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Taxation (Research and Development Tax Credits) Act 2019: the rationale provided for the exclusion applying to above market value good and services (Schedule 21B Part B Clause 17) at the bottom of page 28 has been clarified.
It should read:
"This provision is intended to apply broadly, so applies to transactions with associates and third parties. The amount paid which exceeds the market value is not eligible expenditure".
The flowchart in QB 19/03: Provisional tax – impact on employees who receive one-off amounts of income without tax deducted on page 13 is incorrect.
Where the flowchart asks "Is your residual income tax less than $60,000", the arrow to "No use-of-money interest if residual income tax paid by terminal tax date" should be Yes.
Example 9 published in the Simplifying tax administration – individuals income tax item on page 14 is incorrect.
Lauren, Olivia and Ruairi have a brother called Jeff who also works at the accounting firm and earns salary and wages. On 1 April 2018, Jeff also commences a start-up technology venture, which he operates in his own capacity. Although Jeff is only working on his venture part time, it is successful and he earns an additional $200,000 for the 2018–19 tax year.
Inland Revenue reviews Jeff’s income information at the end of the 2018–19 tax year and, based on the information held for Jeff, the Commissioner is satisfied that the information contained in his pre-populated account correctly and completely records Jeff’s income for that tax year. Inland Revenue therefore finalises Jeff’s pre-populated account and it becomes an assessment on 15 May 2019.
New section 22G(3) provides that a qualifying individual, or an individual who is treated as a qualifying individual, may amend the income information in their final account at any time before their terminal tax date for the tax year. Although Jeff clearly has “other income” that he needs to provide, he has been treated as a qualifying individual and therefore has until his terminal tax date (7 February 2020) to provide any additional information and amend his tax position for the year.
Jeff logs into myIR on 1 February 2020 and updates his tax position to include an additional $200,000 in income and finalises his account for the tax year. Although this is treated as a new assessment for the purposes of section 22G(3), Jeff is liable to pay provisional tax as he derived untaxed income during the tax year which caused him to have residual income tax (RIT) of more than $2,500 at year-end.
Because of his level of untaxed income, Jeff’s RIT exceeds $60,000 and therefore he does not qualify for the provisional tax safe harbour in section 120KE.
As Jeff does not meet the definition of a natural person with an initial provisional tax liability (as he continues to derive income from employment), he can use the interest concession rules in section 120KBB. This means that Jeff’s RIT will be due and payable on the date of his last instalment of provisional tax for that year (being 7 May 2019 for Jeff as he has a standard 31 March balance date)as he was not liable to make any provisional tax payments during the year (because his RIT for the prior year was less than $2,500).
As Jeff did not pay his current year RIT amount on the 7 May 2019, he is subject to UOMI on the outstanding RIT from the day after that date.
The table published in the Hybrid mismatches item on page 42 (titled "Table 1: New Zealand's implementation of the OECD recommendations") is incorrect.
The second part of that table ("Specific rule recommendations") should have contained the following information:
|Section||Rec.||Hybrid mismatch||Hybrid arrangement||Corresponding branch arrangement||Counteraction||Scope|
|CW 9||2||D/NI||Hybrid financial instruments – specific rules**||2.1 Payee country should turn off any exemption
2.2 Restrict foreign tax credits to hybrid arrangement
|Subpart EX||5||D/NI||Reverse hybrids – specific rules***||Disregarded branch structure and diverted branch payments||5.1 Improve CFC and other offshore rules
5.2 Turn off transparency/non-taxation
5.3 Improved disclosure
|Specific to NZ's domestic law|
The Measures to encourage provision of IRD numbers item, published in Tax Information Bulletin Vol 30 No 5, contained an error on page 34 under the heading Joint investors IRD numbers.
This section should have also included the following line:
"This does not apply to a joint investment made through an intermediary that is a company, trust or partnership. These investments should be treated as made by a single investor. A custodian may also adopt this treatment."
The Increasing electronic filing item published in Tax Information Bulletin Vol 30 No 5 contained an error on page 36 in the Key features section.
The text reads:
"An investment income payer who does provide their investment income information to the Commissioner electronically is subject to a penalty of $250, due and payable 30 days after the end of the month in which the payer was required to provide the information to the Commissioner electronically".
It should read:
"An investment income payer who does not provide their investment income information to the Commissioner electronically is subject to a penalty of $250, due and payable 30 days after the end of the month in which the payer was required to provide the information to the Commissioner electronically."
QB 17/08: Are proceeds from the sale of gold bullion income? published in Tax Information Bulletin Vol 29 No 10 contained an error on page 14 concerning Case Q109 (Board of Review (Australia)).
Under CIR's view of whether s CB 4 would apply the text reads "The amount derived on the sale would similarly be income under s CB 4". This line should read "The amount derived on the sale would not be income under s CB 4."
The discussion of the Taxation (Annual Rates for 2016-17, Closely Held Companies, and Remedial Matters) Act 2017 contains errors in figures in examples 2 and 4 under the section relating to Capital loss amount rules in section CD 44(9) of the Income Tax Act 2007.
The figures given for "consideration on disposal", should both be $980,000 instead of $960,000 and $96,000 respectively.
The figure for "consideration on disposal" in the column entitled "Before amendment to section CD 44(9)" should be $700,000 (and not $550,000). The capital loss amount under that column should be $300,000 (and not $450,000).