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A bill that will see offshore property speculators pay a withholding tax on profits from property transactions under the ‘Bright-line test’, and GST applied to online purchases of services and intangibles from overseas suppliers has passed its first reading.

Revenue Minister Todd McClay says the Residential Land Withholding Tax (RLWT), GST on Online Services, and Student Loans Bill is about fairness.

Revenue Minister Todd McClay today announced that the new prescribed interest rate used to calculate fringe benefit tax on low-interest loans provided by employers to their employees will be 5.99%.

The new, lower rate will apply for the quarter beginning on 1 October 2015 and for subsequent quarters.  The previous rate was 6.22%.

The FBT rate on employer-provided low-interest loans is reviewed regularly to align it with the results of the Reserve Bank’s survey of variable first mortgage housing rates to ensure it is in line with market interest rates.

Low-income working families who are eligible for the minimum family tax credit (MFTC) will receive an increase for the 2016–17 tax year, Revenue Minister Todd McClay has announced.

The tax credit currently guarantees recipients an after-tax income of $23,036 a year ($443 a week).  This will increase to $23,764 a year ($457 a week) for the 2016–17 tax year, beginning on 1 April 2016.

Good morning.

Thank you for inviting me to join you once again. Over the last few years it has always been my great pleasure to come and speak to you. 

Your role as payroll professionals and mine as Revenue Minister have a common interest in the smooth running of the tax system.  If it works well for you, then it’s working for me.

We all use the tax system at one time or another, whether it is paying income tax, child support, paying off a student loan or receiving tax credits, it all goes through the tax system.

It’s great to be here with you again.

First I want to say thank you. We have had an extremely busy year in the tax community. It has been a year of heavy lifting.

In just this year we’ve put out 14 consultation papers on policy, seen the introduction or passing of seven bills, and have been involved in the development of other legislation.

There has also been significant progress on the Business Transformation (BT) front from a tax administration point of view.  

That is huge. 

A tax bill introduced today proposes a new withholding tax on sales of residential property by people who live overseas and go on to sell the property within two years of purchase. 

The proposed measure is the third part of the Government’s investment property tax reforms announced as part of Budget 2015.

A tax bill introduced to Parliament today will allow information on student loan borrowers living in Australia to be shared between Inland Revenue and the Australian Taxation Office, ensuring defaulters pay their outstanding loan balances.  

Revenue Minister Todd McClay says measures proposed in a tax bill introduced today are about fairness and equity.

“It is about creating a level playing field for collecting GST and putting New Zealand businesses and jobs ahead of the interests of overseas suppliers”, says Mr McClay.

These measures are an important first step in the Government’s efforts to deal with increasing volumes of online services and other intangibles purchased from overseas suppliers that should, under New Zealand’s tax rules, be subject to GST.

Revenue Minister Todd McClay says the passing of the bright-line legislation in Parliament today is an important tool to ensure property speculators pay their fair share of tax.

The bill, which contains further measures to strengthen the property tax rules announced as part of Budget 2015 passed its third reading in Parliament today.

Mr McClay says proposals in the Taxation (Bright-line Test for Residential Land) Bill were part of a three-pronged approach announced by the Government in May to tighten the property investment rules.

Revenue Minister Todd McClay says Inland Revenue’s Business Transformation programme is likely to take less time, cost less, and deliver more benefits than the original projections.

Mr McClay was speaking at the Trans-Tasman Business Circle, where he released two consultation papers. The first, making it simpler for businesses to manage PAYE and GST and the second looking at the Tax Administration Act.

Revenue Minister Todd McClay says New Zealand and international companies are reaping the benefits of the billion dollar programme to modernise and simplify New Zealand’s tax administration.

“We said the transformation of New Zealand’s tax administration would use a mixture of New Zealand and international expertise – and where a New Zealand company could do the work, I would expect they would be given the opportunity to.

It is my pleasure to be with you here today to unveil the next important stage of how the Government is making tax simpler for business. 

Over the last few years we have taken the first steps in what is a very significant journey towards a simpler tax system for New Zealand.

While our tax system is among the best in the world, and is internationally recognised for that, I know that we can do better. The reality is that as the world becomes more and more connected, and more digital, we need to keep looking at what we can do to improve.

Minister of Revenue Todd McClay has welcomed a decision by the Cook Islands government to implement the 'Automatic Exchange of Financial Account Information in Tax Matters Agreement' (AEOI) and says the Cooks Islands and New Zealand will play their part to target international tax avoidance.  

AEOI is at the heart of international efforts to reduce international tax evasion, and strengthen international efforts to increase transparency among financial institutions and tax administrations.

The Taxation (Bright-line Test for Residential Land) Bill passed its second reading in Parliament tonight.  

The bill proposes an easy-to-understand “bright-line” test, requiring income tax to be paid on gains from residential property purchased and sold within two years.  The only exceptions are an owner’s main home, inherited property, or the transfer of relationship property.

Revenue Minister Todd McClay says many hours of taxpayers’ time is being saved by Inland Revenue’s innovative changes to online and phone services.

The most recent is the ability to activate personal online MyIR accounts by text rather than having to phone Inland Revenue’s call centre to do it.

“That alone has saved 8 minutes for each of the 11,000 customers who’ve used the service in its first month,” says Mr McClay.

Revenue Minister Todd McClay and Small Business Minister Craig Foss have welcomed a new initiative dedicated to helping small businesses better understand tax and finance.

“Business.govt.nz has created a new section of the website called Tax and Finance, which covers everything from tax types to payroll dedications, and offers sound advice on topics such as how to reduce your tax bill, setting budgets and getting paid on time,” Mr Foss says.

The increase in customers filing tax online has meant big savings in postage and printing.

Revenue Minister Todd McClay says Inland Revenue was spending more than $18 million on print and postage each year, but by giving customers access to their details online, it is dropping dramatically.

“Because most customers have embraced online filing Inland Revenue has saved $600,000 per year on prepaid envelopes for Employer Monthly Schedules (EMS), and this is expected to fall much lower,” says Mr McClay.

Revenue Minister Todd McClay says the Government’s aims to broaden New Zealand's economic base means ensuring that the tax system does not discourage innovation.

“Companies that invest in research and development are investing in New Zealand’s future prosperity,” says Mr McClay.

The Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Bill last night passed its second reading.

Doing business with Inland Revenue is 23 per cent easier than it was last year, says Revenue Minister Todd McClay.

“Inland Revenue’s stated aim is to save taxpayers time and money and it is working,” says Mr McClay.

The latest business reference group survey, which looks at levels of effort dealing with government departments, shows a 23 per cent reduction in effort dealing with Inland Revenue, compare to last year.

Revenue Minister Todd McClay says measures aimed at encouraging liable parents to meet their child support obligations and reduce unreasonable levels of long-term child support debt are a step closer, following the second reading of an omnibus tax bill in Parliament today.

The Taxation (Annual Rates for 2015-16, Research and Development, and Remedial Matters) Bill includes proposals to deal with long-standing child support debt, announced in Budget 2015.  

A bill aimed at preparing the way for a simpler and more modern tax administration system passed its first reading in Parliament today.

Revenue Minister Todd McClay says changes proposed in the Taxation (Transformation:  First Phase Simplification and Other Measures) Bill are part of the staged roll-out of Inland Revenue’s Business Transformation programme, which, over time, will reform the department’s business practices and modernise our tax system.

The OECD last night released its final package of actions to address base erosion and profit shifting (BEPS). The Minister of Finance Bill English, and Minister of Revenue, Todd McClay say that the plan, representing two years of intensive work by the OECD and G20 nations will be a significant step forward in the fight against BEPS.

“BEPS behaviours can result in multinationals paying little or no tax anywhere in the world, so this announcement is a big step forward and the culmination of over two years’ work by the international community” Mr English says.

Revenue Minister Todd McClay says the new bright-line test, which comes into force today, will improve compliance with the current residential land sale rules and help to ensure that people pay their fair share of tax on gains from property sales.

“Any gains made on residential property purchased and sold within two years, will be subject to income tax, with some exceptions.  The exceptions include the sale of an owner’s main home, inherited property, or the transfer of property in a relationship settlement.

Revenue Minister Todd McClay says Labour finance spokesman Grant Roberson is trying to have his cake and everyone else's too over his position on fair property taxation legislation currently before parliament.

The objective of the Bright-line Bill, which is currently before the Finance and Expenditure Select Committee, is to improve compliance with the current land sales rules in the Income Tax Act.