A Bill aimed at improving and strengthening the tax rules has passed its third reading in Parliament.
The Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Bill will introduce a range of changes to the tax system.
The changes include:
- Simplifying the look-through company rules and the dividend rules as they apply to closely held companies, to ensure that the decision to convert a small business to a company is not driven by tax considerations;
- Bolstering the rules around the tax treatment of interest earned in New Zealand by non-residents to ensure greater fairness;
- Taxpayer-friendly changes to the GST rules, such as enabling businesses to deduct GST associated with the costs of raising capital;
- Depreciation rollover relief for businesses in the upper South Island and Greater Wellington areas hit by last year’s earthquakes and aftershocks, and
- Adding 14 new charities to the list of donee organisations in schedule 32 of the Income Tax Act 2007, making donors to those charities eligible for tax benefits on their donations.
“Building a more competitive and productive economy for New Zealanders is a priority for this Government,” says Revenue Minister Judith Collins.
“Making sure that the tax rules keep up with social and economic changes, as well as current business practices, is a vital part of a well-functioning economy.
“Improvements to the tax rules following enactment of this bill will give taxpayers more certainty over their tax affairs by dealing with inefficiencies and complexities that have occurred over time.
“That in turn, should result in lower compliance costs for business,” Ms Collins says.
The legislation will come into force on the day on which it receives the Royal assent except for a number of provisions which come into effect on various dates, some of them retrospectively. Most of the provisions will come into force on 1 April 2017.