3)

In schedule 5, part B, clause 1,—

(a)

replace the heading with Tailored tax codes:

(b)

in subclauses (1), (2), (4), (5), and (6), replace “special tax code” with “tailored tax code” in each place where it appears.

(4)

In schedule 5, part B, clause 1(6),—

(a)

replace “notifying the employee or responsible department, as applicable.” with “notifying the employee, the employer, or responsible department, as applicable.”:

(b)

replace “Once notified, the employee” with “If the employee is notified, they”.

101B Schedule 6 amended (Reporting of investment income information)

In schedule 6, table 1, row 6, replace The contact address of the investor with The contact address of the investor and, if the investor is non-resident, the country code of the investor.

102 New schedules inserted

After schedule 5, insert, as set out in schedule 1 of this Act, the following schedules:

(a)

schedule 7 (Disclosure rules):

(b)

schedule 8 (Reporting of income information by individuals and treatment of certain amounts).

102B Schedule 8 amended (Reporting of income information by individuals and treatment of certain amounts)

Replace schedule 8, part B with:

Part B Treatment of certain amounts

1 Writing off certain amounts of tax payable

Subject to clause 2, the Commissioner must write off the following amounts under section 22IB:

(a)

an amount of tax relating to income derived for a tax year by a qualifying individual that is equal to or less than $50:

(b)

an amount of tax relating to reportable income that is derived for a tax year by an individual solely from

(i)

an income tested benefit:

(ii)

an education grant:

(iii)

a payment of New Zealand superannuation:

(iv)

a veteran’s pension:

(c)

an amount of tax relating to the income of an individual for a tax year that arises solely because the individual has an extra pay period in the corresponding income year, being

(i)

53 pay periods in the income year for a person paid weekly; or

(ii)

27 pay periods in the income year for a person paid fortnightly; or

(iii)

14 pay periods in the income year for a person paid in 4-weekly periods.

2 Exclusions

(1)

An amount of tax does not qualify for a write off under clause 1 if the amount is derived by

(a)

an individual who

(i)

is issued with a family notice of entitlement for some or all of the tax year:

(ii)

is paid a family assistance credit for which the amount of family credit abatement under section MD 13 of the Income Tax Act 2007 is greater than zero:

(b)

an individual who is living in a marriage, civil union, or de facto relationship with an individual who

(i)

is issued with a family notice of entitlement for some or all of the tax year:

(ii)

is paid a family assistance credit for which the amount of family credit abatement under section MD 13 of that Act is greater than zero.

(2)

An amount of tax does not qualify for a write off under clause 1(c) if, for the tax year and an amount of income referred to in subclause (3),

(a)

the Commissioner has recommended for the individual, and the individual has consented to, a change of tax code under section 24DB or change of tax rate under section 25A giving the individual a higher tax code or higher RWT rate:

(b)

the individual has used a tailored tax code under schedule 5, part A in relation to the income.

(3)

For the purposes of subclause (2), the income is

(a)

an amount of income for which the obligations of the individual under the PAYE rules are not met:

(b)

an amount of investment income from which RWT is withheld at a rate that is lower than the correct rate:

(c)

an amount from which tax is withheld at a rate that is lower than the correct rate when the amount of income is

(i)

schedular income:

(ii)

income from employment that is an extra pay:

(iii)

income from employment that is secondary employment earnings:

(d)

an amount derived by an individual whose annual gross income is more than $48,000 when the amount of income is

(i)

a taxable Maori authority distribution:

(ii)

an amount of salary or wages from employment as an election day worker, when the individual has used the EDW code:

(iii)

an amount of salary or wages from employment as a casual agricultural employee, when the individual has used the CAE code:

(e)

an amount of a benefit under an employee share agreement in relation to which an employer has not made an election under section RD 7B of the Income Tax Act 2007 to withhold tax.

(4)

For the purposes of subclause (3), the correct rate is

(a)

0.105, if the individual’s annual gross income is $14,000 or less; or

(b)

0.175, if the individual’s annual gross income is more than $14,000 and not more than $48,000; or

(c)

0.300, if the individual’s annual gross income is more than $48,000 and not more than $70,000; or

(d)

0.330, if the individual’s annual gross income is more than $70,000.

3 Small amounts of tax payable

Despite clause 2, the Commissioner may write off an amount of tax under section 22IB if the amount is not substantial and represents an underpayment of tax that is attributable to a function or operation of the tax collection rules.

103 Consequential amendments

The consequential amendments to provisions of the Tax Administration Act 1994 that are listed in schedule 3 apply as set out in that schedule.

Part 3 Amendments to Income Tax Act 2007

104 Income Tax Act 2007

Part 3 amends the Income Tax Act 2007.

104B Section CB 6A amended (Disposal within 5 years: bright-line test for residential land)

In section CB 6A(4),

(a)

replace the subsection heading with Estate or interest acquired upon completion of land development or subdivision:

(b)

replace a freehold estate with an estate or interest:

(c)

replace the freehold estate with the estate or interest:

(d)

replace acquiring an interest, in relation to the land, that is contingent with entering into the agreement under which they acquired the estate or interest.

105 Section CB 9 amended (Disposal within 10 years: land dealing business)

Replace section CB 9(3), except for the heading, with:

(3)

Subsection (2) is overridden by the exclusions in sections CB 15C and CB 15D, for bodies linked or associated with a local authority and for companies in the same wholly-owned group as Housing New Zealand Corporation, and subsections (1) and (2) are overridden by the exclusions in sections CB 16 and CB 19, for residential land and for business premises.

106 Section CB 10 amended (Disposal within 10 years: land development or subdivision business)

Replace section CB 10(3), except for the heading, with:

(3)

Subsection (2) is overridden by the exclusions in sections CB 15C and CB 15D, for bodies linked or associated with a local authority and for companies in the same wholly-owned group as Housing New Zealand Corporation, and subsections (1) and (2) are overridden by the exclusions in sections CB 16 and CB 19, for residential land and for business premises.

107 Section CB 11 amended (Disposal within 10 years of improvement: building business)

(1)

Replace section CB 11(1) and (2) with:

Income

(1)

An amount that a person derives from disposing of land is income of the person if they dispose of the land and—

(a)

within 10 years before the disposal, the person or an associate of the person completed improvements to the land; and

(b)

at the time the improvements were begun, the person or an associate of the person carried on a business of erecting buildings.

(b)

at the time the improvements were begun,

(i)

the person carried on a business of erecting buildings:

(ii)

an associate of the person carried on a business of erecting buildings.

Person or associate

(2)

Subsection (1) applies whether or not the land was acquired for the person’s business or an associate’s business.

(2)

Replace section CB 11(3), except for the heading, with:

(3)

Subsection (2) (1)(b)(ii) is overridden by the exclusions in sections CB 15C and CB 15D, for bodies linked or associated with a local authority and for companies in the same wholly-owned group as Housing New Zealand Corporation, and subsections (1) and (2) are overridden by the exclusions in sections CB 16 and CB 19, for residential land and for business premises.

(3)

Subsection (1) applies for the 2008–09 and later income years. However it does not apply to a person to the extent to which, before the introduction of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Bill, the person takes a tax position in a return of income that is consistent with section CB 11(1) and (2) ignoring the amendment in subsection (1).

108 Section CB 15 amended (Transactions between associated persons)

(1)

In section CB 15(1), in the words before paragraph (a), delete “under whichever is applicable of sections CB 6 to CB 14”.

(2)

After section CB 15(1), insert:

Exclusion for Housing New Zealand Corporation and wholly-owned group

(1B)

Subsection (1) is overridden by section CB 15D.

(3)

Replace section CB 15(2), other than the heading, with:

(2)

For the purposes of sections CB 7 to CB 12 and CB 14, if a person (the transferor) transfers land to a person (the transferee) who is an associated person at the time of the transfer, the transferee is treated as acquiring the land on the date, other than under this subsection, on which the transferor acquired the land.

(4)

Subsections (1) and (3) apply for the 200809 and later income years.

(4)

Subsections (1) and (3) apply for the 200809 and later income years. However it does not apply to a person to the extent to which, before the introduction of the Taxation (Annual Rates for 201819, Modernising Tax Administration, and Remedial Matters) Bill, the person takes a tax position in a return of income that is consistent with section CB 15 ignoring the amendment in subsections (1) and (3).

108B Section CB 15C amended (Council-controlled organisations and other companies)

In section CB 15C(1), words before paragraph (a), replace CB 11(2) with CB 11(1)(b)(ii).

109 New heading and new section CB 15D inserted

After section CB 15C, insert:

Exclusions for Housing New Zealand Corporation and wholly-owned group

CB 15D Housing New Zealand Corporation and wholly-owned group
Exclusion from application of some land provisions

(1)

Sections CB 9(2), CB 10(2), CB 11(2) CB 11(1)(b)(ii), and CB 15(1) do not apply to Housing New Zealand Corporation or a company in the same wholly-owned group of companies as Housing New Zealand Corporation.

Exclusion for group members and members of consolidated group

(2)

If subsection (1) applies to prevent an amount from being income of a person who is a member of a wholly-owned group of companies or a consolidated group, the amount is not income of the person under section CV 1 or CV 2 (which apply to group companies and to consolidated groups).

Defined in this Act: amount, company, consolidated group, income, wholly-owned group of companies

110 Section CB 16A amended (Main home exclusion for disposal within 5 years)

(1)

In section CB 16A(2)(b), replace “residential land” with “residential land described in subsection (1)”.

(2)

Subsection (1) applies to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after 1 October 2015.

111 Section CB 16 amended (Residential exclusion from sections CB 6 to CB 11)

(1)

Replace section CB 16(1)(b) with:

(b)

the dwellinghouse was occupied mainly as a residence by,—

(i)

the person:

(ii)

if members of the person’s family live with them, the person and members of the person’s family living with them:

(iii)

if the person is a trustee, 1 or more beneficiaries of the trust.

(2)

In section CB 16(3), replace “dwellinghouses” with “dwellinghouses described in subsection (1)” .

(3)

Subsections (1) and (2) apply for the 2008–09 and later income years.

112 Section CB 17 amended (Residential exclusion from sections CB 12 and CB 13)

(1)

Replace section CB 17(1)(b) with:

(b)

the development, division, or improvement is for use in, and for the purposes of, the residing on the land of,—

(i)

the person:

(ii)

if members of the person’s family live with them, the person and members of the person’s family living with them.

(2)

Replace section CB 17(2)(b) with:

(b)

the larger area of land was 4,500 square metres or less immediately before it was divided and was occupied mainly as residential land for,—

(i)

the person:

(ii)

if members of the person’s family live with them, the person and members of their family living with them.

(3)

Subsections (1) and (2) apply for the 2008–09 and later income years.

113 Section CB 18 amended (Residential exclusion from section CB 14)

(1)

Replace section CB 18(3)(a) with:

(a)

means a purpose that the person has of using the land or intending to use the land mainly as a residence for,—

(i)

the person:

(ii)

if members of the person’s family live with them, the person and members of the person’s family living with them; and

(2)

Subsection (1) applies for the 2008–09 and later income years.

114 Section CB 27 amended (Income equalisation schemes)

(1)

Repeal section CB 27(b).

(2)

In section CB 27, in the list of defined terms, delete “adverse event income equalisation scheme”.

(3)

Subsection (1) applies for income years beginning after the date on which this Act receives the Royal assent.

115 Section CB 28 amended (Environmental restoration accounts)

In section CB 28(7),—

(a)

in the words before paragraph (a), after “contaminant”, insert “or making of noise”:

(b)

in paragraph (a), after “contaminant”, insert “or making of noise”.

116 Section CD 3 amended (Meaning of dividend)

In section CD 3, replace “CD 21” with “CD 20”.

117 Section CD 5 amended (What is a transfer of value)

(1)

In section CD 5(2)(a), replace “section EW 46C(3)” with “section EW 46C(4)”.

(2)

Subsection (1) applies for a person for the 2008–09 and later income years, except for an income year before the 2015–16 income year for which the person takes a tax position in a return of income that is inconsistent with the amendment made by subsection (1).

118 Section CD 6 amended (When is a transfer caused by a shareholding relationship?)

(1)

In section CD 6(3), replace “subpart HE (Mutual associations)” with “section DV 19 (Association rebates)”.

(2)

In section CD 6(4), replace “subpart HE” with “section DV 19”.

(3)

In section CD 6(5),—

(a)

in the subsection heading, replace section DV 18 and subpart HE with sections DV 18 and DV 19:

(b)

replace “subpart HE” with “section DV 19”.

119 Section CE 1 amended (Amounts derived in connection with employment)

(1)

Before section CE 1(2), insert:

Unrepaid overpayments

(1C)

A person who receives an amount that is an unrepaid PAYE income overpayment is treated as deriving the amount in connection with their employment or service for the income year in which they receive the amount.

(a)

for the income year in which they receive the amount, if paragraph (b) does not apply; or

(b)

on the payday for which the employment income information of the employer who paid the amount to the person includes an upwards adjustment for the amount under regulations made under section 23N of the Tax Administration Act 1994.

Repaid overpayments

(1D)

An amount received by a person that is a PAYE-related overpayment is not income of the person to the extent to which the amount has been repaid to the employer.

(a)

the amount has been repaid to the employer who paid the amount to the person:

(b)

the amount is repayable to that employer by the person under an agreement between them and none of the following apply:

(i)

the person breaches the agreement and does not remedy the breach within 2 months:

(ii)

that employer considers that the person will not comply with the agreement in the future:

(c)

the amount is recoverable under section 248 of the Accident Compensation Act 2001.

(2)

In section CE 1, in the list of defined terms, insert employment income information, “income year”, payday, “PAYE-related overpayment”, and “unrepaid PAYE income overpayment”.

119B New sections CG 8B and CG 8C inserted

(1)

After section CG 8, insert:

CG 8B Recoveries after deductions for high-priced bloodstock removed from New Zealand
When this section applies

(1)

This section applies when

(a)

high-priced bloodstock is removed from New Zealand before being

(i)

first raced in New Zealand:

(ii)

used for breeding in New Zealand; and

(b)

a person who is a prospective bloodstock breeder has been allowed a deduction in relation to the high-priced bloodstock; and

(c)

the high-priced bloodstock is expected, at the time of its removal from New Zealand, to be able to be used for future breeding.

Income

(2)

The person has an amount of income to the extent to which the greater of the high-priced bloodstock’s market value on the day on which it is removed from New Zealand and the total amount of deductions the person has been allowed in relation to the high-priced bloodstock exceeds the total of any amounts of income the person has derived in relation to the high-priced bloodstock.

Timing of income

(3)

The income is allocated to the income year in which the high-priced bloodstock is removed from New Zealand.

Defined in this Act: amount, deduction, high-priced bloodstock, income, income year, New Zealand, prospective bloodstock breeder

CG 8C Recoveries after deductions for high-priced bloodstock disposed of to non-residents
When this section applies

(1)

This section applies when

(a)

a person who is a prospective bloodstock breeder (person A) disposes of high-priced bloodstock to a non-resident (person B) for consideration before the high-priced bloodstock has been

(i)

first raced in New Zealand:

(ii)

used for breeding in New Zealand:

(iii)

removed from New Zealand; and

(b)

person A has been allowed a deduction in relation to the high-priced bloodstock; and

(c)

the high-priced bloodstock is expected, at the time of the disposal, to be able to be used for future breeding.

Income

(2)

The amount described in subsection (3) is income of person A.

Amount of income

(3)

The amount is the greater of

(a)

the amount of consideration receivable by person A for disposing of the high-priced bloodstock; and

(b)

the amount given by the formula in subsection (4).

Formula

(4)

For the purposes of subsection (3)(b), the amount is calculated using the formula

ownership disposal percentage × total deductions.

Definition of items in formula

(5)

In the formula,

(a)

ownership disposal percentage is the percentage of person A’s total share or interest in the high-priced bloodstock that they have disposed of to person B:

(b)

total deductions is the amount equal to the total amount of deductions person A has been allowed in relation to the high-priced bloodstock.

Timing of income

(6)

The income is allocated to the income year in which the high-priced bloodstock is disposed of.

Relationship with section CB 2

(7)

This section overrides section CB 2(2).

Defined in this Act: amount, deduction, dispose, high-priced bloodstock, income, income year, New Zealand, prospective bloodstock breeder

(2)

Subsection (1) applies to bloodstock acquired on or after 1 January 2019.

120 Section CV 1 amended (Group companies)

(1)

In section CV 1, after the heading, insert as a subsection heading Income.

(2)

In section CV 1, insert as subsection (2):

Relationship with section CB 15D

(2)

Subsection (1) is overridden by section CB 15D (Housing New Zealand Corporation and wholly-owned group).

121 Section CV 2 amended (Consolidated groups: income of company in group)

Replace section CV 2(3) with:

Relationship with sections CB 15C and CB 15D

(3)

Subsection (2) is overridden by sections CB 15C and CB 15D (which apply to bodies linked or associated with a local authority or companies in the same wholly-owned group as Housing New Zealand Corporation).

122 Section CW 9 amended (Dividend derived from foreign company)

Repeal section CW 9(2)(a)(vi).

123 Section CW 19 amended (Amounts derived during short-term visits)

In section CW 19(1), in the words before the paragraphs, delete “in a tax year”.

123B Section CW 35 amended (Personal service rehabilitation payments)

(1)

After the section title to section CW 35, insert Exempt income as a subsection heading.

(2)

Replace section CW 35(a) with:

(a)

they are paid the amount under the Accident Compensation Act 2001 either

(i)

in the income year; or

(ii)

as a reimbursement payment in a later income year; and

(3)

In section CW 35(b), replace in the income year with in the income year or in an earlier income year.

(4)

In section CW 35(c), replace for the income year with for the income year or an earlier income year.

(5)

In section CW 35, insert as subsection (2):

Meaning of reimbursement payment

(2)

For the purposes of this section, sections CZ 35, DF 4, and LB 7, reimbursement payment means a personal service rehabilitation payment that

(a)

relates to a key aspect of social rehabilitation that is provided to a person in an income year; and

(b)

is paid to them in an income year that is later than the income year in which they were provided the rehabilitation.

(6)

In section CW 35, in the list of defined terms, insert reimbursement payment.

124 New section CW 38B inserted (Public purpose Crown-controlled companies)

After section CW 38, insert:

CW 38B Public purpose Crown-controlled companies
Exempt income

(1)

An amount of income derived from sinking funds relating to the debt of a public purpose Crown-controlled company is exempt income.

Exempt income

(2)

Any other amount of income derived by a public purpose Crown-controlled company is exempt income.

Exclusion: amounts received in trust

(3)

Subsection (2) does not apply to an amount of income that a public purpose Crown-controlled company derives as a trustee, other than an amount distributed as beneficiary income to a beneficiary who derives the amount as exempt income.

Orders in Council

(4)

The Governor-General may, by Order in Council made on the recommendation of the Minister of Revenue, amend schedule 35

(a)

to add the name of a company that meets the following criteria:

(i)

the company is listed in schedule 4A of the Public Finance Act 1989 or 100% of the voting interests in the company are held by the group of persons that holds 100% of the voting interests in a company listed in schedule 4A of that Act; and

(ii)

Ministers of the Crown hold, on behalf of the Crown, more than 50% of the voting interests in the company; and

(iii)

all other voting interests, if any, in the company are held by local authorities; and

(iv)

the company’s primary purpose is the carrying out of a public policy objective of the Government of New Zealand:

(b)

to substitute the name of a company in recognition of a change in its name:

(c)

to remove the name of a company.

When Minister of Revenue must recommend Order in Council under subsection (4)(c)

(5)

The Minister of Revenue must recommend that an Order in Council be made to remove the name of a company from schedule 35 if the Minister is satisfied that—

(a)

the company has been removed from the register of companies kept under the Companies Act 1993; or

(b)

the company no longer meets the criteria set out in subsection (4)(a).

Defined in this Act: amount, company, exempt income, group of persons, income, income tax, local authority, public purpose Crown-controlled company, trustee, voting interest

124B Section CW 41 amended (Charities: non-business income)

In section CW 41(5), replace In this section and sections CW 42 and CW 43, tax charity with Tax charity.

125 Section CW 42 amended (Charities: business income)

(1)

Before section CW 42(1)(a), insert:

(aa)

the entity carrying on the business is, at the time that the income is derived, registered as a charitable entity under the Charities Act 2005; and

(2)

Subsection (1) applies for the 201920202021 and later income years.

126 Section CX 10 amended (Employment-related loans)

(1)

After section CX 10(2)(b), insert:

(bb)

as an amount that is a PAYE-related overpayment:

(2)

In section CX 10, in the list of defined terms, insert “PAYE-related overpayment”.

(3)

Subsections (1) and (2) apply for the 2019–20 and later income years.

127 Section CX 27 amended (Assistance with tax returns)

(1)

In section CX 27, after the heading, insert as a subsection heading Not fringe benefit.

(2)

In section CX 27, replace “an employee’s income statement or return of income” with “an employee’s return of income”.

(3)

In section CX 27, insert as subsection (2):

Employees’ returns of income

(2)

For the purposes of this section, an employee’s return of income includes the income information held by the Commissioner and set out in the employee’s pre-populated account referred to in section 22D(4) of the Tax Administration Act 1994.

(4)

In section CX 27, in the list of defined terms, delete “income statement”.

128 Section CX 51 amended (Income equalisation schemes)

(1)

In section CX 51, delete “, EH 42 (Refund of excess deposit),”.

(2)

Subsection (1) applies for income years beginning after the date on which this Act receives the Royal assent.

128B Section CX 60 amended (Intra-group transactions)

(1)

After section CX 60(1), insert:

Excluded income

(1B)

An amount that is referred to in section FM 8(2) and not in section FM 8(3) is excluded income.

(2)

Subsection (1) applies for the 201920 and later income years.

128C Section CZ 25 amended (Land and buildings as revenue account property affected by Canterbury earthquakes and replacedinsurance or compensation, Government purchase)

(1)

In section CZ 25(1), in the words before the paragraphs, replace 201920 with 202425.

(2)

In section CZ 25(4)(a), replace 201819 with 202324.

(3)

In section CZ 25(5),

(a)

in the subsection heading, replace 201819 with 202324:

(b)

in paragraph (a), replace 201819 with 202324.

128D New section CZ 25B inserted (Land and buildings as revenue account property affected by Hurunui/Kaikōura earthquakes and replacedinsurance or compensation)

(1)

After section CZ 25, insert:

CZ 25B Land and buildings as revenue account property affected by Hurunui/Kaikōura earthquakes and replacedinsurance or compensation
When this section applies

(1)

This section applies for a person and an income year (the current year) before the 202425 income year when the person,

(a)

in or before the current year, derives for buildings or land (the affected property), all of which is revenue account property, insurance or compensation, if a Hurunui/Kaikōura earthquake as that term is defined in section 4 of the Hurunui/Kaikōura Earthquakes Recovery Act 2016 damages the land and damages each building, or the neighbourhood of the building, causing the building to be useless for the purpose of deriving income and consequently to be demolished or abandoned for later demolition; and

(b)

in the absence of this section, would have in or before the current year a total amount of income (the insurance income) under sections CB 6, CB 7, CB 12, CB 13, and CG 6 (which relate to income from certain disposals of land and from compensation for trading stock) from the compensation or insurance for the affected property that exceeds the total amount of deductions under sections DB 23 and DB 27 (which relate to deductions for the cost or value of land) for the affected property; and

(c)

plans, in the current year, to acquire property (the replacement property)

(i)

replacing affected property; and

(ii)

meeting the requirements of subsection (4); and

(iii)

having a cost exceeding the total amount of deductions under sections DB 23 and DB 27 for the affected property; and

(d)

notifies the Commissioner under subsection (6) in relation to the affected property.

Suspended recovery income

(2)

The amount (the excess recovery) by which the insurance income referred to in subsection (1)(b) exceeds the deductions referred to in subsection (1)(b) is not income of the person except to the extent of the amount (the suspended recovery income) remaining after adjustment under subsection (3) that is attributed to an income year by subsection (5).

Effect of purchase of replacement property

(3)

If the person incurs expenditure (the replacement cost) to acquire replacement property,

(a)

for the purposes of determining the value of the replacement property for section EA 2 (Other revenue account property), the amount of the person’s expenditure on the replacement property is reduced by

(i)

the amount calculated by dividing the replacement cost by the total amount of deductions under sections DB 23 and DB 27 for the affected property and multiplying the result by the excess of the insurance income over the replacement cost, if the insurance income exceeds the replacement cost and the calculated amount is less than or equal to the amount of insurance income; or

(ii)

the amount of the excess recovery, if the insurance income does not exceed the replacement cost or is less than the amount calculated in subparagraph (i); and

(b)

the amount of the suspended recovery income immediately before the expenditure is reduced by an amount equal to the reduction of expenditure under paragraph (a) for the purposes of section EA 2.

Requirements for replacement property

(4)

For an item of affected property, replacement property must be a building or land that is revenue account property

(a)

acquired in or before the person’s 202324 income year; and

(b)

located in the earthquake-affected area as that term is defined in section 4 of the Hurunui/Kaikōura Earthquakes Recovery Act 2016, relating to

(i)

the Canterbury Regional Council (Environment Canterbury), the Hurunui District Council, the Kaikoura District Council, or the Marlborough District Council, if the affected property is located in an earthquake-affected area relating to 1 of those councils; or

(ii)

the Wellington City Council, the Hutt City Council, or the Wellington Regional Council (Greater Wellington), if the affected property is located in an earthquake-affected area relating to 1 of those councils.

Amount remaining at end of 202324 income year or when person changes intentions, is liquidated, or becomes bankrupt

(5)

The person has an amount of income for the affected property in the current year equal to the amount of suspended recovery income when

(a)

the current year ends, if the current year is the 202324 income year:

(b)

in the current year, the person decides not to replace the affected property:

(c)

in the current year, the person goes into liquidation or becomes bankrupt.

Notice of election for affected property

(6)

A person choosing to rely on this section to suspend in a current year the recognition of suspended recovery income from the insurance for affected property must notify the Commissioner.

Contents of notice of election

(7)

A notice under subsection (6) must

(a)

describe the affected property; and

(b)

give details of replacement property acquired in the current year to replace, in full or in part, the affected property; and

(c)

give the cost of the replacement property and the reduction under subsection (3) of that cost for the purposes of section EA 2; and

(d)

give the amount, for the affected property, of the income from insurance or compensation remaining suspended under this section at the end of the current year.

Relationship to section CG 6

(8)

This section overrides section CG 6.

Defined in this Act: amount, deduction, income, income year, notice, notify

(2)

Subsection (1) applies for the 201516 and later income years.

128E New section CZ 35 inserted (Treatment of backdated payments for social rehabilitation: 200809 to 201718 income years)

After section CZ 34, insert:

CZ 35 Treatment of backdated payments for social rehabilitation: 200809 to 201718 income years
When this section applies

(1)

This section applies for income years from the 200809 income year to the 201718 income year when

(a)

a person is paid an amount as a personal service rehabilitation payment; and

(b)

the person pays an amount to another person for providing them a key aspect of social rehabilitation, referred to in the definition of personal service rehabilitation payment, in an income year; and

(c)

the payment referred to in paragraph (a) that is paid in relation to the service referred to in paragraph (b) is made in an income year that is later than the income year in which the service is provided to the person.

Treatment of payment

(2)

If the Commissioner is satisfied that the tax obligations relating to the personal service rehabilitation payment have been met, the payment is treated as exempt income for the income year in which the person derives the payment.

Defined in this Act: amount, Commissioner, exempt income, income year, pay, personal service rehabilitation payment

128F Section DB 18AA amended (Square metre rate method)

(1)

In section DB 18AA(1), replace building with premises.

(2)

Replace section DB 18AA(3), other than the heading, with:

(3)

In the formula,

(a)

total premise costs is the total amount of actual mortgage interest, rates, and rent that the person has paid with respect to buildings and their curtilage on the premises in the income year:

(b)

business proportion is determined by dividing business square metres by the total area of buildings on the premises in square metres:

(c)

business square metres is the total area, in square metres, of any separately identifiable parts of buildings on the premises that are used primarily for business purposes:

(d)

square metre rate is the applicable square metre rate that is published by the Commissioner.

(3)

Subsections (1) and (2) apply for the 201718 and later income years.

129 Section DB 41 amended (Charitable or other public benefit gifts by company)

After section DB 41(2), insert:

No deduction

(2B)

Despite subsection (2), a company is not allowed a deduction for the amount of a charitable or other public benefit gift it makes, to the extent to which the amount is, for the company, an asset ignored for the purposes of section HR 12 (Non-exempt charities: treatment of tax-exempt accumulations) and described in section HR 12(3)(a).

130 Section DB 46 amended (Avoiding, remedying, or mitigating effects of discharge of contaminant)

(1)

In section DB 46, heading, after contaminant, insert or making of noise.

(2)

In section DB 46(1)(b)(i), after “contaminant”, insert “or making of noise”.

130B Section DF 4 amended (Payments for social rehabilitation)

(1)

Replace section DF 4(1). other than the heading, with:

(1)

This section applies when

(a)

a person is paid a personal service rehabilitation payment under the Accident Compensation Act 2001 either

(i)

for an income year; or

(ii)

as a reimbursement payment, in a later income year; and

(b)

the amount is assessable income of the person.

(2)

Replace section DF 4(3)(a) with:

(a)

amount paid is the amount paid by the person

(i)

for a key aspect of social rehabilitation provided to them for the income year or for an earlier income year; and

(ii)

to the extent to which the amount is less than the amount of personal service rehabilitation payment paid to them, after taking into account any amount of tax withheld:

(3)

In section DF 4, in the list of defined terms, insert reimbursement payment.

131 Section DQ 2 repealed (Adverse event income equalisation scheme)

(1)

Repeal section DQ 2.

(2)

Subsection (1) applies for income years beginning after the date on which this Act receives the Royal assent.

132 Section DV 12 amended (Maori authorities: donations)

After section DV 12(1), insert:

No deduction

(1B)

Despite subsection (1), a Maori authority is not allowed a deduction for the amount of a donation it makes or for the amount of a charitable or other public benefit gift it makes, to the extent to which the amount is, for the Maori authority, an asset ignored for the purposes of section HR 12 (Non-exempt charities: treatment of tax-exempt accumulations) and described in section HR 12(3)(a).

133 Section DV 19 amended (Association rebates)

(1)

In section DV 19(2)(a), replace “or” with “and”.

(2)

Subsection (1) applies for the 2008–09 and later income years.

133BA Section DZ 20 amended (Expenditure incurred while income-earning activity interrupted by Canterbury earthquake)

In section DZ 20(1), replace 201920 with 202425 in each place where it appears.

133B Section EC 39 amended (First income year in breeding business)

(1)

After section EC 39(2), insert:

Prospective breeders’ bloodstock to which this section applies

(2B)

This section also applies to stud-founding bloodstock at the end of the prospective bloodstock breeder’s first income year in which the stud-founding bloodstock is 2 years of age.

(2)

In section EC 39, in the list of defined terms, insert prospective bloodstock breeder and stud-founding bloodstock.

(3)

Subsection (1) applies to bloodstock acquired on or after 1 January 2019.

133C New section EC 39B inserted (Stud-founding bloodstock and related terms)

(1)

After section EC 39, insert:

EC 39B Stud-founding bloodstock and related terms
Meaning of stud-founding bloodstock

(1)

Stud-founding bloodstock means high-priced bloodstock that a prospective bloodstock breeder owns if

(a)

the prospective bloodstock breeder acquires the high-priced bloodstock before it is 2 years of age; and

(b)

within 4 months after the day on which the prospective bloodstock breeder acquires the high-priced bloodstock

(i)

the prospective bloodstock breeder notifies the Commissioner of their intention to use the high-priced bloodstock for breeding bloodstock for profit; and

(ii)

information as the Commissioner requires is provided to the Commissioner; and

(c)

the high-priced bloodstock is registered in the New Zealand Stud Book or in the New Zealand Harness Racing Stud Book.

Meaning of high-priced bloodstock

(2)

High-priced bloodstock means bloodstock that

(a)

is sold, when a yearling, at a premier yearling sale for an amount greater than the relevant national minimum price threshold for the calendar year in which the sale occurs; and

(b)

is expected, when sold at the premier yearling sale, to be capable of being used for breeding when it reaches maturity.

Meaning of prospective bloodstock breeder

(3)

A prospective bloodstock breeder means a person who acquires bloodstock

(a)

when they do not have an existing bloodstock breeding business; and

(b)

with the intention of

(i)

having the bloodstock first raced in New Zealand; and

(ii)

using the bloodstock for breeding bloodstock in New Zealand for profit.

Meaning of premier yearling sale

(4)

A premier yearling sale means a sale of bloodstock yearlings that is listed in schedule 18B (Premier yearling sales).

Meaning of national minimum price threshold

(5)

National minimum price threshold, for a class of bloodstock and for the 2019 calendar year, means the national minimum price threshold set by section EZ 6B (National minimum price threshold for 2019 calendar year) for bloodstock of the class.

Defined in this Act: bloodstock, business, Commissioner, high-priced bloodstock, national minimum price threshold, New Zealand, premier yearling sale, prospective bloodstock breeder, stud-founding bloodstock

(2)

Subsection (1) applies to bloodstock acquired on or after 1 January 2019.

133D