Tax Updates – 2018 Tax Year Changes
We have seen a number of tax changes over the last year or two – from both National and Labour. With a change in Government during the year, we have also seen some of the National legislated changes repealed by the Labour Government.
2018 Tax Year Changes Include:
- Farmhouse expenses – an interpretation statement was released which provides an update to the long-standing policy that has allowed a farmer a full deduction for rates and interest and a 25% claim for all other farmhouse expenses. The Department have identified that this treatment is no longer acceptable and the deductibility now needs to be determined through IRD provided guidelines, being closer aligned to the actual business usage.
- Foreign disclosure rules – new compliance requirements have recently been introduced as part of the Information Sharing framework. The purpose of this is to disclose financial transactions for non resident individuals that have a taxable activity or business entity located in New Zealand back to their country of tax residence as part of the global exchange of information. This information sharing framework also applies to NZ resident taxpayers with taxable activity held off-shore.
- Motor Vehicles owned by a Company and made available for private use – an Alternative method is now available for business related vehicles that are made available for private use by shareholder-employees. Currently FBT rules apply however shareholder-employees now have the option to use a motor vehicle expenditure rule so instead of paying FBT, it allows Companies to either make a claim based on the actual business only expenses or a deduction based on the distance travelled for business purposes only.