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Name: TalkTax Editor

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Web Site: http://www.talktax.co.nz

Bio: Dione is Product Development Editor at CCH NZ and is responsbile for new product development for the tax, accountancy and legal markets. She is also the Editor for TalkTax. She would be interested in hearing from anyone who is interested in writing for TalkTax or if you would like to contribute written commentary or articles or have an idea for a new title. We are always interested in hearing from potential contributors who are specialists in Tax, Accounting and Financial Planning, HR, Employment, Conveyancing, Corporate or Business Law.

Posts by TalkTax Editor:

    What were your thoughts on the 2012 Budget?

    June 14th, 2012

    CCH and Ernst & Young clients were surveyed about their thoughts on the NZ Budget. They were asked their opinions on how the Budget would affect their businesses and what was lacking in the 2012 Budget.

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    CCH Budget Report

    May 25th, 2012

    Prepared by CCH analysts with the assistance of Ernst & Young and Bell Gully, CCH are pleased to bring you their 2012 Budget report.

    CCH Budget Report

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    Tax changes announced in today’s Budget

    May 24th, 2012

    The major item would appear to be mixed use assets.  Not clear however whether the government is adopting one of the models considered by PAG in last year’s discussion document or whether a third option is being implemented.

    Don’t sell the beach house just yet.

    Change Timing Savings / Expense over next 4 years
    Inland Revenue will receive an extra $78.4m of funding to assist with tax compliance activities, with a particular focus on the black economy, debt collection and following up on unfiled tax returns. Over the next four years $345.4m
    The tax treatment of mixed-use assets such as holiday homes, boats and planes, which are privately used and which are also rented out, is changing.  Owners will be required to apportion deductions based on the actual income earned and private use of the relevant asset. Date to be set in the bill $109m
    Recently announced changes to livestock valuation rules will be enacted into legislation so that farmers cannot easily switch between the two principal livestock valuation methods of the herd scheme and national standard cost scheme. 18 August 2011 $184 million
    Repeal of “income under $9,880” and “childcare and housekeeper” tax credits, and replacing the “active income of children” tax credit with a narrow exemption so that children earning up to $2,340 annually are not taxed on that income. The start of the 2012/13 income year $117m
    A number of changes have been announced to the student loan scheme:
    • Voluntary repayment bonus will be removed for student loans
    1 April 2013 $43.5m
    • Repayment rate for New Zealand-based student loan borrowers will be increased from 10 cents to 12 cents in the dollar
    1 April 2013 $184.2m
    • “Income” definition will be expanded for the purposes of the student loan scheme only
    1 April 2014 $3.1m
    • Information sharing arrangement to be implemented between Inland Revenue and Customs Service to identify student loan borrowers in default
    Changes have also been announced to the student allowances scheme:
    • Student allowances will be granted to first degrees only and will be unavailable for postgraduate study
    1 January 2013 $33m
    • Parental income thresholds for determining student allowance payments will be maintained at current levels
    Until 31 March 2016 $12.7m

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    Changes to the QROPS regime: Crackdown on UK to NZ pension transfers

    May 24th, 2012

    The UK qualifying recognised overseas pension scheme (QROPS) regime has been the subject of recent change. Regulations introduced by the UK Government, effective from 6 April 2012 (the start of the UK tax year), targeted NZ QROPS providers (among others) with the result that many have had to review their eligibility as a QROPS and make changes to their compliance processes.

    What is the significance of QROPS status?

    UK residents may transfer pension savings out of the UK without triggering a UK tax liability provided the transfer is made to a QROPS. By contrast, transfers to non-QROPS may incur a significant tax cost (up to 55% of the transferred value).

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    Tax issues for receivers and liquidators

    May 22nd, 2012

    One of the side-effects of the GFC has been an increase in the number of tax cases arising in the context of liquidations and receiverships. In the cases discussed below, the IRD has used its status as a preferred creditor to make significant inroads into the secured creditor’s priority in an insolvency.

    Inland Revenue’s priority over accounts receivable

    Until recently it had been understood that a preferred creditor’s priority over a debtor’s “accounts receivable” was limited to the book debts of the company. The High Court’s decision in Burns & Agnew v CIR means, however, that the scope of the Inland Revenue’s preference may at present extend to almost any monetary obligation. Until the law is clarified secured creditors need to pay particular attention to any asset sales by a distressed debtor in the period leading up to a receivership or liquidation. The sale of a secured asset would have the effect of taking an asset outside the scope of any general security agreement with the proceeds being treated as an “account receivable” that will accrue to the benefit of the preferred creditors.

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    Australian Taxation Office issues new alert on New Zealand Foreign Trusts

    May 21st, 2012

    The arrangement causing concern

    Trusts with no New Zealand resident settlor are exempt from New Zealand tax on their foreign source income. Where such income is sourced from Australia, many practitioners argue that such amounts should also be exempt from Australian tax under the Australia/New Zealand Double Tax Agreement. The Australian Taxation Office (ATO) disagrees with this analysis and has released a taxation alert to that effect (TR 2005/14).

    The ATO has continued to express a number concerns about New Zealand Foreign Trust (NZFT) arrangements. This week, in relation to the Project Wickenby, the ATO released a supplementary Taxation Alert dealing with circular arrangements involving NZFTs. This Alert identifies arrangements where an Australian business uses a NZFT as an intermediary when supplying or receiving goods or services with the profit margin retained by the NZFT and not reported or assessed for tax in New Zealand or Australia.

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    AIL and the interest exemption under the US and Australian DTAs

    January 24th, 2012

    The Approved Issuer Levy (AIL) rules were introduced in the early 1990s.  The rules were designed to reduce the cost suffered by borrowers as a consequence of New Zealand’s non-resident withholding tax (NRWT) regime.

    Absent the AIL regime, a New Zealand borrower is generally required to withhold NRWT from New Zealand sourced interest payments made to a non-resident lender unless that lender has a fixed establishment in New Zealand. NRWT must be deducted by the borrower from the interest payment and generally represents the lender’s final New Zealand tax liability in respect of that interest. Read the rest of this entry “

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    It’s happening everywhere ..

    November 22nd, 2011

    An EY global survey, highlighted in a recent article in the Sydney Morning Herald indicates that increases in audit activity are part of a broader global trend.   The paper writes:

    An annual survey by the global accounting firm Ernst & Young found tax authorities are becoming more aggressive and forcing companies and governments into more clashes over tax laws,  The survey, based on interviews with 541 senior tax and finance executives, concludes that the world has entered a period of elevated risk for tax controversy.  Findings were that audits are more frequent and aggressive, making them more costly to defend or litigate.  Tax assessments and penalties have now entered the realm of billions of dollars.  Companies [also] face unprecedented scrutiny and reporting of their tax affairs by advocacy groups and the media. Read the rest of this entry “

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    Falls Road – when GST is not just part of the purchase price

    November 9th, 2011

    A recent HC decision has interesting implications for the payment of GST in property settlements that involve nominees.   In this case:

    (a)    Fletcher agreed to sell land to the Hulls, who nominated Falls Road to complete the transaction.

    (b)   The GST ($650k) was payable before settlement and so a GST invoice was issued by Fletcher and Falls Road paid the GST to Fletcher.

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    Taxation of UK Pensions – Ignorance is bliss?

    November 7th, 2011

    Last weekend’s NZ Herald has an article on the IRD’s approach to the taxation of UK pension schemes.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10764091

    The way NZ taxes foreign pension schemes is complex and (as a consequence) poorly understood.  The IRD have had an overhaul of the regime on their (very long) to do list for quite some time.   The IRD have apparently indicated that audit and enforcement action against NZ tax residents with UK pensions will be suspended pending the outcome of a more general policy review of this area.

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Recent comments

  • Joanne Martin: Hi Would you be able to email me to discuss a small company that is an LTC which I need some advice on...
  • Rizwana Saheed: You are on the right track that there is an exemption when employees work overtime but whether or not...
  • bryan: as a group of employees we get paid meal money if we exceed 11hrs on any day. Employer says he wants to tax...
  • linda: My mother is 94 and has dementia. With govt assisted carers she is still living in a home gifted within the...
  • Sharon: Hi Daniel, Can you please advise how owners of a profit-making LTC pay themselves? The owners used to pay...
  • Another Anne: My Dad is in care on full subsidy. I am EPOA. Are we able to gift some money to my brother in UK so...
  • Twagilayesu Isaya: I agree with the author of this article that Inland Revenue Department need to provide clear...
  • Quinn: Hi. I would like some clarification regarding the valuation of the investments component of the owners basis...
  • QROPS Pensions: Interesting piece of writing, you always write the most useful content & TalkTax is no exception...
  • Davo: Jo, quite likely is that the transition to an LTC was not done in time and the company became a normal company...

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