Income Tax Amendment Act (No. 2) 1985
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Income Tax Amendment Act (No. 2) 1985
Public Act |
1985 No 59 |
|
Date of assent |
23 March 1985 |
|
Contents
An Act to amend the Income Tax Act 1976
BE IT ENACTED by the General Assembly of New Zealand in Parliament assembled, and by the authority of the same, as follows:
1 Short Title
This Act may be cited as the Income Tax Amendment Act (No. 2) 1985, and shall be read together with and deemed part of the Income Tax Act 1976 (hereinafter referred to as the principal Act).
2 Application
Except where this Act otherwise provides, this Act shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1984 and in every subsequent year.
3 Interpretation
(1)
Section 2 of the principal Act is hereby amended by repealing the definition of the expression “basic rates”
, and substituting the following definition:
“‘Basic rates’ means the rates of income tax and excess retention tax specified in the First Schedule to this Act:”.
(2)
Section 2 of the principal Act is hereby further amended by repealing paragraph (d) of the definition of the expression “money lent”
(as inserted by section 3(1) of the Income Tax Amendment Act 1983), and substituting the following paragraph:
“(d)
Any amount paid to, or for the benefit of, or on behalf of, or dealt with in the interest of or on behalf of, any other person in consideration for an agreement to pay or a promise to pay by the other person, where that amount is exceeded by the amount payable to the person pursuant to the agreement or the promise,—”.
(3)
Subsection (2) of this section shall apply with respect to income, being interest, derived from money lent pursuant to a binding contract entered into on or after the 29th day of July 1983.
4 Meaning of term “dividends”
(1)
Section 4(1) of the principal Act (as amended by section 5 of the Income Tax Amendment Act (No. 3) 1983) is hereby further amended by repealing paragraphs (b) and (d), and substituting the following paragraph:
“(b)
Where any property of the company, not being property to which paragraph (a) or paragraph (c) of this subsection applies, is—
“(i)
Distributed in any manner and under any name among all or any of the shareholders of the company; or
“(ii)
Sold or otherwise disposed of to a shareholder,—
without consideration or for a consideration which, in the opinion of the Commissioner, is less than its market price or true value, the excess of—
“(iii)
The market price of that property on the day it was distributed or, as the case may be, sold or otherwise disposed of; or
“(iv)
In any case where section 117(5) of this Act applies, the price deemed to have been realised pursuant to a determination of the Commissioner under that subsection; or
“(v)
If the provisions of subparagraph (iii) and subparagraph (iv) of this paragraph do not apply, such price as the Commissioner determines might have been expected to have been realised if the company had disposed of that property to a person where, at the time of the disposal, that person was not a shareholder in the company and the person and the company were not associated persons,—
over the consideration (if any) provided to the company for the distribution, sale, or disposition:”.
(2)
Section 4(1)(c) of the principal Act is hereby amended by adding the following proviso:
“Provided that this paragraph shall not, in respect of the amount of the market price (or if there is no market price, the amount of the price deemed to have been realised pursuant to a determination of the Commissioner under section 117(5)(b) of this Act) of any capital asset received by any shareholder in respect of his shares after the time at which, under the Companies Act 1955, the winding up or dissolution of the company commenced or is deemed to have commenced, apply to the extent that that amount exceeds the sum of—
“(i)
The cost to that company of that capital asset; and
“(ii)
Any capital losses, being capital losses arising from the realisation of capital assets, other than a realisation to which subsection (5a) of this section applies, incurred in the income year (or, as the case may be, the accounting year of the company corresponding with that year) in which that capital asset was received by the shareholder (being losses not already taken into account under this paragraph or subsection (5) of this section or under section 3(3) of this Act or in calculating the assessable income of the company for any year):”.
(3)
Section 4(1) of the principal Act (as so amended) is hereby further amended by adding, after the second proviso, the following proviso:
“Provided further that where any amount, being the whole or part of any increase arising from the writing up of an asset, has been excluded from—
“(i)
The term ‘dividends’ in accordance with section 4(3) of the Land and Income Tax Act 1954 (as enacted before the amendment of that section by subsections (1) to (3) of section 5 of the Land and Income Tax Amendment Act 1965); or
“(ii)
The term ‘bonus issue’ in accordance with section 3(3) of this Act,—
the cost of that asset shall, for the purposes of paragraph (c) of this subsection, be deemed to be increased by that amount.”
(4)
Section 4(2) of the principal Act (as amended by section 3(2) of the Income Tax Amendment Act (No. 2) 1977 and section 19(1) of the Income Tax Amendment Act 1980) is hereby further amended by adding the following proviso:
“Provided also that where the Commissioner is satisfied that the dividend pursuant to this subsection arose from the charging of that expenditure, in the accounts of the company, in the reasonable belief of all of the shareholders of the company that the benefit of that expenditure was enjoyed by the company and not by any other person, the Commissioner may, where any of that expenditure is subsequently repaid to the company, amend in such manner as may be thereby rendered necessary the assessment made in respect of income derived, by the shareholder, during the income year in which the benefit arose, and may at any time refund any tax found to have been paid in excess of the amount properly payable, notwithstanding anything in section 409 of this Act.”
(5)
Section 4(5) of the principal Act (as amended by section 5(3) of the Income Tax Amendment Act (No. 3) 1983) is hereby further amended by inserting, after the words “not already taken into account under this subsection”
, the words “or under subsection (1)(c) of this section”
.
(6)
Section 3(3) of the principal Act (as amended by section 4(1) of the Income Tax Amendment Act (No. 3) 1983) is hereby consequentially further amended by omitting the words “or under section 4(5)”
, and substituting the words “or under section 4(1)(c) or section 4(5)”
.
(7)
Subsection (1) of this section shall apply on and from the day on which this Act receives the Governor-General’s assent.
(8)
Subsections (2), (3), (5), and (6) of this section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1982 and in every subsequent year.
5 Dates by which annual returns to be furnished
(1)
Section 17 of the principal Act is hereby amended by adding the following subsections:
“(5)
Subject to subsection (6) of this section, where—
“(a)
The annual returns required to be furnished by 10 or more taxpayers are prepared by any person, being—
“(i)
A person who carries on a professional public practice; or
“(ii)
A person who carries on any business in which annual returns so required to be furnished are prepared; or
“(iii)
The Maori Trustee; and
“(b)
The Commissioner is satisfied that—
“(i)
Any of the said required returns is unable to be furnished on or before the day (ascertained in accordance with subsections (1) and (2) of this section) not later than which it is required to be furnished; or
“(ii)
It would be not reasonable, having regard to the circumstances of the said person, to require, in the case of one, or more than one, of the said required returns, that it or they be furnished on or before the said day,—
the Commissioner, in his discretion, may extend or further extend the time for furnishing the said required return or required returns to such date or dates as, in his discretion, he thinks proper in the circumstances.
“(6)
For the purposes of subsections (4) and (5) of this section,—
“(a)
Where the return required to be furnished by any taxpayer is a return for a year ending with any 31st day of March, the time for furnishing that return shall not be extended or further extended to a time later than the 31st day of March that immediately succeeds that 31 st day of March:
“(b)
Where the return required to be furnished by any taxpayer is, by consent of the Commissioner under section 15 of this Act, a return for a year ending with the date of the annual balance of the accounts of the taxpayer, the time for furnishing that return shall,—
“(i)
Where the said date is between the 30th day of September and the next succeeding 31st day of March, not be extended or further extended to a time later than the 31st day of March next succeeding the 31st day of March that immediately succeeds the said date:
“(ii)
Where the said date is between the 31st day of March and the next succeeding 1st day of October, not be extended or further extended to a time later than the 31st day of March that immediately succeeds the said date.”
(2)
Section 17(4) of the principal Act (as added by section 6(1) of the Income Tax Amendment Act (No. 2) 1982) is hereby consequentially amended by inserting, before the words “Where any taxpayer”
, the words “Subject to subsection (6) of this section,”
.
6 Commissioner to make assessments, determinations of loss, and other determinations
Section 19 of the principal Act (as substituted by section 20 of the Income Tax Amendment Act 1980 and amended by section 25(2)(a) of the Income Tax Amendment Act (No. 3) 1983) is hereby further amended by repealing subsection (2), and substituting the following subsection:
“(2)
Subject to subsection (1) of this section, where any taxpayer has furnished a return in respect of any income year, and—
“(a)
The return shows, or purports to show, that the taxpayer has incurred a loss in that income year; or
“(b)
Notwithstanding that the return shows, or purports to show, that in that income year the taxpayer has—
“(i)
Derived assessable income; or
“(ii)
Neither derived assessable income nor incurred a loss,—
the Commissioner ascertains that the taxpayer has incurred a loss in that income year,—
the Commissioner shall determine the amount of that loss (that determination being referred to hereafter in this section and in section 29 of this Act as a determination of loss)—
“(c)
In accordance with the provisions of this Act for the calculation of assessable income; or
“(d)
Where section 22(4) of this Act applies in relation to the taxpayer and to the income year, in accordance with the provisions of that section.”
7 Obligation to pay tax where objection lodged
(1)
The principal Act is hereby amended by repealing section 34, and substituting the following section:
“34
“(1)
For the purposes of this section—
“‘Competent objection’, in relation to a person, being a taxpayer, and to any assessment, means an objection made by the person, to the assessment, in accordance with section 30 of this Act; but does not include any non-qualifying objection:
“‘Day of determination of final liability’, in relation to any amount of deferrable tax, means—
“(a)
Where the Commissioner receives from the taxpayer a notice in writing of the withdrawal by the taxpayer of the objection to the assessment in relation to which there is that amount of deferrable tax, the day on which the Commissioner receives that notice:
“(b)
Where that objection is determined by a Taxation Review Authority and not by any Court, the day on which the Taxation Review Authority determines the objection:
“(c)
Where the objection is determined as a result of proceedings taken in any Court, whether or not by way of appeal, the day on which the objection is finally determined, whether in those proceedings or, as the case may be, on any appeal:
“‘Deferrable tax’, in relation to a person, being a taxpayer, and to any assessment (not being an assessment made under section 321 of this Act) in relation to which the person has made an objection, being a competent objection, means an amount equal to one-half of so much of the tax assessed (in the assessment) as, after the disallowance, in whole or in part, by the Commissioner of the objection, is determined by the Commissioner to be, and is notified by him in writing to the taxpayer as being, the amount by which, if the taxpayer succeeded, in a hearing and determination by either a Taxation Review Authority or the High Court, with the whole or, as the case may be, the part of the objection that was so disallowed, the amount of the assessment of the tax would, by reason of the taxpayer so succeeding, be reduced:
“‘Non-qualifying objection’, in relation to a person, being a taxpayer, and to any assessment, means an objection made by the person, to the assessment, in accordance with section 30 of this Act where, and to the extent that, any ground of objection stated by the person is that—
“(a)
The return of income furnished by the taxpayer or the other particulars supplied together therewith, being the return and the other particulars from and by reference to which the assessment has been made, is deficient or, as the case may be, are deficient or insufficient; or
“(b)
The assessment has been made, under section 21 of this Act, in the absence of the return of income or the particulars from or by reference to which, had that return of income or those particulars been furnished to the Commissioner, the assessment would have been made; or
“(c)
A determination by the Commissioner made under section 19(4) of this Act is incorrect.
“(2)
The obligation to pay and the right of the Commissioner to receive and recover—
“(a)
Any tax, being deferrable tax, shall be suspended until the expiry of the day that, in relation to the deferrable tax, is the day of determination of final liability:
“(b)
Any tax, not being deferrable tax, shall not be suspended by any objection, appeal, or case stated, made or requested under this Part of this Act.
“(3)
Where, in relation to a person being a taxpayer and to any assessment the tax assessed in which has become due and payable, any amount of deferrable tax is unpaid and any amount of tax that is not deferrable tax is unpaid, each such amount of unpaid tax may be recovered by the Commissioner as a separate debt arising from a separate cause of action.
“(4)
If the objector succeeds, in whole or in part, with his objection, appeal, or case stated, the Commissioner shall forthwith refund the amount (if any) of the tax received by the Commissioner in excess of the amount which, according to the decision on the hearing of the objection, appeal, or case stated, was properly payable:
“Provided that no such amount shall be refunded until the expiry of whichever of the following days is the latest:
“(a)
The day on which the objection is determined by the Commissioner:
“(b)
The day on which there is given, in relation to the grounds of the objection, a decision of the Taxation Review Authority:
“(c)
The day on which there is given, in relation to the grounds of the objection, such judgment of any Court, whether or not on appeal, as, in relation to the objection, is the judgment which finally determines the objection.”
(2)
This section shall apply with respect to any objection made to an assessment the notice of which is given on or after the 1st day of April 1985.
8 Interest on certain excess tax
(1)
The principal Act is hereby amended by inserting, after section 34 (as substituted by section 7 of this Act), the following section:
“34a
“(1)
For the purposes of this section—
“‘Competent objection’ has the same meaning as in section 34(1) of this Act:
“‘Instalment portion’, in relation to any qualifying tax in dispute, means—
“(a)
Where the payment of the qualifying tax in dispute was made to the Commissioner in one sum, so much of that sum as is required to be refunded by the Commissioner to the taxpayer in accordance with this Act:
“(b)
Where the payment of the qualifying tax in dispute was made to the Commissioner in 2 or more instalments, so much of the amounts of those instalments as, if they were aggregated, would be equal to the amount of so much of the qualifying tax in dispute as is required to be so refunded by the Commissioner:
“‘Qualifying tax in dispute’ means—
“(a)
In relation to a taxpayer and to any assessment made under this Act, the amount of the tax (assessed in that assessment) to the assessment of which the taxpayer has made a competent objection:
“(b)
In relation to a taxpayer and to any determination made under section 19(4) of this Act, the amount of the credit of tax to the extent that a competent objection to the determination of the credit of tax has been made by the taxpayer; and for the purposes of this section the amount of the credit of tax shall, to that extent, be deemed to be an amount of tax paid to the Commissioner by the taxpayer on the date of the determination of the credit of tax;—
and includes the amount of any provisional tax payable by the taxpayer, in respect of the income of the income year immediately succeeding the income year on the income derived during which the assessment referred to in paragraph (a) of this definition was made or, as the case may be, the income year in respect of which the determination referred to in paragraph (b) of this definition was made, to the extent that the amount of the said provisional tax is, by reason of the assessment of the amount of the tax referred to in the said paragraph (a) or, as the case may be, the determination of the amount of the credit of tax referred to in the said paragraph (b), greater than it would have been had that assessment or that determination not been made; but does not include the amount of any provisional tax in respect of which the taxpayer has furnished to the Commissioner a statement or an amended statement or a further amended statement in accordance with section 387 of this Act:
“‘Specified rate of interest’, in relation to any period of 12 consecutive months commencing on any 1st day of April, means the interest percent per annum applicable to the period in accordance with the determination and notification made and given under subsection (7), or, as the case may be, subsection (8) of this section.
“(2)
In any case where any qualifying tax in dispute has, wholly or in part, been paid by or on behalf of the taxpayer to the Commissioner at or before the time of the decision on the consideration or the hearing of the objection, appeal, or case stated, being the objection or the appeal or the case stated, as the case may be, to which that qualifying tax in dispute relates, there shall, subject to this section, be paid by the Commissioner to the taxpayer interest on so much, if any, of the tax, being the qualifying tax in dispute that has been so paid, as is required to be refunded by the Commissioner to the taxpayer in accordance with section 34 of this Act:
“Provided that where the amount of interest that, but for this proviso, would be paid under this section is less than $5, no interest shall be payable under this section.
“(3)
Interest payable in accordance with this section shall be payable in relation to any period of 12 consecutive months commencing on any 1st day of April and shall, in relation to each instalment portion in relation to any qualifying tax in dispute that, in the said period, is an amount applied to, or standing to, the credit of the account of the taxpayer with the Commissioner, be calculated in accordance with the following formula:
_eqn1.JPG)
where—
x
is the number of days in the period that commences on whichever of the following days is the latest:
“(a)
The day on which the notice of the assessment, in relation to which the competent objection was made, was given to the taxpayer:
“(b)
The day on which the instalment portion in relation to the qualifying tax in dispute was paid to the Commissioner:
“(c)
The first day of the said period of 12 consecutive months:
“(d)
The 1st day of April 1985,—and ends on whichever of the following days is the earlier:
“(e)
The day on which the instalment portion in relation to the qualifying tax in dispute is refunded by the Commissioner in accordance with this Act (or, where the qualifying tax in dispute to which the instalment portion relates is an amount of provisional tax, the earlier of that last-mentioned day and the day on which the provisional tax is credited or refunded by the Commissioner pursuant to section 393(1) of this Act):
“(f)
The last day of the said period of 12 consecutive months; and
y
is the amount of the instalment portion in relation to the qualifying tax in dispute, being the instalment portion and the qualifying tax in dispute first mentioned in this subsection; and
z
is the specified rate of interest.
“(4)
For the purposes of subsection (3) of this section, the amounts of the instalments referred to in paragraph (b) of the definition of the expression ‘instalment portion’ in subsection (1) of this section shall be deemed to have been received by the Commissioner in the sequence that is the converse of the sequence in which those amounts were paid to the Commissioner.
“(5)
Where the Commissioner is satisfied that the amount of any interest paid to the taxpayer under this section is in excess of the proper amount, the Commissioner may recover the amount of the excess in the same manner, with any necessary modifications, as if it were income tax payable by the taxpayer.
“(6)
All money payable under this section by way of interest on qualifying tax in dispute shall be paid out of the Consolidated Account without further appropriation than this Act.
“(7)
The Secretary to the Treasury shall, prior to the 31st day of March 1985, determine the rate percent per annum at which interest is to be payable under this section and shall notify that rate in the Gazette.
“(8)
The Secretary to the Treasury may from time to time after the 31st day of March 1985 determine, by notification in the Gazette, the rate percent per annum of interest that is to apply for the purposes of this section in relation to any period or periods of 12 consecutive months commencing on any 1st day of April succeeding that notification.”
(2)
This section shall apply with respect to any objection made to an assessment, a notice of which was given on or after the 1st day of April 1985.
9 Rebate in respect of gifts of money and payment of school fees
(1)
Section 56a of the principal Act (as inserted by section 9(1) of the Income Tax Amendment Act (No. 2) 1977) is hereby amended by repealing the definition of the expression “fees”
in subsection (1) (as substituted by section 8(1) of the Income Tax Amendment Act 1980), and substituting the following definition:
“‘Fees’ include attendance dues in respect of the attendance by any person at any integrated school; but do not include any fees for any examination by any person, body, or institution, other than the school at which education is received by the person:”.
(2)
Section 56a(2) of the principal Act (as so inserted) is hereby amended by adding, after paragraph (w) (as added by section 9 of the Income Tax Amendment Act (No. 3) 1983), the following paragraph:
“(x) CORSO (Incorporated):”.
(3)
Section 56a(2) of the principal Act (as so inserted) is hereby amended by adding, after paragraph (x) (as added by subsection (2) of this section), the following paragraph:
“(y) Operation Hope (Aid Ship to Africa):”.
(4)
Subsection (2) of this section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1985 and in every subsequent year.
10 Incomes wholly exempt from tax
(1)
Section 61 of the principal Act is hereby amended by repealing paragraph (25), and substituting the following paragraph:
“(25)
Income derived by trustees in trust for charitable purposes or derived by any society or institution established exclusively for charitable purposes and not carried on for the private pecuniary profit of any individual, except where that income so derived is income to which paragraph (27) of this section applies:”.
(2)
Section 61 of the principal Act is hereby further amended by inserting in the second proviso to paragraph (27) (as inserted by section 9(3) of the Income Tax Amendment Act (No. 2) 1982), after the words “in that income year”
, the words “and notwithstanding any other provision of this Act, where that business is carried on by or on behalf of or for the benefit of trustees in trust, the trustees shall be assessable and liable for income tax on that income as if they were beneficially entitled thereto, and every person other than the trustees shall, in relation to that income, be deemed not to be beneficially entitled in possession to the receipt thereof, and section 230 of this Act shall apply accordingly”
.
(3)
Section 61(27) of the principal Act is hereby further amended by inserting in paragraphs (e) and (f) of the second proviso (as so inserted), before the words “disposes of”
in both places where they occur, in each case the words “has disposed of or”
.
(4)
Section 61 of the principal Act is hereby further amended by repealing paragraph (49), and substituting the following paragraph:
“(49)
Income derived by any trustee, and any amount distributed to a beneficiary, of a trust for the benefit of persons harmed by the drug known as ‘thalidomide’, where that trust was created—
“(a)
By an order of Court under the Minors’ Contracts Act 1969; or
“(b)
Under the law of any country or territory outside New Zealand in any case where—
“(i)
The funds settled on the trust were money paid in compensation by the producer or supplier of the said drug; and
“(ii)
The purpose and effect of the trust are the same or substantially the same as the purpose and effect of a trust that is of the kind referred to in subparagraph (a) of this paragraph and the income derived by the trustee of which is, under this paragraph, exempt from tax:”.
(5)
Subsection (3) of this section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1983 and in every subsequent year.
(6)
Subsection (4) of this section shall apply with respect to the tax on income derived in any income year, whether commencing before, on, or after the date on which this Act receives the Governor-General’s assent.
11 Exemption from tax of certain aircraft operators
The principal Act is hereby amended by inserting, after section 64, the following section:
“64a
“(1)
For the purposes of this section—
“‘Aircraft operator’ means a person engaged in the business of operating any aircraft for air transport from any airport:
“‘Air transport’ means the carriage by any aircraft of merchandise, goods, livestock, mails, or passengers emplaned or embarked on that aircraft at any airport:
“‘Air transport from New Zealand’ means the carriage outside New Zealand by any aircraft of merchandise, goods, livestock, mails, or passengers emplaned or embarked on that aircraft at any airport in New Zealand; and such carriage shall be deemed to be outside New Zealand notwithstanding that the aircraft calls at any one or more other airports in New Zealand before leaving New Zealand on the flight for which that emplaning or embarking occurred:
“‘Income tax’, in relation to any country or territory outside New Zealand, means any tax which, in the opinion of the Commissioner, is substantially of the same nature as income tax imposed under this Part of this Act.
“(2)
Where any aircraft operator, or any class or classes of aircraft operators, being resident in a country or territory outside New Zealand and not being resident in New Zealand, is or, as the case may be, are engaged in air transport from New Zealand, the Commissioner may exempt in whole or in part such operator or class or classes of operators from liability to pay income tax in New Zealand in respect of income derived from that air transport from New Zealand, if and so far as he is satisfied that in corresponding circumstances the like aircraft operator or, as the case may be, the like class or classes of aircraft operators, being resident in New Zealand, are not liable to or are exempt from income tax imposed by the laws of that country or territory outside New Zealand.”
12 Items included in assessable income
(1)
Section 65 of the principal Act is hereby amended by inserting, after subsection (1a) (as inserted by section 12(1) of the Income Tax Amendment Act 1981), the following subsection:
“(1b)
For the purposes of this section, the term ‘pensions’ shall include any ex gratia payment (not being a payment to which any of subsections (2) to (4a) and (6) of section 68 of this Act applies) received by any taxpayer from any person for whom the taxpayer or a parent or a child of the taxpayer, or a person who is or has been a spouse or a dependant of the taxpayer, has rendered past services, being a payment which, in the opinion of the Commissioner, would not have been made by that person (being the person first mentioned in this subsection) if those past services had not been rendered by, as the case may be, the taxpayer or the said parent or the said child or the said person who is or has been a spouse or a dependent.”.
(2)
Section 2 of the principal Act is hereby amended by inserting, after paragraph (ba) of the definition of the expression “salary or wages”
(as inserted by section 28(2) of the Income Tax Amendment Act (No. 3) 1983), the following paragraph:
“(bb)
An ex gratia payment that is a pension within the meaning of section 65(1b) of this Act; and”.
(3)
Section 243(2) of the principal Act is hereby amended by inserting, after paragraph (i), the following paragraph:
“(ia)
An ex gratia payment that is a pension within the meaning of section 65(1b) of this Act:”.
(4)
This section shall apply with respect to payments received on or after the day on which this Act receives the Governor-General’s assent.
13 Retiring allowances payable to employees
(1)
Section 68 of the principal Act (as amended by section 42 of the Income Tax Amendment Act (No. 2) 1977 and section 12 of the Income Tax Amendment Act (No. 3) 1983) is hereby further amended by repealing subsection (3), and substituting the following subsection:
“(3)
In any case where—
“(a)
A taxpayer has retired and on the occasion of his retirement a payment of the kind referred to in subsection (2) of this section has been made to him; and
“(b)
After his retirement the taxpayer engages in any employment or service; and
“(c)
On the occasion of the termination of that employment or service a payment of the kind referred to in subsection (2) of this section is made to him,—
that taxpayer shall, on the occasion of that termination, be deemed to have further retired, and that payment shall be deemed to be a payment to which subsection (2) of this section applies; and for the purposes of the said subsection (2), every period of employment or service that preceded the employment or service referred to in paragraph (b) of this subsection, and all remuneration in respect of every such period, shall be disregarded in calculating the specified sum in relation to that further retirement.”
(2)
Section 68 of the principal Act (as so amended) is hereby further amended—
(a)
By omitting from subsection (2) the words “occasion of his retirement from that employment or service”
, and substituting the words “termination of that employment or service, that termination being the occasion of his retirement”
:
(b)
By omitting from subsection (4)(a) the words “occasion of his retirement from that employment of service”
, and substituting the words “termination of that employment or service and that termination shall be deemed to be the occasion of his retirement”
:
(c)
By omitting from subsection (4a) (as inserted by section 12(4) of the Income Tax Amendment Act (No. 3) 1983) the words “occasion of the retirement of the taxpayer from that employment or service”
, and substituting the words “termination of that employment or service and that termination shall be deemed to be the occasion of the retirement of the taxpayer”
:
(d)
By omitting from subsection (5)(d) the words “from any employment or service”
.
(3)
This section shall apply with respect to any payment made on or after the 1st day of April 1984.
14 Excess income on sale of livestock where farmer forced to quit farm, or farming business adversely affected by fire, flood, etc.
Section 94(2)(d) of the principal Act is hereby amended by adding the following proviso:
“Provided also that where, before the end of the period for acquiring other livestock or retaining progeny of livestock as provided in this paragraph or, as the case may be, in the foregoing proviso to this paragraph (that period being referred to hereafter in this proviso as the replacement period), the farming business is affected by a further occurrence or by a continuation of an occurrence, being in either case an occurrence of any of the kinds referred to in paragraph (a) of this subsection, the Minister may, if he thinks fit, declare that the replacement period shall be extended to the end of such later income year as is specified by him for that purpose; and the Minister may from time to time, by declaration made by him in that behalf, extend further, in like manner and to the end of such income year as he considers appropriate in the circumstances, the said period as extended by him under this proviso.”
15 Deduction for expenditure or loss incurred in production of income from employment
(1)
The principal Act is hereby amended by repealing section 105 (as amended by section 10 of the Income Tax Amendment Act 1978, section 3(3) of the Income Tax Amendment Act 1980, and section 13 of the Income Tax Amendment Act 1981), and substituting the following section:
“105
“(1)
For the purposes of this section the term ‘income from employment’ means—
“(a)
Income from employment as defined in section 2 of this Act:
“(b)
Any salary, wages, or other income to which section 6(2) of this Act applies:
“(c)
Withholding payments of the classes specified in clause 10 of Part A and clause 6 of Part B of the Schedule to the Income Tax (Withholding Payments) Regulations 1979.
“(2)
For the purposes of section 104 of this Act and notwithstanding anything in section 106 of this Act, the amount or, as the case may be, the sum of the amounts of the expenditure and losses incurred by any taxpayer in deriving assessable income, being assessable income that consists of income from employment, in any income year shall be deemed to be such amount (referred to hereafter in this subsection as the qualifying amount) as is equal to the greater of—
“(a)
An amount equal to the smaller of—
“(i)
An amount equal to 2 percent of that income from employment in that income year:
“(ii)
$52:
“(b)
An amount equal to the smaller of—
“(i)
The aggregate of the amounts of the expenditure and losses (being expenditure and losses incurred by the taxpayer in gaining or producing that assessable income) of any of the kinds specified in the Fourth Schedule to this Act, reduced by every amount received (whether before or after the incurring of that expenditure and those losses), by or on behalf of the taxpayer, in respect of or in relation to that expenditure and those losses:
“(ii)
The said aggregate, reduced by every amount that, in relation to the said expenditure and losses so incurred, is (in accordance with the said Fourth Schedule, and by reason of the maximum or, as the case may be, the maxima specified therein in respect of the said expenditure and losses) not a deductible amount;—
and, except to the extent of the qualifying amount, no deduction shall be allowed under section 104 of this Act of any expenditure or loss incurred by the taxpayer in so deriving that assessable income.
“(3)
For the purposes of subsection (2)(b) of this section, expenditure or loss shall be deemed not to have been incurred unless the taxpayer furnishes to the Commissioner such receipts or other evidence, documenting the incurring of the expenditure or loss, as the Commissioner considers necessary.
“(4)
Notwithstanding anything in section 108 of this Act, no deduction shall, in calculating the assessable income derived in any income year by any taxpayer (being assessable income that consists of income from employment), be allowed in respect of any depreciation in respect of any asset, other than an asset used in and for the purposes of travel where the expenditure or loss incurred on that travel is of a kind that is referred to in clause 6 of the Fourth Schedule to this Act and that is, within the meaning of the said Fourth Schedule and in relation to the taxpayer and to that income year, an item of expenditure or loss deductible in respect of income from employment.”
(2)
Section 106(1)(i) of the principal Act is hereby repealed.
(3)
The Fourth Schedule to the principal Act is hereby consequentially amended by repealing clause 8, and substituting the following clause:
“8
Expenditure incurred by the taxpayer for the purposes of, and as a condition of, his employment, not being expenditure of any of the kinds referred to in any of the foregoing provisions of this Schedule and not being expenditure that consists of or is in relation to sums or matters of any of the kinds referred to in section 106 of this Act.”
(4)
The following enactments are hereby consequentially repealed:
(a)
Section 10 of the Income Tax Amendment Act 1978:
(b)
Section 3(3) of the Income Tax Amendment Act 1980:
(c)
Section 13 of the Income Tax Amendment Act 1981.
(5)
This section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1984 and in every subsequent year:
Provided that with respect to the tax on income derived in the income year that commenced on the 1st day of April 1984, section 105 of the principal Act (as substituted by subsection (1) of this section) shall apply as if for subsection (3) of that section there were substituted subsection (3) of section 105 of that Act (as in force immediately before this section came into force).
16 Amendments consequential upon enactment of Fisheries Act 1983
(1)
Section 109(1) of the principal Act is hereby amended by repealing the definition of the expression “fishing boat”
, and substituting the following definition:
“‘Fishing boat’ means a boat that is registered as a fishing boat under Part I of the Fisheries Amendment Act 1963 or a boat that is registered as a fishing vessel under Part IV of the Fisheries Act 1983; and includes a small boat belonging to any boat that is so registered.”
(2)
Section 118(1) of the principal Act is hereby amended by inserting in the definition of the expression “fishing boat”
(as amended by section 25(1) of the Income Tax Amendment Act 1978), after the words “Fisheries Amendment Act 1963”
, the words “or a boat that is registered as a fishing vessel under Part IV of the Fisheries Act 1983”
.
(3)
Section 156a(1) of the principal Act (as inserted by section 18 of the Income Tax Amendment Act 1979) is hereby amended by inserting in paragraph (b) of the definition of the expression “foreign owned fishing vessel”
, after the words “Fisheries Act 1908”
, the words “or registered as a fishing vessel under Part IV of the Fisheries Act 1983”
.
(4)
This section shall be deemed to have come into force on the 1st day of October 1983.
17 Depreciation allowances, etc., on motorcars
(1)
Section 110(1) of the principal Act (as substituted by section 15 of the Income Tax Amendment Act (No. 2) 1977) is hereby amended by repealing paragraphs (a) and (b) of the definition of the expression “expenditure”
(as inserted by section 2(2) of the Income Tax Amendment Act (No. 2) 1980 and amended by section 18(2) and (3) of the Income Tax Amendment Act (No. 2) 1982), and substituting the following paragraph:
“(a)
For the purposes of section 125 of this Act, qualifying expenditure of the kind referred to in paragraph (f) of the definition of the expression ‘qualifying expenditure’ in subsection (1) of that section, being expenditure that is allowed as a deduction, pursuant to subsection (2) of that section, in calculating the assessable income derived by that taxpayer in that income year; or”.
(2)
The Income Tax Amendment Act (No. 2) 1982 is hereby consequentially amended by repealing section 18(2).
(3)
This section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1982 and in every subsequent year.
18 First year depreciation allowance on plant and machinery and on certain buildings
(1)
Section 112(1) of the principal Act (as amended by section 17(1) of the Income Tax Amendment Act (No. 2) 1982) is hereby further amended by repealing the definitions of the expressions “export slaughterhouse”
, “packing house”
, and “stock”
.
(2)
Section 112(2) of the principal Act (as amended by section 55(1) of the Income Tax Amendment Act 1979 and section 17(2) of the Income Tax Amendment Act (No. 2) 1982) is hereby further amended by repealing paragraphs (g) and (h) and the proviso to that subsection.
(3)
Section 112(3) of the principal Act (as substituted by section 16(1) of the Income Tax Amendment Act (No. 2) 1977) is hereby amended—
(a)
By repealing paragraph (a):
(b)
By omitting from paragraph (b) the word “other”
.
(4)
Section 112(4) of the principal Act (as substituted by section 16(2) of the Income Tax Amendment Act (No. 2) 1977) is hereby amended by repealing paragraph (b).
(5)
The Fifth Schedule to the principal Act (as substituted by section 16(3) of the Income Tax Amendment Act (No. 2) 1977 and amended by section 55 of the Income Tax Amendment Act 1979) is hereby consequentially amended by omitting from columns (1), (2), (3), and (4) the items relating to paragraphs (g) and (h) of section 112(2).
19 Investment allowance on new plant and machinery used in a high priority activity
(1)
The principal Act is hereby amended by repealing section 121a (as inserted by section 19(1) of the Income Tax Amendment Act (No. 2) 1977).
(2)
Section 121(3)(a) of the principal Act is hereby consequentially amended by omitting the expression “121a,”
(as inserted by section 19(2)(a) of the Income Tax Amendment Act (No. 2) 1977).
(3)
Section 122(5) of the principal Act is hereby consequentially amended by omitting the expression “121a,”
(as inserted by section 19(2)(b) of the Income Tax Amendment Act (No. 2) 1977).
(4)
The Income Tax Amendment Act (No. 2) 1977 is hereby consequentially amended by repealing section 19.
(5)
This section shall apply on and from the first day of the income year commencing on the 1st day of April 1985.
20 Investment allowance on new plant and machinery for use for farming or agricultural purposes
(1)
Section 122 of the principal Act is hereby amended by inserting, after subsection (3), the following subsection:
“(3a)
Subject to this section, in any case where—
“(a)
The Commissioner is satisfied that a binding contract has been entered into by any taxpayer on or before the 8th day of November 1984; and
“(b)
Pursuant to that binding contract, expenditure of any of the kinds referred to in subsection (3) of this section is incurred by that taxpayer on or after the 1st day of April 1985; and
“(c)
That expenditure is incurred within such period after the 31st day of March 1985 as, in the opinion of the Commissioner, is reasonable in the circumstances of the particular case,—
subsection (3) of this section shall apply in relation to that expenditure as if the date on which that expenditure is incurred were the terminating date in relation to that expenditure.”
(2)
Section 122 of the principal Act is hereby further amended by inserting, after subsection (4), the following subsection:
“(4a)
Subject to this section, in any case where—
“(a)
The Commissioner is satisfied that on or before the 8th day of November 1984 any taxpayer has entered into a binding agreement to lease from any person under a qualifying lease any new farming or agricultural plant or machinery to which this section applies; and
“(b)
Pursuant to that binding agreement, the taxpayer commences, within such period after the 31st day of March 1985 as, in the opinion of the Commissioner, is reasonable in the circumstances of the particular case, to so lease that farming or agricultural plant or machinery for use by him in New Zealand in the production of assessable income,—
subsection (4) of this section shall apply as if the terminating date in relation to that lease were the date on which that leasing so commences.”
21 Year in which accident compensation levy is deductible
(1)
The principal Act is hereby amended by inserting, after section 140, the following section:
“140a
“(1)
For the purposes of this section ‘accident compensation levy’ means, where the taxpayer is an employer, the levy payable by him pursuant to section 43 of the Accident Compensation Act 1982 and, where the taxpayer is a self-employed person, the levy payable by him pursuant to section 44 of that Act.
“(2)
For the purpose of calculating the assessable income derived in any income year by any taxpayer, any amount of accident compensation levy that becomes due from and payable by the taxpayer in that income year shall be deemed to be expenditure incurred by the taxpayer in that income year and in no other income year, and the deduction (if any) allowable in respect thereof under section 104 of this Act shall be computed accordingly:
“Provided that where, in relation to any taxpayer, any amount of accident compensation levy has been allowed as a deduction in calculating the assessable income of that taxpayer derived in any income year, being an income year preceding the income year in relation to which under this section, if it had then been in force, the levy would have been deemed to be expenditure incurred and being an income year that commenced before the 1st day of April 1985, that amount of accident compensation levy shall be deemed to be expenditure incurred in the income year first mentioned in this proviso and not in any other income year.”
(2)
This section shall apply with respect to any amount of accident compensation levy (as defined in section 140a(1) of the principal Act) that becomes due from and payable by any taxpayer in the income year commencing on the 1st day of April 1985 and in every subsequent year.
22 Export performance incentive for qualifying goods
(1)
Section 156a(3) of the principal Act (as inserted by section 18 of the Income Tax Amendment Act 1979) is hereby amended by omitting the words “terminating date”
, and substituting the words “31st day of March 1985”
.
(2)
Section 156a of the principal Act (as so inserted) is hereby further amended by inserting, after subsection (3), the following subsections:
“(3a)
Subject to this section, where in the income year commencing on the 1st day of April 1985 a taxpayer derives assessable income in carrying on in New Zealand any business in which export goods are sold or otherwise disposed of, there shall be allowed to that taxpayer a credit of tax of an amount equal to 50 percent of the specified percentage of the consideration receivable in respect of those export goods:
“Provided that where, in relation to that income year, the Corporation has determined an assigned percentage in respect of any of those export goods pursuant to subsection (4) of this section, this subsection shall apply as if the assigned percentage were the specified percentage in respect of those export goods.
“(3b)
Subject to this section, where in the income year commencing on the 1st day of April 1986 a taxpayer derives assessable income in carrying on in New Zealand any business in which export goods are sold or otherwise disposed of, there shall be allowed to that taxpayer a credit of tax of an amount equal to 25 percent of the specified percentage of the consideration receivable in respect of those export goods:
“Provided that where, in relation to that income year, the Corporation has determined an assigned percentage in respect of any of those export goods pursuant to subsection (4) of this section, this subsection shall apply as if the assigned percentage were the specified percentage in respect of those export goods.”
(3)
Section 156a(4) of the principal Act (as so inserted and amended by section 27 of the Income Tax Amendment Act (No. 2) 1982) is hereby further amended by inserting, after the words “the taxpayer may”
, the words “, in any income year ending on or before the 31st day of March 1985,”
.
(4)
Section 156a(4) of the principal Act (as so inserted and amended) is hereby further amended by repealing paragraph (d), and substituting the following paragraph:
“(d)
The assigned percentage so determined by the Corporation shall apply for the income year in which the application is made and for every subsequent income year, unless another assigned percentage is determined by the Corporation in respect of that class or kind of those export goods:”.
(5)
Section 156a of the principal Act (as so inserted) is hereby further amended by inserting, after subsection (9), the following subsection:
“(9a)
Where, in any income year commencing on or after the 1st day of April 1984, any export merchant (referred to hereafter in this subsection as the taxpayer) exports any export goods, being export goods that the taxpayer has acquired from a person who—
“(a)
In any income year that ended on or before the 31st day of March 1984 was engaged in any business in which goods were sold or otherwise disposed of; or
“(b)
In any income year commencing on or after the 1st day of April 1984 has acquired any business in which, in any income year that ended on or before the 31st day of March 1984, goods were sold or otherwise disposed of,—
and not being export goods that—
“(c)
Are of a kind that the taxpayer has acquired, for export by the taxpayer, from the said person in any income year that commenced on or before the 1st day of April 1983:
“(d)
Are acquired by the taxpayer, for export by the taxpayer, from the manufacturer, producer, or processor thereof, being a manufacturer, producer, or processor, as the case may be, from whom the taxpayer acquired goods that were for export by the taxpayer in any income year that commenced on or before the 1st day of April 1983,—
and the Commissioner is satisfied that, had the date of the annual balance of the accounts of the taxpayer not been a date later, in relation to the 31st day of March of the income year first mentioned in this subsection, than the date of the annual balance of the accounts of the said person, those goods would have been exported by the said person, there shall not, under this section, be allowed to the taxpayer any credit of tax greater than that which would, under this section, have been allowed to the said person had the said person exported those export goods in the manner in which and on the date on which they were exported by the taxpayer; and, for the purposes of paragraph (a) of this subsection, the expression ‘a person’ shall include any other person where the person and the other person are associated persons.”
23 Export performance incentive for qualifying services
(1)
Section 156b(2) of the principal Act (as inserted by section 18 of the Income Tax Amendment Act 1979) is hereby amended—
(a)
By omitting the words “terminating date”
, and substituting the words “31st day of March 1985”
:
(b)
By inserting, after the words “Exchange Control Regulations 1978”
, the words “or, as the case may be, the Exchange Control Regulations 1985”
.
(2)
Section 156b of the principal Act (as so inserted) is hereby further amended by inserting, after subsection (2), the following subsections:
“(2a)
Subject to this section, where in the income year commencing on the 1st day of April 1985 any taxpayer carrying on business in New Zealand has derived assessable income which consists of fees, and the Commissioner is satisfied that an amount of net foreign currency earnings in respect of those fees has been transferred to the credit of the taxpayer—
“(a)
By the transfer of foreign currency to New Zealand through the New Zealand banking system; or
“(b)
By payment in New Zealand, in New Zealand currency, from funds held in New Zealand which would otherwise be remittable from New Zealand in terms of the Exchange Control Regulations 1978 or, as the case may be, the Exchange Control Regulations 1985,—
within that income year or within the prescribed period in relation to that income year or within such later time as the Commissioner in his discretion may allow, there shall be allowed to that taxpayer a credit of tax equal to 5.95 percent of the amount of such net foreign currency earnings.
“(2b)
Subject to this section, where in the income year commencing on the 1st day of April 1986 any taxpayer carrying on business in New Zealand has derived assessable income which consists of fees, and the Commissioner is satisfied that an amount of net foreign currency earnings in respect of those fees has been transferred to the credit of the taxpayer—
“(a)
By the transfer of foreign currency to New Zealand through the New Zealand banking system; or
“(b)
By payment in New Zealand, in New Zealand currency, from funds held in New Zealand which would otherwise be remittable from New Zealand in terms of the Exchange Control Regulations 1985—
within that income year or within the prescribed period in relation to that income year or within such later time as the Commissioner in his discretion may allow, there shall be allowed to that taxpayer a credit of tax equal to 2.975 percent of the amount of such net foreign currency earnings.”
24 Export performance incentive for qualifying overseas projects
(1)
Section 156d(1) of the principal Act (as inserted by section 18 of the Income Tax Amendment Act 1979 and amended by section 33 of the Income Tax Amendment Act 1980) is hereby further amended—
(a)
By omitting from the definition of the expression “qualifying project”
the words “terminating date”
, and substituting the words “31st day of March 1987”
:
(b)
By omitting from the definition of the expression “qualifying project”
the words “(not being services to which section 156b of this Act applies)”
, and substituting the words “(not being non-qualifying services)”
.
(2)
Section 156d(1) of the principal Act (as so inserted and amended) is hereby further amended by inserting, after the definition of the expression “net foreign currency earnings”
, the following definition:
“‘Non-qualifying services’, in relation to any taxpayer, means—
“(a)
In relation to any income year ending on or before the 31st day of March 1987, any qualifying services the fees derived from the supply of which are fees to which section 156b of this Act applies, or would have applied if all of the fees received and receivable for that supply had been derived on or before the last day of the income year ending on the 31st day of March 1987:
“(b)
In relation to any income year commencing on or after the 1st day of April 1987, any qualifying services the fees derived from the supply of which are fees to which section 156b of this Act would have applied if all of the fees received and receivable for that supply had been derived in the income year ending on the 31st day of March 1987:”.
(3)
Section 156d(3) of the principal Act (as so inserted) is hereby amended—
(a)
By inserting, after the words “from any qualifying project”
, the words “that commenced to be performed in any income year ending on or before the 31st day of March 1985”
:
(b)
By inserting, after the words “the Commissioner is satisfied”
, the words “, in any case where that qualifying project commences to be performed in the income year ending on the 31st day of March 1985, that that qualifying project is, in that income year and at all times thereafter, performed with expedition, and is satisfied, in every case,”
:
(c)
By inserting, after the words “Exchange Control Regulations 1978”
, the words “or, as the case may be, the Exchange Control Regulations 1985”
.
(4)
Section 156d of the principal Act (as so inserted and amended) is hereby further amended by inserting, after subsection (3), the following subsections:
“(3a)
Subject to this section, where in any income year or years any taxpayer carrying on a business in New Zealand has derived assessable income from any qualifying project that commenced to be performed in the income year commencing on the 1st day of April 1985 and the Commissioner is satisfied that that qualifying project was, in that income year and at all times thereafter, performed with expedition and that an amount of net foreign currency earnings in respect of that assessable income has been transferred to the credit of the taxpayer—
“(a)
By the transfer of foreign currency to New Zealand through the New Zealand banking system; or
“(b)
By payment in New Zealand, in New Zealand currency, from funds held in New Zealand which would otherwise be remittable from New Zealand in terms of the Exchange Control Regulations 1978 or, as the case may be, the Exchange Control Regulations 1985,—
within that income year or those years or within such later time as the Commissioner in his discretion may allow, there shall be allowed to that taxpayer a credit of tax equal to 5.95 percent of the amount of such net foreign currency earnings.
“(3b)
Subject to this section, where in any income year or years any taxpayer carrying on a business in New Zealand has derived assessable income from any qualifying project that commenced to be performed in the income year commencing on the 1st day of April 1986 and the Commissioner is satisfied that that qualifying project was, in that income year and at all times thereafter, performed with expedition and that an amount of net foreign currency earnings in respect of that assessable income has been transferred to the credit of the taxpayer—
“(a)
By the transfer of foreign currency to New Zealand through the New Zealand banking system; or
“(b)
By payment in New Zealand, in New Zealand currency, from funds held in New Zealand which would otherwise be remittable from New Zealand in terms of the Exchange Control Regulations 1985—
within that income year or those years or within such later time as the Commissioner in his discretion may allow, there shall be allowed to that taxpayer a credit of tax equal to 2.975 percent of the amount of such net foreign currency earnings.”
25 Export performance incentive for qualifying tourist services
(1)
Section 156e(2) of the principal Act (as inserted by section 18 of the Income Tax Amendment Act 1979 and amended by section 34 of the Income Tax Amendment Act 1980) is hereby further amended—
(a)
By omitting the words “terminating date”
, and substituting the words “31st day of March 1985”
:
(b)
By inserting, after the words “Exchange Control Regulations 1978”
, the words “or, as the case may be, the Exchange Control Regulations 1985”
.
(2)
Section 156e of the principal Act (as so inserted) is hereby further amended by inserting, after subsection (2), the following subsections:
“(2a)
Subject to this section, where in the income year commencing on the 1st day of April 1985 any taxpayer carrying on a business in New Zealand as a tourist wholesaler or retailer has derived assessable income from the sale of qualifying tourist services and the Commissioner is satisfied that an amount of net foreign currency earnings in respect of that assessable income has been transferred to the credit of the taxpayer—
“(a)
By the transfer of foreign currency to New Zealand through the New Zealand banking system; or
“(b)
By payment in New Zealand, in New Zealand currency, from funds held in New Zealand which would otherwise be remittable from New Zealand in terms of the Exchange Control Regulations 1978 or, as the case may be, the Exchange Control Regulations 1985,—
prior to or within that income year or within the prescribed period in relation to that income year or within such later time as the Commissioner in his discretion may allow, there shall be allowed to that taxpayer a credit of tax equal to 5 percent of the amount of such net foreign currency earnings.
“(2b)
Subject to this section, where in the income year commencing on the 1st day of April 1986 any taxpayer carrying on a business in New Zealand as a tourist wholesaler or retailer has derived assessable income from the sale of qualifying tourist services and the Commissioner is satisfied that an amount of net foreign currency earnings in respect of that assessable income has been transferred to the credit of the taxpayer—
“(a)
By the transfer of foreign currency to New Zealand through the New Zealand banking system; or
“(b)
By payment in New Zealand, in New Zealand currency, from funds held in New Zealand which would otherwise be remittable from New Zealand in terms of the Exchange Control Regulations 1985,—
prior to or within that income year or within the prescribed period in relation to that income year or within such later time as the Commissioner in his discretion may allow, there shall be allowed to that taxpayer a credit of tax equal to 2.5 percent of the amount of such net foreign currency earnings.”
26 Export earnings from qualifying overseas projects
(1)
The principal Act is hereby amended by repealing section 158a (as inserted by section 26 of the Income Tax Amendment Act (No. 2) 1977).
(2)
The Income Tax Amendment Act (No. 2) 1977 is hereby consequentially amended by repealing section 26.
(3)
The Income Tax Amendment Act 1979 is hereby consequentially amended by repealing section 23.
(4)
The Income Tax Amendment Act (No. 3) 1983 is hereby consequentially amended by repealing section 26.
(5)
This section shall apply on and from the first day of the income year commencing on the 1st day of April 1985.
27 Payments to partners for services performed for the partnership
(1)
Section 167b(1) of the principal Act (as inserted by section 28(1) of the Income Tax Amendment Act (No. 3) 1983) is hereby amended by repealing the definition of the expression “contract of service”
, and substituting the following definition:
“‘Contract of service’, in relation to a partnership and to any partner who is a working partner thereof, means a binding agreement in writing, entered into by all the partners, which specifies the terms and conditions under which the partner is to be a working partner of the partnership, including any amount payable to the working partner for services performed by him in the carrying on of the business of the partnership pursuant to that agreement, whether or not—
“(a)
The amount so specified includes any amount, so payable for those services, by way of bonus to the working partner; and
“(b)
There is so payable for those services, by way of bonus to the working partner, an amount additional to the amount so specified:”.
(2)
Section 167b(1) of the principal Act (as so inserted and amended) is hereby further amended by omitting from the definition of the expression “working partner”
the words “, as his principal occupation,”
.
(3)
Section 167b of the principal Act (as so inserted) is hereby further amended by repealing subsection (2), and substituting the following subsection:
“(2)
Subject to section 97 of this Act, where any payment is made by any partnership to any working partner of the partnership for services performed by him as a working partner of the partnership in any period in any income year (being a period commencing not earlier than the date on which the contract of service in relation to that partner becomes binding, and ending not later than the date on which that contract of service terminates), the amount of that payment shall, to the extent that it does not exceed, as the case may be,—
“(a)
Such amount as, in accordance with the said contract of service, is the amount payable to that partner in respect of the said period; or
“(b)
The aggregate of—
“(i)
The amount referred to in paragraph (a) of this subsection; and
“(ii)
The amount (being an amount additional to the said amount payable to that partner in respect of the said period) of any payment of bonus or further bonus made by the partnership to that working partner for the said services performed by him,—
be deemed, for the purposes of this Act, to be an amount of expenditure of the kind referred to in section 104(b) of this Act.”
(4)
This section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1984 and in every subsequent year in so far as the payment by the partnership was or is made on or after the 16th day of December 1983, being the date on which the Income Tax Amendment Act (No. 3) 1983 received the Governor-General’s assent.
28 Specified suspensory loans
Section 172(1) of the principal Act (as substituted by section 60(1) of the Income Tax Amendment Act 1979) is hereby amended by adding to the definition of the expression “specified suspensory loan”
the following paragraphs:
“(c)
Any loan made by the Ministry of Energy as a liquefied petroleum gas distribution suspensory loan and designated as such by that Ministry:
“(d)
Any other loan, made by a public authority and designated by that public authority as a specified suspensory loan.”
29 Grant-related suspensory loans
Section 173(1) of the principal Act (as substituted by section 32(1) of the Income Tax Amendment Act 1978 and amended by section 61 of the Income Tax Amendment Act 1979, section 39 of the Income Tax Amendment Act 1980, section 18(1) of the Income Tax Amendment Act 1981, section 31 of the Income Tax Amendment Act (No. 2) 1982, and section 30(1) of the Income Tax Amendment Act (No. 3) 1983) is hereby further amended by adding to the definition of the expression “grant-related suspensory loan”
the following paragraph:
“(d)
Any other loan, made by a public authority, (not being a loan to which section 172 of this Act applies) pursuant to the terms of which the liability of the borrower in respect of that loan may be remitted in whole or in part.”
30 Loss incurred in specified activities
(1)
Section 188a of the principal Act (as inserted by section 32 of the Income Tax Amendment Act (No. 2) 1982) is hereby amended, as from its commencement, by inserting—
(a)
In subsection (4)(b)(i), after the words “that other specified activity”
; and
(b)
In subsection (5a) (as inserted by section 31(1) of the Income Tax Amendment Act (No. 3) 1983), after the words “the income year in which the land is so sold or otherwise disposed of”
; and
(c)
In subsection (7)(g), after the words “2 or more specified activities”
,—
in each case the words “, or within such further time as the Commissioner, in his discretion, may allow in any case or class of cases”
.
(2)
Section 188a(5a) of the principal Act (as so inserted and amended) is hereby further amended, as from its commencement, by repealing the proviso, and substituting the following proviso:
“Provided that in no case shall the amount that is deemed to be assessable income so derived exceed the balance remaining after deducting, from the amount of the loss or, as the case may be, the sum of the amounts of the losses so incurred in the conduct of that specified activity, an amount equal to the amount or, as the case may be, the sum of every amount (of that loss or those losses) that has, before the sale or other disposal of that land, been deducted from or set off against the assessable income derived by the taxpayer or that has been, or is at any time to be, deducted from or set off against the assessable income derived by any other taxpayer.”
31 Companies engaged in exploring, or searching for, or mining petroleum
(1)
Section 214b(9)(1) of the principal Act (as inserted by section 29 of the Income Tax Amendment Act 1979) is hereby amended by omitting from subparagraph (i) the words “paragraph (c)(i) of this paragraph”
, and substituting the words “paragraph (c)(i) of this subsection”
.
(2)
This section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1979 and in every subsequent year.
32 Non-resident withholding tax imposed
(1)
Section 311(b) of the principal Act (as substituted by section 44(1) of the Income Tax Amendment Act 1980) is hereby amended by omitting the word “subsection”
, and substituting the word “section”
.
(2)
This section shall apply with respect to non-resident withholding income derived on or after the 1st day of April 1982.
33 Additional tax for default in making or paying deductions of non-resident withholding tax
(1)
Section 322 of the principal Act is hereby amended by repealing subsection (1), and substituting the following subsection:
“(1)
Where—
“(a)
Any person, being a person under an obligation under this Part of this Act to make a deduction of nonresident withholding tax from a payment consisting of non-resident withholding income, fails wholly or in part to make the deduction; or
“(b)
Any person who has made a deduction of non-resident withholding tax fails wholly or in part to pay, on the last day of the time prescribed, the amount of the deduction to the Commissioner; or
“(c)
Any person who is liable to pay any amount to the Commissioner under this Part of this Act fails to pay the amount on the due date for payment thereof—
that person shall, unless the Commissioner is satisfied that he has not been guilty of wilful neglect or default, on the expiry of the day on which that failure occurs, be liable, without conviction, in addition to any other penalty to which he may be liable, to a penalty of an amount equal to—
“(d)
Ten percent of the amount in respect of which default has been made (that amount being referred to hereafter in this subsection as ‘the amount in default’); and
“(e)
Ten percent of the amount of so much, if any, of the amount in default and the penalty added thereto in accordance with the provisions of paragraph (d) of this subsection as remains unpaid at the expiry of the day on which there expires the period of 6 months immediately following the day on which the said failure occurred; and
“(f)
Ten percent of the amount of so much, if any, of the amount in default and the penalty added thereto in accordance with the provisions of paragraphs (d) and (e) of this subsection, and of the penalty, if any, theretofore added thereto in accordance with the provisions of this paragraph, as remains unpaid at the expiry of any of the periods of 6 months that, consecutively, succeed the period of 6 months referred to in paragraph (e) of this subsection.”
(2)
This section shall apply with respect to non-resident withholding tax payable in respect of non-resident withholding income derived on or after the 1st day of April 1985.
34 New Part Xb (relating to fringe benefit tax) inserted
(1)
The principal Act is hereby amended by inserting, after Part Xa (as inserted by section 17(1) of the Income Tax Amendment Act 1984), the following Part:
“PART Xb Fringe Benefit Tax
“336n Interpretation
(1)
For the purposes of this Part of this Act—
“‘Arrangement’ means any contract, agreement, plan, or understanding (whether enforceable or unenforceable) including all steps and transactions by which it is carried into effect:
“‘Benefit’ includes the availability, for the private use or enjoyment of any person, of a motor vehicle that is owned, leased, or rented by another person:
“‘Emergency call’ means a visit which is required to be made by an employee from his home in the course of his employment for the purpose of providing any services, being a visit in relation to which—
“(a)
The Commissioner is satisfied that—
“(i)
The nature of the services is such that they are essential to the operation of any plant or machinery of the employer or any client or customer of the employer; or
“(ii)
The performance of the services is essential to the maintenance of any service provided by any public authority or local authority or by any person in the carrying on of a business to the extent that the business comprises the supply of any energy or fuel to the public; and
“(b)
The services are supplied at the request of the employer, any client or customer of the employer, or any member of the public; and
“(c)
The services are required to be performed by the employee between the hours of 6.00 p.m. and 6.00 a.m. on any day that is not a Saturday, Sunday, or statutory public holiday or, where the services are required to be performed on a day that is a Saturday, Sunday, or statutory public holiday, at any time on that day:
“‘Employee’ means a person who will receive, receives, or has at any time received, or who will be, is, or has at any time been entitled to receive, a source deduction payment (not being a payment of any of the kinds referred to in paragraphs (ba), (c), and (d) of the definition of the expression ‘salary or wages’ in section 2 of this Act and not being a withholding payment of the kind specified in Part E of the Income Tax (Withholding Payments) Regulations 1979) in respect of which the person is liable for income tax under Part IV of this Act:
“‘Employer’ means a person who will pay, pays, or has at any time paid, or who will be, is, or has at any time been liable to pay, a source deduction payment (not being a payment of any of the kinds referred to in paragraphs (ba), (c), and (d) of the definition of the expression ‘salary or wages’ in section 2 of this Act and not being a withholding payment of the kind referred to in Part E of the Income Tax (Withholding Payments) Regulations 1979); and includes—
“(a)
The manager or other principal officer in the case of an unincorporated body of persons other than a partnership:
“(b)
Each partner in the case of a partnership:
“(c)
Each person in whom property has become vested or to whom the control of the property has passed in the case of the estate of a deceased person, a trust, a company in liquidation, or an assigned estate, or in any other case where property is vested or controlled in a fiduciary capacity,—
and also includes the Crown:
“‘Employer of an employee’ means the person who, in relation to an employee, is an employer; and ‘employer of the employee’, ‘employee of the employer’, and ‘employees of the employer’ have corresponding meanings:
“‘Employment’ means the activity or the activities the performing of which by any person will give rise, gives rise, or has at any time given rise to entitlement by the person to the receipt of a source deduction payment (not being a payment of any of the kinds referred to in paragraphs (ba), (c), and (d) of the definition of the expression ‘salary or wages’ in section 2 of this Act and not being a withholding payment of the kind specified in Part E of the Income Tax (Withholding Payments) Regulations 1979):
“‘Employment related loan’ means a loan that, within the meaning of the definition of the expression ‘fringe benefit’ in this subsection, is a fringe benefit:
“‘Fringe benefit’, in relation to an employee and to any quarter, means any benefit that consists of—
“(a)
The private use or enjoyment, in relation to the employee, at any time during the quarter, of a motor vehicle owned, leased, or rented by the person who makes the motor vehicle available to the employee:
“(b)
The availability for the private use or enjoyment of the employee, at any time during the quarter, of a motor vehicle that is so owned, leased, or rented:
“(c)
Any loan that is owing, by the employee, at any time during the quarter:
“(d)
Any subsidised transport:
“(e)
Any benefit of any other kind whatever, received or enjoyed by the employee in the quarter,—
being, as the case may be, private use or enjoyment, availability for private use or enjoyment, a loan, subsidised transport, or a benefit that is used, enjoyed, or received, whether directly or indirectly, in relation to, in the course of, or by virtue of the employment of the employee (whether that employment will occur, is occurring, or has occurred) and which is provided or granted by the employer of the employee,—
but does not include—
“(f)
Any benefit provided or granted by a proprietary company to any person where, and to the extent that, the expenditure incurred by the proprietary company in respect of or in relation to the providing or granting of that benefit is, under section 4(2) of this Act, deemed to be a dividend:
“(g)
Any loan to the extent that it is a loan to which section 166 of this Act applies:
“(h)
Any benefit that, in any quarter, is provided or granted by or on behalf of an employer, being a society, institution, association, organisation, trust, or fund to which, in the quarter, section 56a(2) of this Act applies, to an employee of that employer:
“Provided that this paragraph shall not apply to any such benefit to the extent that the benefit is used, enjoyed, or received, whether directly or indirectly, primarily and principally in relation to, in the course of, or by virtue of, any employment, in relation to the employee, that consists of any activity or activities performed by the employee in the carrying on, by the employer, of a business:
“(i)
The Commissioner is satisfied that it is a benefit received or enjoyed by the employee in a quarter in which the employee derives a source deduction payment that is or, as the case may be, source deduction payments all of which are, not liable for income tax under Part IV of this Act,—
and does not, in relation to any benefit to which paragraph (e) of this definition applies, include—
“(j)
Any benefit to the extent to which—
“(i)
It is—
“(A)
Monetary remuneration to which section 65(2)(b) of this Act applies; or
“(B)
Otherwise included or to be included in the assessable income of the employee in accordance with Part IV of this Act:
“(ii)
It is income of the employee which is exempt from tax in accordance with Part IV of this Act:
“(iii)
If it had been provided by means of a cash payment, it would have been income of the employee (other than interest and other than dividends) which is exempt from tax in accordance with Part IV of this Act:
“(iv)
It removes a need which would otherwise exist for the employer of the employee to pay to the employee an allowance, being an allowance which the Commissioner is satisfied would, had it been so paid, have been exempt from tax in terms of a determination made by him under section 73(2) of this Act:
“(v)
It removes a need which would otherwise exist for the employer of the employee to pay the employee an allowance to reimburse the employee for transport costs that the employee would have incurred in travelling between his home and his place of work for the purposes of his employment with that employer of the employee, being transport costs which the employee would otherwise have been required to incur for the benefit or convenience of the employer of the employee in relation to that employment and which the Commissioner is satisfied would have been attributable to any one or more of the factors of the kinds specified in paragraphs (a) to (f) of section 73(3) of this Act:
“(vi)
It consists of the transportation of any person in any vehicle other than a vehicle designed principally for the carriage of passengers:
“(vii)
Any benefit arising from the use or enjoyment or the availability for use or enjoyment of a motor vehicle:
“(viii)
It is a benefit in relation to which section 69 of this Act applies:
“(ix)
It consists of the payment of any tuition or examination fees by the employer in relation to the education or examination of the employee of the employer or of any child of the employee or the employer:
“(x)
The Commissioner is satisfied that it was provided to the employee by the employer of the employee exclusively for the purpose of enabling the employee to entertain existing or prospective clients or customers (not being, in any case, an employee of the employer or of any person where the employer and the person are associated persons, and not being, in any case where the employee and the person are associated persons) of the employer of the employee:
“(xi)
It consists of a membership subscription which the employer of the employee has paid and which entitles the employee to membership of a club of which members of the general public may become members, being a payment which the Commissioner is satisfied is allowable as a deduction under Part IV of this Act in calculating the assessable income of the employer of the employee:
“(k)
Any benefit to which section 68 or section 72 or section 152(4)(b) of this Act applies:
“(l)
Any benefit which consists of any premium paid by the employer of the employee in respect of a policy of personal accident or sickness insurance for the benefit of the employee or for the benefit of the spouse or any child of the employee, being a policy of personal accident or sickness insurance to which section 59 of this Act would, but for subsection (5) of that section, have applied had that premium been paid by the employee:
“(m)
Any benefit which consists of contributions made by an employer to any specified fund within the meaning of section 59 of this Act:
“(n)
Any benefit (not being a benefit which consists of the use or enjoyment of free, discounted, or subsidised travel or accommodation) that is provided by the employer of the employee on the premises of the employer, not being premises that are occupied by the employee of the employer for residential purposes, (or that, at any time when the employee is required to perform duties for the employer on premises, not being residential premises of the employee, other than those of the employer, is provided by the employer of the employee, or by any other person on those other premises), where the benefit is enjoyed by the employee on those premises (or, as the case may be, on those other premises):
“‘Identical goods’, in relation to any goods, means other goods that are the same in all respects, including physical characteristics, quality, and reputation as those goods, except for minor differences (if any) in appearance that do not affect the value of the goods:
“‘Loan’ includes an advance, a deposit, money otherwise let out, and a credit given (including the forebearance of a debt), whether, in each case, on current account or otherwise:
“‘Motorcar’ means a motor vehicle (other than a motor cycle or a moped or a minibus) designed exclusively or principally for the carriage of persons; and includes a motor vehicle designed principally for the carriage of passengers but which has rear doors or collapsible rear seats, but does not include a motor vehicle that is a taxicab:
“‘Motor vehicle’ has the same meaning as in section 2(1) of the Transport Act 1962; but does not include any vehicle the gross laden weight of which exceeds 3500 kilograms:
“‘Non-concessionary rate of interest’, in relation to any employment related loan made on or before the 31st day of March 1985, means the rate of interest that is declared by regulations made under section 336w(1)(b) of this Act to be the non-concessionary rate of interest for the period of 12 consecutive months, ending on the 31st day of March, in which the loan was made:
“‘Prescribed rate of interest’ means the rate of interest declared by regulations made under section 336w(1)(a) and (2) of this Act to be the rate of interest that is to apply to employment related loans:
“‘Private use or enjoyment’, in relation to a motor vehicle and to any person, includes travel by the person in the motor vehicle in the course of proceeding to or from his home; and also includes any other travel by the person in the motor vehicle where that travel confers on the person a benefit of a private or domestic nature:
“Provided that—
“(a)
Where the motor vehicle is required to be used by the employee for the purpose of making an emergency call in the course of his employment, the day on which he departs from his home to make that emergency call shall not be counted as a day on which the motor vehicle is available for the private use or enjoyment of the employee:
“(b)
Where the Commissioner is satisfied that an employee is required by the employer of the employee to use a motor vehicle in the course of the employment of the employee and the Commissioner is of the opinion that the nature of the employment of the employee regularly requires the employee to be absent from his home in the course of his employment, the whole of each day in which that motor vehicle is used by the employee, while he is so absent from his home, in the course of the performing of the activities of which that employment consists, where the period of absence is not less than 24 hours continuously, shall not, for the purposes of section 336o of this Act, be counted as a day in which the motor vehicle was available for the private use or enjoyment of the employee,—
and, for the purposes of this proviso, the expression ‘day’ means the continuous period of 24 hours ending at midnight:
“‘Quarter means a period of 3 consecutive calendar months, in any calendar year, ending with the last day of March, June, September, or December:
“‘Subsidised transport’ means the provision, in any quarter, by an employer, being a person who carries on a business that consists of or includes the transportation, for hire or reward, of persons who are members of the general public, to an employee of the employer of carriage or entitlement to carriage in the course of that transportation (not being transportation in a motor vehicle) where the amount (if any) paid by the employee of the employer in respect of the carriage or the entitlement to carriage is less than the amount that is the highest amount charged, in the quarter in which the provision occurs, by the employer of the employee for the provision by him, to persons who are members of the general public, of carriage or, as the case may be, entitlement to carriage that is of the same class and extent and on or for the same occasion or occasions as the class and extent and occasion or occasions of the carriage or the entitlement to carriage first mentioned in this definition:
“‘Taxicab’ has the same meaning as in section 2(1) of the Transport Act 1962:
“‘Work related vehicle’, in relation to any day, means a motor vehicle with the employer’s name permanently affixed thereto, not being a motor vehicle that is a motorcar, in relation to which any driver thereof during that day (that driver being an employee of an employer) is provided, whether directly or indirectly, by the employer of the employee with a benefit that consists of private use or enjoyment or availability for private use or enjoyment in or for travel that, the Commissioner is satisfied, is of either or both of the following kinds and is of no other kind:
“(a)
Travel, in proceeding to or from the home of the employee, being the said driver, in the course of and as a condition of the performing, during the said day, of the activity or the activities that in relation to the employee and to the employer of the employee constitutes or, as the case may be, constitute the employment of the employee:
“(b)
Travel by the employee, being the said driver, otherwise than in the course of proceeding to or from the home of the employee, in the course of the performing during the said day of the said activity or the said activities where the private use or enjoyment or the availability for private use or enjoyment, of which the said benefit consists, arises incidentally in the course of the said performance.
“(2)
For the purposes of this Part of this Act, where a benefit is provided for or granted to an employee by a person with whom the employer of the employee has entered into an arrangement for that benefit to be so provided or granted, that benefit shall be deemed to be a benefit provided for or granted to the employee by the employer of the employee.
“(3)
For the purposes of this Part of this Act, where any benefit which, if it were provided for or granted to an employee would be a fringe benefit, is provided or granted by the employer of the employee, or is provided or granted by another person with whom the employer of the employee has entered into an arrangement for the providing or granting of that benefit, for or to a person other than the employee of the employer, the employee of the employer and the other person being associated persons, that benefit shall be deemed to be a benefit provided for or granted to the employee by the employer of the employee.
“(4)
For the purposes of this Part of this Act, where any fringe benefit, being the private use or enjoyment, or the availability for private use or enjoyment, in relation to one and the same motor vehicle is, on any day, provided by an employer to more than one person who is an employee of the employer, there shall be deemed to be provided, in relation to that private use or enjoyment or that availability for private use or enjoyment in relation to that motor vehicle on that day, only one fringe benefit, and, where more than one of those persons pay an amount for the enjoyment of the fringe benefit first mentioned in this subsection, the amount referred to in section 336p(1)(a) of this Act shall, for the purposes of calculating the taxable value of the said one fringe benefit, be deemed to be an amount equal to the sum of the amounts so paid.
“(5)
For the purposes of this Part of this Act, in any case where—
“(a)
Any item of goods (that item of goods being referred to hereafter in this subsection as the special goods) is on any day sold by an employer to an employee of the employer at a price that is less than the cost of the special goods to the employer; and
“(b)
The Commissioner is satisfied that the amount of the difference between the said price and the said cost results from the allowance by the employer, in addition to the discount allowed by him to persons who on that day purchase from him (at arms length and in the open market) goods that in relation to the special goods are identical goods, of the discount that, customarily, is allowed by the employer in respect of the purchase from him of goods by employees of the employer,—
the special goods shall, except where the selling price of the goods first mentioned in paragraph (b) of this subsection is, immediately before the allowance therefrom of the discount first mentioned in the said paragraph (b), in excess of $200, be deemed to have been sold at a price equal to the cost of them to the employer.
“3360 Value of fringe benefit
“(1)
For the purposes of this Part of this Act, the value of any fringe benefit, being a benefit that consists of the private use or enjoyment, or the availability for private use or enjoyment, of a motor vehicle shall, in relation to any quarter and to each motor vehicle the private use or enjoyment of which or the availability for private use or enjoyment of which constitutes that benefit, be an amount calculated in accordance with the following formula:
_eqn2.JPG)
where—
y
is a number equal to the lesser of—
“(a)
The number of days, during the quarter, on which that benefit occurred, reduced by the number of days (if any), during the quarter, in relation to which the said motor vehicle is a work related vehicle:
“(b)
The number 90; and
z
is the amount, calculated in accordance with the Tenth Schedule to this Act, that in relation to the quarter and to the said motor vehicle is the value of the benefit that would be able to be enjoyed by the employee if the employee had unlimited private use or enjoyment or availability for private use or enjoyment of the motor vehicle in that quarter.
“(2)
For the purposes of this Part of this Act the value of any fringe benefit, being a benefit that consists of an employment related loan which is owed by an employee at any time during the quarter, shall be the amount, if any, by which the amount of interest that would have accrued on that loan in respect of that quarter had that interest been calculated on the daily balance of that loan at the prescribed rate of interest exceeds the amount of interest that, whenever it accrues, is in respect of that loan to the employee during that quarter:
“Provided that where—
“(a)
The employment related loan is a loan that was made on or before the 31st day of March 1985; and
“(b)
The rate of interest payable on that employment related loan is not, by reason of express provision in the loan agreement, subject to review,—
the prescribed rate of interest shall be deemed to be the rate of interest that, in relation to the year in which the agreement to make that loan was signed or, where the said agreement was not in writing, the making of the loan was agreed to by all the parties to that loan, is the non-concessionary rate of interest for that year.
“(3)
For the purposes of this Part of this Act, the value of any fringe benefit, being a benefit that consists of subsidised transport provided in any quarter by an employer, shall be an amount equal to 25 percent of the amount that, in relation to the subsidised transport so provided, is, within the meaning of the definition of the expression ‘subsidised transport’ in section 336n(1) of this Act, the highest amount charged by the employer.
“(4)
For the purposes of this Part of this Act, the value of any fringe benefit, being a benefit that consists of the receipt or enjoyment of goods provided by any person during any quarter, shall be,—
“(a)
Where the goods were manufactured, produced, or processed by that person, an amount equal to the lowest price for which, at the time when the goods were provided to the employee, other goods (being, in relation to those goods, identical goods) that were manufactured, produced, or processed by that person were sold by him, whether by wholesale or retail, to purchasers who in relation to him were, the Commissioner is satisfied, at arm’s length, (whether those purchasers were wholesalers, retailers, or members of the general public) in the open market in New Zealand in sales freely offered and made on ordinary trade terms:
“(b)
Where the goods were purchased by that person, or where that person paid for the purchase of the goods, and the Commissioner is satisfied that that person and the person supplying the goods were dealing with each other at arm’s length in relation to that supplying of those goods, an amount equal to the amount of the cost of those goods to the person first mentioned in this paragraph:
“(c)
Where the person who provided those goods is a company included in a group of companies, the value of the fringe benefit shall be, at the option of that person, the amount which would be determined by applying the provisions of paragraph (a) or, as the case may be, paragraph (b) of this subsection in the manner in which it would be applied if the group of companies were one company:
“(d)
Where the value of the fringe benefit would, if it were determined in accordance with the foregoing provisions of this subsection, exceed the amount that in the opinion of the Commissioner would, if those goods had been offered for sale at retail by the said person at the time when the benefit of which that fringe benefit consists was provided to the employee, have been paid for the purchase of those goods by a member of the general public in the open market in New Zealand (the said person and the member of the general public being at arm’s length) in a sale freely offered and made on ordinary trade terms, an amount equal to that amount.
“(5)
For the purposes of this Part of this Act, the value of any fringe benefit, being a benefit that consists of the receipt or enjoyment of services (other than those to which, as the case may be, subsection (1) or subsection (2) or subsection (3) of this section applies) provided (whether directly or indirectly) during any quarter shall be the amount determined by applying the provisions of whichever of the following paragraphs of this subsection first (in relation to the sequence of those paragraphs) enables, in relation to the services and to their provision by the employer of the employee, the determination of an amount:
“(a)
Where the services were provided by the employer of the employee where the employer of the employee, as part of his business normally provides such services for payment, an amount equal to the price for which, at the time when the services were so provided to the employee services identical or similar to those services were customarily provided by the employer of the employee to a member of the general public in the open market in New Zealand on ordinary trade terms between buyers and sellers independent of each other:
“(b)
Where the services were provided by or on behalf of the employer of the employee, the employer of the employee being liable to pay or having paid for the performing of those services, and the Commissioner is satisfied that the employer of the employee and the person performing those services were dealing with each other at arm’s length in relation to that performing of those services, an amount equal to the amount that the employer is so liable to pay or has so paid:
“(c)
Where neither of paragraphs (a) and (b) of this subsection applies in relation to the services and to their provision, directly or indirectly, to the employee of the employer an amount equal to the price or fee which, the Commissioner is satisfied, the person providing or performing those services to or for the employee of the employer would have charged a member of the general public had that person provided or performed, at the time of the said provision, identical services, to or for that member of the general public, in the open market in New Zealand, that providing or that performing being freely offered and fulfilled on ordinary trade or professional terms between clients and providers or performers of services independent of each other.
“(6)
Where the Commissioner is satisfied that the value of any fringe benefit is unable to be determined under the foregoing provisions of this subsection, the value of the fringe benefit shall be the amount which he determines would normally be paid for the receipt of that fringe benefit by a member of the general public in the open market in New Zealand in a transaction freely entered into on ordinary trade terms between buyers and sellers independent of each other or, if such amount is unable to be so determined, the value of the fringe benefit shall be such amount as the Commissioner determines.
“336p Taxable value of fringe benefit
“(1)
Subject to this section, for the purposes of this Part of this Act the taxable value of any fringe benefit provided by the employer of the employee in any quarter shall be the amount of the value of that fringe benefit, reduced by—
“(a)
The amount (if any) paid by the employee in relation to the quarter for the receipt or enjoyment of that fringe benefit (not being an amount paid for the acquisition or improvement by the employee of an asset the receipt or enjoyment of which does not constitute the fringe benefit), except where the fringe benefit is an employment related loan:
“(b)
In relation to a motor vehicle which is owned in part by the employee, an amount equal to 2.5 percent of so much of the cost price of the vehicle as is the cost price of the vehicle to the employee.
“(2)
Where any fringe benefit of the kind referred to in paragraph (d) of the definition of the expression ‘fringe benefit’ in section 336n(1) of this Act results from any expenditure incurred by an employer in respect of fares, accommodation, or sustenance provided for or to an employee, and the Commissioner is satisfied that—
“(a)
That expenditure is incurred in relation to travel undertaken by the employee to enable him to perform the duties of his employment and is not incurred directly (whether wholly or in part) in respect of or in relation to—
“(i)
The providing by the employer of the employee, to or for the employee, of any period of leave or vacation:
“(ii)
The taking by the employee of any such period of leave or vacation:
“(iii)
The providing of any transport for the purposes of the providing by the employer of the employee or the taking by the employee of any such period of leave or vacation; and
“(b)
Had the said fringe benefit not resulted from that expenditure, that expenditure would not have been less in amount,—
the taxable value of that fringe benefit shall be nil.
“336q Part of Act to bind the Crown
This Part of this Act shall bind the Crown.
“336r Application of this Part
This Part of this Act shall apply to every person, being an employer of an employee who has provided a fringe benefit to an employee of the employer, notwithstanding that that person or the income of that person may be exempt from income tax under this Act or any other Act.
“336s Fringe benefit tax imposed
Every employer of an employee who has provided or granted a fringe benefit to an employee of the employer shall be liable to pay a special tax by way of an income tax to be known as fringe benefit tax at the rate of 45 percent of the taxable value of that fringe benefit:
“Provided that, for the purposes of this section, in relation to an employee and to any quarter, the value of any fringe benefit or, as the case may be, the aggregate of the values of the fringe benefits (being in every case a fringe benefit that consists of a benefit of the kind referred to in paragraph (e) of the definition of the expression ‘fringe benefit’ in section 336n(1) of this Act and being in every case the value that, but for this proviso, would be the taxable value of the fringe benefit) provided or granted in the quarter to the employee by the employer of the employee shall be reduced to,—
“(a)
Where that value or, as the case may be, that aggregate does not exceed $50, nil:
“(b)
Where that value or, as the case may be, that aggregate exceeds $50, an amount equal to the balance remaining after deducting from that value or, as the case may be, that aggregate the amount of $50;—
and the liability of the employer under this section (apart from this proviso) shall be reduced accordingly.
“336t Payment of fringe benefit tax every quarter
Within 20 days after the expiry of each quarter, every person who is an employer of an employee, being a person to whom section 336r of this Act applies, shall, in relation to the quarter, forward to the Commissioner a return in the prescribed form setting out—
“(a)
Such details, as are prescribed in that return, of the fringe benefits received or enjoyed by each of his employees in that quarter; and
“(b)
A calculation of the amount of fringe benefit tax payable in respect of the taxable value of those fringe benefits,—
and the employer shall be liable to pay the amount so calculated to the Commissioner within the said period of 20 days.
“336U Additional tax to be charged if default made in payment of fringe benefit tax
“(1)
Notwithstanding section 398(2) of this Act, additional tax shall, as follows, be, and be deemed to be, added to any fringe benefit tax remaining unpaid, and shall be payable accordingly:
“(a)
On the amount of any fringe benefit tax unpaid at the expiry of the day on which the time specified in section 336t of this Act expires, additional tax of 10 percent:
“(b)
On the amount of so much, if any, of the fringe benefit tax (being the fringe benefit tax referred to in paragraph (a) of this subsection and the additional tax added thereto in accordance with the provisions of that paragraph), as remains unpaid at the expiry of the day on which there expires the period of 6 months immediately following the day on which the time specified in section 336t of this Act expires, additional tax of 10 percent:
“(c)
On the amount of so much, if any, of the fringe benefit tax (being the fringe benefit tax referred to in paragraph (a) of this subsection, the additional tax added thereto in accordance with the provisions of paragraphs (a) and (b) of this subsection, and the additional tax, if any, theretofore added thereto in accordance with the provisions of this paragraph) as remains unpaid at the expiry of any of the periods of 6 months that, consecutively, succeed the period of 6 months referred to in paragraph (b) of this subsection, additional tax of 10 percent.
“(2)
Subject to this Part of this Act, the other Parts of this Act, so far as they are applicable and with any necessary modifications, shall apply with respect to the amount of additional tax imposed under this section as if it were additional tax under section 398(2) of this Act and as if the person by whom the additional tax is payable were the taxpayer.
“336v Assessment of fringe benefit tax
“(1)
The Commissioner may, in respect of any person who is chargeable with fringe benefit tax in respect of any quarter, make an assessment of the amount of fringe benefit tax which, in his judgment, ought to be levied, and that person shall be liable to pay the fringe benefit tax so assessed, except so far as he establishes on objection that the assessment is excessive or that he is not chargeable with fringe benefit tax.
“(2)
Sections 23, 27, and 29 of this Act shall apply, so far as may be, with respect to every assessment made under this section as if—
“(a)
The expression ‘tax already assessed’ in the said section 23 included fringe benefit tax already assessed under this section; and
“(b)
The expression ‘taxpayer’ in the said sections 23, 27, and 29 included a person who is chargeable with fringe benefit tax.
“(3)
An assessment made under this section shall be subject to objection in the same manner as an assessment of income tax levied under section 38 of this Act, and Part III of this Act shall apply, so far as may be, to an objection to an assessment made under this section as if the expressions ‘income tax’ and ‘tax’ in that Part included fringe benefit tax.
“336w Regulations
“(1)
The Governor-General may from time to time, by Order in Council, make regulations for all or any of the following purposes:
“(a)
Declaring the rate of interest which is to apply to employment related loans:
“(b)
Declaring rates of interest for the periods of 12 consecutive months ending on the 31 st day of March in each of the years 1956 to 1985.
“(2)
Regulations made pursuant to subsection (1)(a) of this section shall apply for one or more periods of 12 consecutive months commencing on the 1st day of April according to their tenor.
“336x Avoidance arrangements
Where the Commissioner is satisfied that an arrangement has been entered into between persons to defeat the intent and application of this Part, or of any provision of this Part, of this Act, the Commissioner may, notwithstanding the arrangement, deem—
“(a)
A person who is a party to that arrangement (that person being referred to hereafter in this section as the participant) to be the employer in relation to such other person or such other persons as the Commissioner specifies by notice in writing to the participant; and
“(b)
The said other person or, as the case may be, each of the said other persons to be, in relation to the participant, an employee,—
for the purposes of this Part of this Act; and the provisions of the said Part shall apply accordingly throughout such period or periods (each being a period during which that arrangement is in force) as the Commissioner determines.
“336Y Application of other provisions to fringe benefit tax
Subject to this Part of this Act, the other Parts of this Act, so far as they are applicable and with any necessary modifications, shall apply with respect to fringe benefit tax as if it were income tax levied under section 38 of this Act and as if every reference to a year of assessment were a reference to a quarter; but nothing in this Part of this Act shall be so construed as to include fringe benefit tax in the expressions ‘income tax’ or ‘tax’ for the purposes of Part IV of this Act.
(2)
The principal Act is hereby amended by adding the Tenth Schedule set out in the First Schedule to this Act.
(3)
Section 2 of the principal Act is hereby amended by inserting, in their appropriate alphabetical order, the following definitions:
“‘Expenditure on account of an employee’ means—
“(a)
Any payment made by an employer in respect of or in relation to any expenditure incurred or to be incurred by an employee of the employer, not being—
“(i)
A payment made by a proprietary company in respect of or in relation to expenditure incurred by an employee of the proprietary company, where and to the extent that the payment is in respect of or in relation to expenditure that, under section 4(2) of this Act, is deemed to be a dividend:
“(ii)
A payment that is or, as the case may be, such part of a payment as is exempted from tax pursuant to section 73 of this Act:
“(iii)
A payment in respect of expenditure incurred and discharged by the employee in the course of his employment where and to the extent that, the Commissioner is satisfied, the expenditure is the liability of the employer and not of the employee and the undertaking by the employee of the discharging of that liability is in consideration of the making to him of the said payment:
“(b)
The payment by an employer of any life insurance premium on any policy of life insurance for the benefit of an employee of the employer or for the benefit of the spouse or any child of any such employee, except where and to the extent that the said employer is a proprietary company and the said payment is in respect of expenditure that, under section 4(2) of this Act, is deemed to be a dividend,—
but does not include an employment related loan to which Part Xb of this Act applies:
“‘Fringe benefit tax’ means fringe benefit tax payable in accordance with section 336s of this Act:
“‘Monetary remuneration’ means any salary, wage, allowance, bonus, gratuity, extra salary, compensation for loss of office or employment, emolument (of whatever kind), or other benefit in money, in respect of or in relation to the employment or service of the taxpayer; and includes any expenditure on account of an employee:”.
(4)
Section 2 of the principal Act is hereby further amended by omitting from the definition of the expression “salary or wages”
the words “(whether in cash or otherwise) including all sums received or receivable by way of overtime pay, bonus, gratuity, extra salary, commission, or remuneration of any kind”
, and substituting the words “including all sums received or receivable by way of overtime pay, bonus, gratuity, extra salary, commission, or other remuneration of any kind”
.
(5)
Section 2 of the principal Act is hereby further amended by inserting, after paragraph (a) of the definition of the expression “salary or wages”
, the following paragraph:
“(aa)
All payments that are expenditure on account of an employee:”.
(6)
The principal Act is hereby further amended by inserting in section 4(1), after the words “and shall also include any money advanced by the company to or for the benefit of any of its shareholders”
, the words “(not being an advance that is an employment related loan within the meaning of Part Xb of this Act)”
.
(7)
Section 65(2) of the principal Act is hereby amended by repealing paragraph (b), and substituting the following paragraph:
“(b)
All monetary remuneration:”.
(8)
The principal Act is hereby further amended by omitting from section 69(2) and also from section 72 the words “the term ‘allowances’”
, and substituting in each case the words “the term ‘monetary remuneration’”
.
(9)
Section 106(2)(a) of the principal Act is hereby amended by inserting, after the words “and excess retention tax”
(as inserted by section 40(1)(b) of the Income Tax Amendment Act (No. 2) 1982), the words “and fringe benefit tax”
.
(10)
Section 428(3) of the principal Act (as amended by section 41(1) of the Income Tax Amendment Act (No. 3) 1983) is hereby consequentially amended by repealing paragraph (c), and substituting the following paragraphs:
“(c)
Makes, holds, or disposes of, for the purpose of gaining or producing assessable income, any investment:
“(ca)
Is an employer to whom the provisions of Part Xb of this Act apply or is a person who provides any fringe benefit to any person who, in relation to any employer to whom the provisions of Part Xb of this Act apply, is an employee,—”.
(11)
Section 428(3) of the principal Act (as so amended) is hereby further amended by repealing paragraph (e), and substituting the following paragraphs:
“(e)
The deductions allowable in the calculating of that assessable income; and
“(f)
Every fringe benefit, and the taxable value thereof, provided by him to any person in relation to whom he is an employer and every fringe benefit provided by him to any person who in relation to another person is an employee, those records to include (without limiting the generality of the foregoing provisions of this paragraph) details of the recipient of the fringe benefit, the occasion of the providing of it, and the amount (if any) paid or payable by the employee for the receipt or enjoyment of it,—”.
(12)
This section shall come into force on the 1st day of April 1985 and shall, in its application to fringe benefits (as defined in section 336n of the principal Act) apply to every fringe benefit provided on or after that day.
35 Amount of salary or wages where ordinary payments to superannuation fund are made
(1)
Section 341 of the principal Act (as substituted by section 17(1) of the Income Tax Amendment Act 1982 and amended by section 3(4) of the Income Tax Amendment Act 1984) is hereby further amended by repealing subsection (1), and substituting the following subsection:
“(1)
Where an employee is a contributor to a superannuation fund established for the benefit of employees of his employer (not being a superannuation category 1 scheme that is classified as a non-subsidised employee lump sum superannuation scheme class A fund, and not being a superannuation category 2 scheme that is classified as a non-subsidised employee lump sum superannuation scheme class B fund, where the membership of the employee in that superannuation category 1 scheme or, as the case may be, that superannuation category 2 scheme, commenced on or after the 9th day of November 1984), the amount of the salary or wages paid to the employee for a pay period shall, where the tax code of any employee in relation to any source deduction payment is one specified in section 344(1)(b) (except subparagraph (ix)) of this Act, for the purpose of calculating the amount of the tax deduction be deemed to be the greater of—
“(a)
The residue of the payment of salary or wages after subtracting therefrom the amount of the specified contribution:
“(b)
An amount approved particularly or generally by the Commissioner in any case or class of cases, on written request made to him in that behalf, being an amount greater than the amount that, apart from this paragraph, would be the said residue, and being an amount not greater than the said payment of salary or wages.”
(2)
Section 341(2) of the principal Act (as so substituted) is hereby amended by omitting the words “(of the kind referred to in subsection (1) of this section)”
, and substituting the words “(being a superannuation fund in relation to the regular current contributions to which a subtraction may be made under subsection (1)(a) of this section)”
.
(3)
The Income Tax Amendment Act 1984 is hereby consequentially amended by repealing section 3(4).
(4)
This section shall apply with respect to regular current contributions made by an employee to a superannuation fund in relation to any pay period ending on or after the day on which this Act receives the Governor-General’s assent.
36 Application of tax codes specified in tax code declarations or tax code certificates
(1)
Section 344(1)(b) of the principal Act (as substituted by section 19(1) of the Income Tax Amendment Act 1982) is hereby amended by repealing subparagraph (ix) (as inserted by section 3(5) of the Income Tax Amendment Act 1984), and substituting the following subparagraphs:
“(ix)
‘Sec’, signifying an employee in relation to whom the source deduction payment is a payment that is secondary employment earnings, not being a source deduction payment that is a payment of any of the kinds referred to in clauses 7 and 7a of the Second Schedule to this Act:
“(x)
‘SHR’, signifying an employee in relation to whom the source deduction payment is a payment of salary or wages for employment as a shearer:
“(xi)
‘SSH’, signifying an employee in relation to whom the source deduction payment is a payment of salary or wages for employment as a shearing shed hand.”
(2)
Section 344 of the principal Act is hereby further amended by omitting from subsection (3) the words “or as determined by the Commissioner under subsection (4) of this section”
.
(3)
Section 344 of the principal Act is hereby further amended by inserting in subsections (9) and (10) (as substituted by section 19(4) and (5) of the Income Tax Amendment Act 1982 and amended by section 3(6) of the Income Tax Amendment Act 1984), after the expression “‘Sec’”
in each case where it appears, the words “or ‘SHR’ or ‘SSH’”
.
(4)
Section 3 79(2) of the principal Act (as amended by section 19(6)(b) of the Income Tax Amendment Act 1982 and section 3(8) of the Income Tax Amendment Act 1984) is hereby further amended by inserting, after the expression “‘Sec’”
, the words “or ‘SHR’ or ‘SSH’”
.
(5)
The Income Tax Amendment Act 1984 is hereby consequentially amended by repealing section 3(5).
(6)
Subsections (1), (3), (4), and (5) of this section shall apply with respect to every source deduction payment made for any pay period ending on or after the 1st day of April 1985.
37 Tax of pay-period taxpayers to be determined by amount of tax deductions or by assessment
(1)
The principal Act is hereby amended by repealing section 357 of the principal Act (as amended by section 14(1) and (2) of the Income Tax Amendment Act 1980), and substituting the following section:
“357
“(1)
Notwithstanding anything in this Act, the amount of income tax for which a pay-period taxpayer to whom section 359 of this Act does not apply is liable in respect of the income derived by the taxpayer in any year shall be determined exclusively and finally by the total amount of the tax deductions required under this Part of this Act to be made from that income, except where the taxpayer has, not later than the end of the next succeeding year or within such further period as the Commissioner in his discretion may allow in any case or class of cases, furnished to the Commissioner a return of that income, in which case the amount of that income tax shall be the smaller of the following amounts:
“(a)
The total amount of those tax deductions:
“(b)
The amount of income tax assessed under Part IV of this Act.
“(2)
Except where a return of income is furnished for the purpose of having the amount of income tax in respect of the income for the year assessed under Part IV of this Act, a pay-period taxpayer to whom this section applies shall not furnish a return of income for the year unless he is required by the Commissioner to do so.”
(2)
The Income Tax Amendment Act 1980 is hereby consequentially amended by repealing section 14(1) and (2).
(3)
This section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1983 and in every subsequent year.
38 Recovery of tax deductions from employers
(1)
Section 365 of the principal Act (as amended by section 27 of the Income Tax Amendment Act 1981) is hereby amended by repealing subsection (1), and substituting the following subsections:
“(1)
For the purposes of this section—
“(a)
A floating charge shall include a charge that conferred a floating security at the time of its creation but has since become a fixed or specific charge:
“(b)
The expression ‘tax deduction’ shall not include any additional tax or penal tax.
“(1a)
The amount of every tax deduction made under this Part of this Act shall be held in trust for the Crown, and any amount so held in trust shall not be property of the employer liable to execution, and, in the event of the bankruptcy or liquidation of the employer or of an assignment for the benefit of the employer’s creditors, shall remain apart, and form no part of the estate in bankruptcy, liquidation, or assignment.”
(2)
Section 365 of the principal Act (as so amended) is hereby further amended by repealing subsection (4).
(3)
The Income Tax Amendment Act 1981 is hereby consequentially amended by repealing section 27.
(4)
This section shall apply on and from the day on which this Act receives the Governor-General’s assent.
39 Additional tax for default in making tax deduction or in paying any amount due to Commissioner
(1)
Section 370 of the principal Act is hereby amended by repealing subsection (1), and substituting the following subsection:
“(1)
Where—
“(a)
Any employer or other person by whom any source deduction payment is made fails wholly or in part to make a tax deduction therefrom in accordance with his obligations under this Part of this Act; or
“(b)
Any person who has made a tax deduction fails wholly or in part to pay, on the last day of the time prescribed and in the prescribed manner, the amount of the tax deduction to the Commissioner; or
“(c)
Any person who is liable to pay any amount to the Commissioner under this Part of this Act fails to pay the amount on the due date for payment thereof,—
that employer or that other person or that person shall, on the expiry of the day on which that failure occurs, be liable, without conviction, in addition to any other penalty to which he may be liable, to a penalty of an amount equal to—
“(d)
Ten percent of the amount in respect of which default has been made (that amount being referred to hereafter in this subsection as ‘the amount in default’); and
“(e)
Ten percent of the amount of so much, if any, of the amount in default and the penalty added thereto in accordance with the provisions of paragraph (d) of this subsection as remains unpaid at the expiry of the day on which there expires the period of 6 months immediately following the day on which the said failure occurred; and
“(f)
Ten percent of the amount of so much, if any, of the amount in default and the penalty added thereto in accordance with the provisions of paragraphs (d) and (e) of this subsection, and of the penalty, if any, theretofore added thereto in accordance with the provisions of this paragraph, as remains unpaid at the expiry of any of the periods of 6 months that, consecutively, succeed the period of 6 months referred to in paragraph (e) of this subsection.”
(2)
Section 370(4) of the principal Act is hereby amended by omitting the words “section 398”
, and substituting the words “section 398(2)(a)”
.
(3)
This section shall apply with respect to tax deductions made or required to be made in respect of the tax on income derived in the income year commencing on the 1st day of April 1985 and in every subsequent year.
40 Additional tax to be charged if default made in payment of tax
(1)
The principal Act is hereby amended by repealing section 398, and substituting the following section:
“398
“(1)
For the purposes of this section—
“‘Competent objection’ has the same meaning as in section 34 of this Act:
“‘Day of determination of final liability’ has the same meaning as in section 34 of this Act:
“‘Deferrable tax’ has the same meaning as in section 34 of this Act:
“‘Period of deferral’, in relation to a taxpayer and to an assessment of tax and to any competent objection to that assessment and to so much of the tax assessed in that assessment as the Commissioner has determined to be an amount of deferrable tax, means the period which commences on the later of—
“(a)
The day on which the notice of that assessment of tax is given to the taxpayer:
“(b)
The day on which there expires the period of 1 month immediately following the due date for payment of that deferrable tax,—
and ends at the expiry of the day that, in relation to that deferrable tax, is the day of determination of final liability:
“Provided that, for the purposes of this definition, where, at any time before the said day of determination of final liability, there has been refunded by the Commissioner the whole or any part of the said amount of deferrable tax (payment of that whole or that part having been received by the Commissioner before the expiry of the period of one month immediately following the due date for payment of the tax in relation to the assessment of which there is the said amount of deferrable tax), the due date for payment of the said tax shall, to the extent that that tax is deferrable tax so refunded, be deemed to be the day that immediately precedes by one month the date of the making of the said refund:
“‘Specified rate of additional tax’, in relation to any period of 12 consecutive months commencing on any 1st day of April, means the percent per annum that, for the purposes of section 34 of this Act, is the percent per annum of the specified rate of interest for the period.
“(2)
Subject to this section, additional tax shall, as follows, be, and be deemed to be, added to any tax remaining unpaid, and shall be payable accordingly:
“(a)
On the amount of any tax remaining unpaid at the expiry of the day on which there expires the period of one month immediately following, as the case may be, the due date of that tax (whether already assessed or not) or the date of demand of that tax, additional tax of 10 percent:
“(b)
On the amount of so much, if any, of the tax (being the tax referred to in paragraph (a) of this subsection and the additional tax added thereto in accordance with the provisions of that paragraph), as remains unpaid at the expiry of the day on which there expires the period of 7 months immediately following, as the case may be, the due date of that tax (whether already assessed or not) or the date of demand of that tax, additional tax of 10 percent:
“(c)
On the amount of so much, if any, of the tax (being the tax referred to in paragraph (a) of this subsection and the additional tax added thereto in accordance with the provisions of paragraphs (a) and (b) of this subsection) as remains unpaid at the expiry of the day on which there expires the period of 6 months immediately following the day referred to in paragraph (b) of this subsection, additional tax of 10 percent:
“(d)
On the amount of so much, if any, of the tax (being the tax referred to in paragraph (a) of this subsection, the additional tax added thereto in accordance with the provisions of paragraphs (a), (b), and (c) of this subsection, and the additional tax, if any, theretofore added thereto in accordance with the provisions of this paragraph) as remains unpaid at the expiry of any of the periods of 6 months that, consecutively, succeed the period of 6 months referred to in paragraph (c) of this subsection, additional tax of 10 percent.
“(3)
Where any taxpayer has made a competent objection to an assessment and the Commissioner has notified the taxpayer, in writing, of the amount of the deferrable tax assessed in that assessment, any additional tax added to that deferrable tax, in accordance with subsection (2) of this section, on or after the day on which the period of deferral, in relation to that deferrable tax, commenced shall forthwith be remitted by the Commissioner and that subsection shall, commencing with that day, cease to apply in respect of that deferrable tax.
“(4)
Notwithstanding subsection (2) of this section, additional tax shall, as follows, be, and be deemed to be, added to any deferrable tax, and shall be payable accordingly:
“(a)
On the amount of any deferrable tax that is paid by the taxpayer at any time during the period of deferral (such payment being referred to hereafter in this subsection as the ‘specified payment’), additional tax of an amount that is calculated, in relation to any period, of 12 consecutive months commencing on the 1st day of April, during which that deferrable tax has remained unpaid, in accordance with the following formula:
_eqn3.JPG)
where—
x
is the number of days in such period, being a period within the said period of 12 consecutive months, as commences on whichever of the following days is the latest:
“(i)
The day on which the period of deferral commenced:
“(ii)
The first day of the said period of 12 consecutive months:
“(iii)
The 1st day of April 1985;—
and ends on whichever of the following days is the earlier:
“(iv)
The day that, in relation to the deferrable tax, is the day on which the specified payment is received by the Commissioner:
“(v)
The last day of the said period of 12 consecutive months; and
y
is the amount of the specified payment; and
z
is the specified rate of additional tax:
“(b)
On the amount of so much of any deferrable tax as remains unpaid at the expiry of the day on which there expires the period of deferral, additional tax of an amount that, in relation to any period of 12 consecutive months commencing on the 1st day of April, is calculated in accordance with the following formula:
_eqn4.JPG)
where—
x
is the number of days in the period that commences on whichever of the following days is the latest:
“(i)
The day on which the period of deferral commenced:
“(ii)
The first day of the said period of 12 consecutive months:
“(iii)
The 1st day of April 1985;—
and ends on whichever of the following days is the earlier:
“(iv)
The day at the expiry of which there expires the period of deferral:
“(v)
The last day of the said period of 12 consecutive months; and
y
is the amount first mentioned in this paragraph; and
z
is the specified rate of additional tax:
“(c)
On the amount of so much of the tax (being the deferrable tax referred to in paragraph (b) of this subsection and the additional tax added thereto in accordance with the provisions of paragraph (b) or, as the case may be, paragraphs (a) and (b) of this subsection) as remains unpaid at the expiry of the day on which there expires the period of one month immediately following the day on which there expires the period of deferral, additional tax of 10 percent:
“(d)
On the amount of so much, if any, of the tax (being the deferrable tax referred to in paragraph (b) of this subsection and the additional tax added thereto in accordance with the provisions of paragraphs (b) and (c) or, as the case may be, paragraphs (a), (b) and (c) of this subsection), as remains unpaid at the expiry of the day on which there expires the period of 6 months immediately following the day first mentioned in paragraph (c) of this subsection, additional tax of 10 percent:
“(e)
On the amount of so much, if any, of the tax (being the deferrable tax referred to in paragraph (b) of this subsection, the additional tax added thereto in accordance with the provisions of paragraphs (b), (c), and (d) or, as the case may be, paragraphs (a), (b), (c), and (d) of this subsection, and the additional tax, if any, theretofore added thereto in accordance with the provisions of this paragraph) as remains unpaid at the expiry of any of the periods of 6 months that, consecutively, succeed the period of 6 months referred to in paragraph (d) of this subsection, additional tax of 10 percent.
“(5)
In any case in which an assessment is not made until after the due date of the tax, or is increased after the due date of the tax, and the Commissioner is satisfied that the taxpayer has not been guilty of wilful neglect or default in making due and complete returns for the purposes of that tax, the Commissioner shall in his notice to the taxpayer of the assessment or amended assessment, or in any subsequent notice, fix a new date for the payment of the tax or of the increase, as the case may be, and the date so fixed shall be deemed to be the due date of that tax or increase for the purposes of subsection (2) or subsection (4) of this section.
“(6)
Notwithstanding subsection (5) of this section, subsections (2) and (4) of this section shall apply in any case where the Commissioner has notified the taxpayer in advance of the due date, either generally or specifically, that subsection (2) of this section shall apply in respect of the tax as calculated by the taxpayer, or in respect of an amount of tax estimated by the taxpayer, in either case in accordance with the procedures prescribed by the Commissioner.
“(7)
In any case where the tax to which subsection (2) of this section applies is provisional tax (to which section 394 of this Act applies), the said subsection (2) shall, in relation to that provisional tax, apply only to any period or periods that end on or before the day immediately preceding the day on which there becomes due and payable the tax on the assessable income in relation to which that provisional tax was estimated or ascertained.
“(8)
Notwithstanding the other provisions of this section, in any case where the taxpayer is resident beyond New Zealand and has no agent in New Zealand, the due date that, apart from this subsection, would be the due date referred to in subsection (2)(a) of this section shall be deemed, for the purposes of this section, to be such later date (not being a date later, in relation to that due date, by more than 6 months) as the Commissioner may deem appropriate in the circumstances of the case.”
(2)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1985 and in every subsequent year.
41 Deduction of tax from payment due to defaulters
Section 400(1) of the principal Act (as substituted by section 47(1) of the Income Tax Amendment Act 1980) is hereby amended by repealing paragraphs (b) and (c) of the definition of the expression “bank”
, and substituting the following paragraphs:
“(b)
Any trustee bank established under the Trustee Banks Act 1983:
“(c)
Any private savings bank carried on under the Private Savings Banks Act 1983:”.
42 Relief from additional tax
(1)
The principal Act is hereby amended by repealing section 413 (as amended by section 33(1) of the Income Tax Amendment Act (No. 2) 1977), and substituting the following section:
“413
“(1)
For the purposes of this section ‘incremental tax’ means the additional tax which is, and is deemed to be, added to unpaid tax in accordance with the provisions of section 398(2)(b) or section 398(2)(c) or section 398(2)(d) of this Act.
“(2)
Subject to this section, on application for relief made in writing by or on behalf of any taxpayer who has become liable for the payment of any additional tax under section 398(2)(a) of this Act or any incremental tax, the Commissioner, if, having regard to the circumstances of the case, he thinks it equitable to do so, may, subject to this section, grant relief to the taxpayer—
“(a)
By the remission of the whole or part of the additional tax, or, as the case may be, the incremental tax; or
“(b)
Where the additional tax, or, as the case may be, the incremental tax has been paid, in whole or in part, by the refund to the taxpayer of the whole or any part of that additional tax or that incremental tax that has been paid, with or without the remission of any part of that additional tax or that incremental tax that has not been paid.
“(3)
Where any taxpayer becomes liable for the payment of any incremental tax, and at the time at which that liability arises the tax or the additional tax or the incremental tax in relation to which the taxpayer becomes so liable for the payment of the said incremental tax is—
“(a)
Tax that is payable in 2 or more instalments pursuant to an arrangement entered into between the taxpayer and the Commissioner; or
“(b)
Tax in respect of which deductions are required to be made, and paid to the Commissioner, pursuant to a notice issued under section 400(2) of this Act,—
and every one of those instalments is paid in full pursuant to the terms of that arrangement, or, as the case may be, every one of those deductions and payments is made pursuant to that notice, the Commissioner shall grant relief to the taxpayer—
“(c)
By the remission of the incremental tax first mentioned in this subsection; or
“(d)
Where the incremental tax so first mentioned has been paid, in whole or in part, by the refund to the taxpayer of the whole or the part of that incremental tax that has been paid, with or without the remission of any part of that incremental tax that has not been paid.
“(4)
In any case where subsection (2) of this section applies, no amount of tax in excess of $1,000 in any case shall be remitted or refunded under this section except with the approval of the Minister given either specifically with respect to that case, or generally with respect to any class or classes of cases.”
(2)
The Income Tax Amendment Act (No. 2) 1977 is hereby consequentially amended by repealing section 33.
(3)
This section shall apply with respect to the tax on income derived in the income year commencing on the 1st day of April 1985 and in every subsequent year.
43 Publication of names of tax evaders
(1)
Section 427(1)(c) of the principal Act is hereby amended by inserting, after the word “under”
, the words “section 323 or”
.
(2)
This section shall come into force on the date on which this Act receives the Governor-General’s assent, and shall apply with respect to persons charged with penal tax on or after that date.
44 Records and returns of specified charitable, benevolent, philanthropic, or cultural bodies
(1)
The principal Act is hereby amended by inserting, after section 432, the following section:
“432a
“(1)
For the purposes of this section the expression ‘specified body’ means any society, institution, association, organisation, trust, or fund specifically named in any of the paragraphs of section 56a(2) of this Act.
“(2)
Every specified body shall keep in New Zealand sufficient records in the English language to enable the ascertainment by the Commissioner of the sources of donations made to it and the application within New Zealand, or, as the case may be, within any country or territory outside New Zealand of its funds.
“(3)
Every specified body shall furnish, on request of the Commissioner, a return of its funds derived or received in any income year and showing the source and application of those funds, together with such other particulars as may be required by the Commissioner.
“(4)
In any case where the Commissioner has reason to believe that the funds of any specified body might be or are being applied for a purpose that is not charitable, benevolent, philanthropic, or cultural, he shall, notwithstanding section 13 of the Inland Revenue Department Act 1974, without revealing the identity of the maker of any donation to the specified body, inform the Minister accordingly.”
45 Payments to shearers
(1)
The Second Schedule to the principal Act (as substituted by section 45(1) of the Income Tax Amendment Act (No. 2) 1977) is hereby amended by repealing clause 7 (as substituted by section 23(3) of the Income Tax Amendment Act 1984), and substituting the following clause:
“7
From every payment of salary or wages for employment as a shearer, in respect of which the shearer has delivered to the employer a tax code declaration pursuant to section 344 of this Act and specifying the tax code ‘SHR’, the basic tax deduction shall be an amount calculated on the amount of the payment at the rate of 25c per $1.”
(2)
This section shall apply with respect to every source deduction payment made for any pay period ending on or after the 1st day of April 1985.
46 Payments to shearing shed hands
(1)
The Second Schedule to the principal Act (as so substituted) is hereby amended by repealing clause 7 A (as inserted by section 23(3) of the Income Tax Amendment Act 1984), and substituting the following clause:
“7A
“(1)
From every payment of salary or wages for employment as a shearing shed hand, in respect of which the shearing shed hand has delivered to the employer a tax code declaration pursuant to section 344 of this Act and specifying the tax code ‘SSH’, the basic tax deduction shall be an amount calculated on the amount of the payment at the rate of 20c per $1.”
(2)
The Income Tax Amendment Act 1984 is hereby consequentially amended by repealing section 23(3).
(3)
This section shall apply with respect to every source deduction payment made for any pay period ending on or after the 1st day of April 1985.
47 Terminating dates of taxation incentives
(1)
The principal Act is hereby amended by repealing the Third Schedule (as substituted by section 42(1) of the Income Tax Amendment Act (No. 3) 1983), and substituting the new Third Schedule as set out in the Second Schedule to this Act.
(2)
The Income Tax Amendment Act (No. 3) 1983 is hereby consequentially amended by repealing section 42 and the Schedule thereto.
(3)
The Income Tax Amendment Act 1984 is hereby consequentially amended by repealing section 15(2).
48 Items of expenditure or loss deductible in respect of income from employment
The Fourth Schedule to the principal Act is hereby amended by repealing clause 6 (as amended by section 15(4) of the Income Tax Amendment Act (No. 2) 1983), and substituting the following clause:
“6
Expenditure or loss incurred on travel in the course of the taxpayer’s employment, not being expenditure or loss incurred on—
“(a)
Travel between the taxpayer’s home and place of work except where either the taxpayer’s base of work is his home or the taxpayer has no fixed place of work:
“(b)
Travel in connection with any of the matters referred to in clause 5 of this Schedule.”
49 Increased exports of goods
(1)
It is hereby declared that Part C of the Seventh Schedule to the principal Act (as repealed by section 25(2)(f) of the Income Tax Amendment Act (No. 3) 1983) is deemed to have been amended with respect to the tax on income derived in the income year that commenced on the 1st day of April 1980 and in every subsequent income year that ended on or before the terminating date in relation to section 156 of the principal Act (as repealed by section 25(1) of the Income Tax Amendment Act (No. 3) 1983) by the repeal of the following item:
“Any produce, being fruit, legumes, vegetables, or cereals (including extracts, fats, oils, concentrates, powders, soups, juices, jams, jellies, pastes or purees derived from fruit, legumes, vegetables, or cereals), which has been canned, dried, dehydrated, evaporated, individually quick frozen, or otherwise incorporates a significant degree of local processing.”
and the substitution of the following item:
“Any produce, being fruit, legumes, vegetables, or milled cereals (including extracts, fats, oils, concentrates, powders, soups, juices, jams, jellies, pastes or purees derived from fruit, legumes, vegetables, or milled cereals), which has been canned, dried, dehydrated, evaporated, individually quick frozen, or otherwise incorporates a significant degree of local processing.”
(2)
Subsection (1) of this section shall not apply in relation to—
(a)
Any export goods that were sold or otherwise disposed of before the end of the income year that ended on the 31st day of March 1980:
(b)
Any export goods in respect of which firm orders, both as to price and quantity, were placed and accepted before the end of the said income year.
(3)
Every reference in subsections (1) and (2) of this section to an income year shall, where a taxpayer furnishes a return of income under section 15 of the principal Act for an accounting year ending with an annual balance date other than the 31st day of March, be deemed to be a reference to the accounting year corresponding with that income year.
(4)
This section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1980 and in each of the 3 income years that immediately succeeded that income year.
50 Repeal of spent provisions
(1)
Section 10 of the Income Tax Amendment Act (No. 2) 1977 is hereby repealed.
(2)
Section 22 of the Income Tax Amendment Act (No. 2) 1977 is hereby repealed.
(3)
Section 9 of the Income Tax Amendment Act 1980 is hereby repealed.
(4)
Section 27 of the Income Tax Amendment Act 1980 is hereby repealed.
(5)
The First Schedule to the Income Tax Amendment Act 1982 is hereby repealed.
(6)
Subsection (1) of this section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1979 and in every subsequent year.
(7)
Subsections (2) and (4) of this section shall apply on and from the 1st day of April 1983.
(8)
Subsection (3) of this section shall apply with respect to the tax on income derived in the income year that commenced on the 1st day of April 1982 and in every subsequent year.
SCHEDULES
FIRST SCHEDULE NEW TENTH SCHEDULE TO PRINCIPAL ACT
Section 34(2)
“TENTH SCHEDULE Fringe Benefit Values
Section 3360
Motor Vehicles
In relation to any quarter and to any motor vehicle that in the quarter is provided by any person for the private use or enjoyment of an employee or is available for such private use or enjoyment, the value of the benefit that would be able to be enjoyed by the employee, if the employee had unlimited private use or enjoyment or availability for private use or enjoyment of the motor vehicle in that quarter, shall be,—
(a)
Where the motor vehicle is owned (whether in his own right or jointly with any other person) by that person, an amount equal to 6 percent of the cost price of the motor vehicle to that person or, as the case may be, those persons:
(b)
Where the motor vehicle is leased or rented by that person from any other person, where that person and that other person are not associated persons, an amount equal to 6 percent of the market value of the motor vehicle on the date on which the period of that leasing or renting commenced:
(c)
Where, for the purposes of paragraph (a) or paragraph (b) of this Schedule, the cost price of the motor vehicle or, as the case may be, the market value of the motor vehicle on the date on which the period of that leasing or renting of that motor vehicle commenced, is for any reason unable to be established by that person to the satisfaction of the Commissioner, an amount equal to 6 percent of the amount which the Commissioner is satisfied was the market value of the motor vehicle on the date of acquisition of it by that person or, as the case may be, at the date on which the period of that leasing or renting commenced:
(d)
Where the cost price of the motor vehicle was nil or was, in the opinion of the Commissioner, less than the amount of the market value of the motor vehicle on the date of the acquisition of it by that person, and the Commissioner is satisfied that the cost price of that motor vehicle was, as a result of any arrangement (as defined in section 336n of this Act) entered into between that person and any other person, where that person and that other person are associated persons, that arrangement being for the purpose of defeating the intent and operation of Part Xb of this Act, an amount equal to 6 percent of the amount which the Commissioner is satisfied was the market value of the motor vehicle on the date on which it was acquired by that person:
(e)
Where the motor vehicle to which this Schedule applies is one of a number of motor vehicles each of which is available for the private use or enjoyment of the employee in that quarter, an amount equal to 6 percent of the quotient obtained by dividing the sum of, as appropriate, the cost prices and market values of those motor vehicles, as determined in accordance with the foregoing paragraphs of this Schedule, by the total number of those motor vehicles.”
SECOND SCHEDULE New Third Schedule to Principal Act
Section 47(1)
“THIRD SCHEDULE Terminating Dates
Section 2
| Section of Act | General Description | Terminating Date |
|---|---|---|
| 119 | Regional investment allowance | 31 March 1983 |
| 120 | Export investment allowance | 31 March 1983 |
| 121 | Industrial development plan investment allowance | 31 March 1986 |
| 121a | High priority activity investment allowance | 31 March 1984 |
| 122 | Farming and agriculture investment allowance | 31 March 1985 |
| 123 | Fishing investment allowance | 31 March 1983 |
| 127 | Development expenditure on farming or agricultural land | 31 March 1986 |
| 127a | Development expenditure on forestry | 31 March 1986 |
| 128 | Development expenditure on aquaculture | 31 March 1986 |
| 156F | Export-market development and tourist promotion incentive | 31 March 1986 |
| 156g | Export-market development (self-employed taxpayers) incentive | 31 March 1986 |
| 158a | Export earnings from qualifying overseas projects | 31 March 1980 |
The reference in the second column of this Schedule to the nature of the deduction is by way of general description only and shall not be construed as limiting or extending the deduction under the section referred to in the first column of this Schedule.”
This Act is administered in the Inland Revenue Department.
Versions
Income Tax Amendment Act (No. 2) 1985
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