Recent Tax Updates
Employment – legal protections for employees affected by domestic violence – Legislated 30 July 2018
From 1 April 2019, employees who are affected by domestic violence now have the right to take at least 10 days of paid domestic violence leave each year (this is separate from annual leave, sick leave and bereavement leave). They can request short-term flexible working arrangements lasting up to 2 months and they must not be treated adversely in the workplace because they might have experienced domestic violence.
There are employment service requirements that need to be satisfied before domestic violence leave is available and the employee may be required to show proof before granted leave since domestic violence can include not just physical but also sexual or psychological abuse that may not be noticeable by employers. It does not matter when the domestic violence took place to be entitled to this leave.
GST on imported low-value goods (Amazon Tax) – Legislated on 26 June 2019
From 1 December 2019, overseas businesses that sell low-valued goods to New Zealand consumers, as well as online marketplaces and re-deliveries, valued at $1,000 or less are required to register for, collect, and return GST provided their turnover exceeds or is expected to exceed $60,000. The $1,000 threshold relates to the value of the goods only and excludes transport, insurance or any other costs associated with landing the goods.
The compliance will not affect New Zealanders, however it could affect the price that we pay for low-value assets that have previously been allowed to slip through the GST system.
Ring-fencing of rental losses – Legilsated on 26 June 2019
From 1 April 2019, taxpayers with a residential rental property activity will no longer be able to offset rental losses with other taxable activity such as wages or salary earnings, business income and investments etc.
To be included in the new rules, the land must be residential or able to be used for residential dwelling purposes and a dwelling must be predominantly used as a place of residence.
There are exclusions to the legislation such as business premises, mixed-use assets or employee accommodation and situations where the answer may not be black and white. For example a situation where there is dual use or a mix of residential and commercial rental activities as well as tax implications to consider; such as Company continuity issues, tax treatment on disposal of properties or being able to utilise losses in the future.
The two approaches available to tax payers are the portfolio approach which calculates income and expenses over the entire portfolio, or the property-by-property approach which calculates income and expenses on each property.