2018 Tax Updates
More changes proposed or already introduced as part of the tax simplification and business transformation programme to keep up with! Most of these changes we will pick up at the time of preparing your financial statements and tax returns, however, you may be interested for any adjustments you make during the year.
Some of these changes that may affect you are as follows:
- ¨ Farmhouse expense deductibility—A new calculation provides guidance on the deductibility of expenses based on the entity structure and farmhouse value, compared with the total value of the farm;
- ¨ Information sharing—allows information to be shared when related to serious offences against the Companies Act; and for tax debt with credit reporting agencies at more than $150,000, conditions do apply, and amendments likely to be limited to non-individuals;
- ¨ IRD Late Payment Penalties—1% incremental late payment penalty to be removed;
- ¨ Look Through Companies (LTC) – Removal of the deduction limitation rule, introduction of a continuity period, a change as to how owners are counted and entry tax calculation;
- ¨ Minimum wage—increase as an adult to $15.75 an hour, or starting out/training to $12.60 an hour;
- ¨ Mileage reimbursement rate for Motor Vehicles—increased from 72 cents per km to 73 cents per km and alternative ways to calculate a private portion adjustment;
- ¨ Qualifying Companies (QC’s) – Introduction of a minimum interest calculation;
- ¨ RWT Exemption Certificates—Will no longer have an expiry date of 12 months;
- ¨ Self correction on minor errors—tax error level raised from $500 to $1,000 for being allowed to adjust the next return;
- ¨ Shareholder Salaries and PAYE—Now being able to split annual earning between shareholder salary (tax paid at year end) and PAYE (PAYE deducted monthly);
- ¨ Use of Money Interest safe harbour threshold—Increases the threshold to $60,000 and removed the requirement that a taxpayer be a natural person (individual);
- ¨ Withholding Tax (Contractors) – Allows the taxpayer to select their own tax deduction rate (minimum rate 10%, non resident 15% and can only amend twice in a 12 month period)
We will come back to you with more detail when the IRD stop changing the rules and interpretations.
Our team here at Bennetts Proactive are fully aware of the already legislated tax changes. We will keep an eye out for the upcoming amendments to legislation and will consider these when preparing your returns and advise if any affect you.