Vol 36 No 2 TIB - March 2024
- SL2023/295 – Order in Council – Student Loan Scheme (Repayment Threshold for 2024-25 Tax Year and Subsequent Tax Years) Regulations 2023
- AE 24/01: Participating jurisdictions for the CRS applied standard
- BR Prd 23/07: Qantas Airways Limited
- IS 24/01: Taxation of trusts
- GA 24/01: Proposed increase in the trustee tax rate to 39%
Technical decision summary
- TDS 24/02: Renovation work on recently acquired properties and the capital limitation
- CSUM 24/01: TRA finds the disputants suppressed income
The Government has proposed that from the 2024/25 income year, the tax rate applying to trustee income will increase to 39% to align with the top personal tax rate. These changes were included in the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill introduced on 18 May 2023. The proposals in the Bill are not legislation until enacted and are subject to change through the parliamentary process.
Since the increase in trustee tax rate was proposed, Inland Revenue has been asked to provide guidance around how it may perceive some taxpayer transactions and structural changes. This article is intended to provide high-level guidance based on Inland Revenue’s interpretation of the current law.
IS 24/01 Taxation of trusts
This interpretation statement explains the taxation of trusts under the trust rules in the Income Tax Act 2007. It updates and replaces IS 18/01.
The statement is a general guide as to how income derived by the trustees of a trust is taxed. It also explains the various compliance obligations imposed on settlors, trustees and beneficiaries under tax law.
It does not deal with the proposed change to the trustee tax rate and related measures contained in the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. These will be explained in a Tax Information Bulletin after the legislation passes.
Vol 36 No 1 TIB - February 2024
- Public Act 2023 No 70 – Taxation Principles Reporting Act Repeal Act 2023
- SL2023/288 – Order in Council – Income Tax (Tax Credit) Order 2023
- BR Prd 23/02: Waka Kotahi NZ Transport Agency
- BR Prd 23/03: Everlasting Nominees Limited
- BR Prd 23/04: Everlasting Nominees Limited
- BR Prd 23/05: Everlasting Nominees Limited
- BR Prd 23/06: WorkRide Limited
- IS 23/11: Income tax: Income – when gifts are assessable income
Questions we’ve been asked
- QB 23/08: Income tax – deductibility of expenditure – renting to flatmates
- QB 23/09: Income tax – Forfeited deposits from cancelled land sale agreements
- QB 23/10: Foreign investment fund (FIF) calculation methods in cases of non-compliance
Technical decision summaries
- TDS 23/14: Omitted income, shortfall penalties
- TDS 23/15: Income Tax and GST – Omitted business income and liability for shortfall penalties
- TDS 23/16: Income Tax and GST – Omitted business income and liability for shortfall penalties
- TDS 23/17: Income Tax – Omitted income and liability for shortfall penalties
- TDS 23/18: Income Tax – Omitted income and liability for shortfall penalties
- TDS 23/19: Income Tax – Omitted income and liability for shortfall penalties
- TDS 23/20: Deductibility of retention payments
- TDS 24/01: Interest free loan and dividends
Income tax; general permission; capital limitation; neglected acquisition.
The Commissioner determined this list of Participating Jurisdictions effective from 1 April 2024. Since the last update in 2023, Georgia, Kenya, Maldives, Moldova, Montenegro, Morocco, Thailand, Uganda and Ukraine have been added as Participating Jurisdictions. These are jurisdictions which are able to provide New Zealand with financial account information under the Common Reporting Standard (CRS). The list of participating jurisdictions is important for financial institutions when conducting due diligence in respect of accounts held by passive non-financial entities.
CSUM 24/01 TRA finds the disputants suppressed income
The Taxation Review Authority (TRA) found in favour of the Commissioner, confirming assessments made in relation to 10 payments Mr A and the company (the disputants) claimed were inheritance payments from Mr A’s grandfather’s estate in Afghanistan. The Commissioner argued the payments were business income from the disputant’s car parts business and made assessments on this basis. The TRA found the evidence supported the Commissioner’s position and the disputant’s had not satisfied their onus to show the assessments were wrong and by how much.
In addition, the TRA found in favour of the Commissioner in relation to the GST assessments that included the disputed deposits, disallowed disputed expenditure, and adjusted the disputant’s zero rating of exports.
TDS 24/01 Interest free loan and dividends
Income tax: capitalisation of company structure; interest free loan whether a dividend arises; withholding tax; tax avoidance.
This QWBA explains that a person has a choice of methods to calculate FIF income even if they fail to declare the income in a tax return and later file a voluntary disclosure, or fail to file a tax return by the due date and later provide one including the income.
It also explains what happens if a person does not file a return and the Commissioner issues a default assessment.
This item is particularly relevant for natural persons and eligible trustees.