Important information

October 2018

Anti-Money Laundering and Countering Financing of Terrorism

New Anti-Money Laundering and Countering Financing of Terrorism Act 2009 comes into effect for Accounting Practices
on the 1st of October 2018.

This legislation
is designed to increase communication between accountants and the Financial Intelligence Unit of the New Zealand Police in order to detect money laundering activity.

Osborne Group may require more information from clients in order to comply with the new legislation.

If you have any questions regarding this please contact us.


            July 2017            

         Change to deductibility of Farmhouse expenses

            For farming clients who prepare your own GST returns, please be aware that new rules apply for the 2018 year. 


            Under the new rules, the deduction on farm house expenses has reduced from 25% to 20%. This change is to be adopted
            from the 1st of June 2017 for farms with a 31 May balance date and 1st of July 2017 for farms with a 30 June balance


            The deductibility of these expenses now depends on the value of the farm house relative to the total farm. If the value
            of the house is less than 20% of the total farm you will be considered a Type 1 farm. This means that 100% of the rates 
            and mortgage interest may be claimed and the deductibility of the home telephone is reduced to 50% (unless you can
            show that the actual business use of telephone is greater than 50%). All other home expenses such as electricity, repairs
            and insurance is now 20% deductible.


            Please note that if there is more than one farm house on the farm that a family member resides, this must be included
            into the 20% allocation.  


            If the value of your farm house is greater than 20% compared to your farm, you will be considered a Type 2 farm. The
            farm house expenses (including rates and mortgage interest) will be apportioned based on the area of your farm house
            that is used for business such as a dedicated farm office, we are able to assist you with this apportionment if you are
            unsure about the allocation requirements. The deductibility of the home telephone is also reduced to 50% (unless you
can show that the actual business use of telephone is greater than 50%).           

         Fonterra Interest Payments

            For our farming clients who are dairy farms, please be aware that Fonterra will now be charging interest on your Fonterra
            Co-operative support loans at 2.47% per month. Please ensure that you separate this deduction from your Milk
            production income in your GST return's so that you do not claim GST on the interest. If there has been GST claimed on
            this throughout the year, we will be required to make a GST adjustment which will need to be repaid to Inland Revenue
            when we prepare your 2018 Financial Statements. 


            Should you have any queries, please contact your account manager.


       August 2016

Tax Bill simplifies business taxes and tightens foreign trust rules

On 8 August 2016, the Government introduced the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (149-1) into Parliament. The Bill proposes to simplify tax processes, reduce compliance costs for smaller businesses, and tighten foreign trust disclosure rules.

The Bill introduces amendments to the Income Tax Act 2007, Tax Administration Act 1994, and the Student Loan Scheme Act 2011. A brief summary of the main measures contained in the Bill is set out below:

Changes to business taxation to make tax simpler

Changes to provisional tax are proposed to increase certainty by:

  • increasing the current $50,000 residual income tax limit for interest to $60,000 (for individuals and non-individuals), and
  • removing use of money interest for the first two provisional tax payments for all taxpayers who use the uplift method.

Amendments are also proposed to:

  • provide for more accurate and timely payment of provisional tax by allowing businesses to use the Accounting Income Method (AIM) to pay their provisional tax based on a calculation prepared by accounting software
  • provide that the Commissioner must approve a software provider before they can become an approved AIM provider
  • allow a company to make tax payments on behalf of shareholder-employees
  • allow contractors subject to the schedular payment rules to elect their own withholding rate
  • extend the current schedular payment rules to cover all contractors operating through labour-hire firms
  • enable contractors that are not subject to the schedular payment rules to opt in to the withholding rules through voluntary withholding agreements
  • reform the late payment penalty by no longer imposing the 1% monthly incremental late payment penalty from new GST, income tax, and Working for Families tax credit overpayment debt
  • amend the tax secrecy rules to allow Inland Revenue to disclose information about taxpayer's tax debts to approved credit reporting agencies
  • enable Inland Revenue to share information about certain serious offences under the Companies Act 1993 with the Registrar of Companies
  • extend the rules for motor vehicle expenditure for sole traders and partnerships to close companies
  • increase the threshold for annual FBT returns from $500,000 to $1m
  • increase the threshold for self-correction of minor errors from $500 to $1,000
  • simplify the calculation of deductions for dual use vehicles and premises
  • remove the requirement to renew resident withholding tax exemption certificates annually, and
  • modify the 63 day rule on employee remuneration.

Automatic exchange of information

Amendments are proposed to implement the G20/OECD standard for Automatic Exchange of Financial Account Information in Tax Matters (in short, Automatic Exchange of Information, or AEOI) in New Zealand.

It is also proposed to incorporate the Common Reporting Standard (CRS) into New Zealand law. The CRS is an element of the AEOI standard developed by the OECD that sets out the due diligence and reporting obligations to be imposed on financial institutions.

Disclosure requirements for foreign trusts

Amendments are proposed to the disclosure requirements for foreign trusts with New Zealand resident trustees. These amendments largely follow the recommendation of the Government Inquiry into Foreign Trust Disclosure Rules. The amendments are intended to deter offshore parties from using NZ trusts for illicit purposes.

Other measures

Other measures proposed by the Bill include:

  • amendments to the use of money interest (UOMI) and transfer rules to prevent taxpayer from artificially obtaining credit use of money interest or reducing debit use of money interest
  • amendments to the rules for new and increased assessments by the Commissioner
  • amendments to the late payment penalty grace period rules, and
  • remedial amendments to the collection of tax on employment income from employee share benefits.







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