Tax Updates – Proposed Changes
There are also a few changes in the pipeline that could affect you which include:
Administration of PAYE – It’s proposed that:
- Electronic payday reporting will become mandatory which will require employers to report their employees’ (and contractors with WH tax deductions) income and deductions on payday rather than on the current monthly basis from 1 April 2019 but permissible from 1 April 2018
- Lowering of the threshold for mandatory electric filing of PAYE information from $100,000 to $50,000 from 1 April 2019
- Requirement for employers to provide IRD with information about new and departing employees no later than the next return of payday information.
- Currently PAYE is still payable 20th of the month following.
Investment – It’s proposed that:
- A higher level of disclosure will be required by payers of interest, dividends and taxable Maori authority distributions and will also include disclosure by payers of investment income that is exempt from withholding tax
- Disclosures will include the recipient’s date of birth and where investments are held jointly, detailed will be required for each owner
- Electronic filing of withholding returns, including the detailed recipient information will also become mandatory.
- It is also expected that at some future point, we will not need to obtain this information from you at the time of preparing your income tax returns as the IRD will already have this information available on their system by way of the proposed changes.
GST – It’s proposed that:
- Updating the timeframe around Use of Money Interest kicking in
- Updating the timeframe around default assessments being issued as a result of streamlining IRD systems
- Provision to allow a threshold for mandatory electronic filing of returns and a penalty being able to be imposed for taxpayers who do not comply (exemptions will be available)
Brightline period for residential property – it is proposed that:
- For property sold within 2 years (subject to criteria to determine if exemption’s apply)
- The brightline period will extend from 2 years to 5 years. This will only apply on or after the date which the Act receives Royal Assent (not yet received – but due in March 2018), so for those properties where the first interest was acquired before this date of Royal Assent the 2 year period will continue.
Until legislation is passed we will not know exacly what the changes will be, but once we do we will be sure to pass it on to you. The proposed changes around PAYE, Investments and GST fits into the reform of the IRD system and to modernise the process through business and technology changes. IRD believe that there should be a reduction of complicance costs for taxpayers, and it should reduce their administrative costs too, as taxpayers will pick up the data disclosure costs. More frequent and comprehensive collection of information will be available to IRD allowing them to be able to intervene more frequently and have readily available information to assist with social policy, debt collection and distribution of benefits.