The New Zealand Inland Revenue is consulting on measures to require parties to a sale of real property or business assets to adopt in their income tax returns a consistent allocation of the purchase price to individual assets.

A recent research paper by Paul Schmelzing of the Bank of England shows that real interest rates ie. what you need to pay above inflation to borrow money, have been pretty consistently declining for 700 years. As economic growth has given us money over time, the cost of borrowing it has gone down.

Inland Revenue Department (IRD) has announced a number of changes in the way in which employment information should be filed by companies.

New Zealand’s sky-high house prices could drop if the government would introduce a capital gains tax and prevent high-income people from borrowing too much money, according to Helen Clark Foundation’s latest report.

A new report has proposed introducing a capital gains tax and limiting access to mortgages for high-income households as a way of combatting the country’s housing affordability problem.

Inland Revenue wants business owners affected by events like the flooding in Southland and coronavirus impacts to know they still need to pay tax.

This decade is only a few weeks old, but I consider the likely major tax themes for the years ahead are already becoming very clear.

Over the holidays, the news has been dominated by the apocalyptic visions of the Australian bushfires, and our thoughts and condolences go out to everyone affected by those fires particularly the families of those who’ve lost their lives.

Inland Revenue scrutiny of property transactions has resulted in $12.5 million in tax bills for property traders and speculators last year.

The department is tasked with identifying property dealers and speculators who should have paid tax on the gains they make from buying and selling properties.

The year’s first arrest of an overseas-based student loan defaulter has certainly riled the nation, underscoring society’s contempt for people who rip off the taxpayer.

In what appears to be just the ninth such border arrest since the law was changed in 2014, a woman who had returned home to visit her ill mother was arrested at Auckland Airport, appearing before court last week.

A Paraparaumu restaurant and bar that withheld thousands of dollars in KiwiSaver and student loan debt payments must pay workers and Inland Revenue $46,756 in arrears.

The Employment Relations Authority found ​Smith & Co Hospo, which traded as The Social, deducted $9600 from wages in KiwiSaver contributions and student loan repayments but never forwarded the payments.

More than half of all Kiwis living overseas with a student loan are dragging their feet on paying their debts.

And the amount of money the taxman considers overdue by those living overseas has jumped by almost $150 million in the space of just a year.

Inland Revenue has let millions of dollars of tax revenue slip through its fingers by weakening its grip on the ‘hidden economy’, National Party revenue spokesman Andrew Bayly says.

The number of staff working on tax investigations has fallen by more than quarter to 143 since 2016, according to figures provided to Bayly by the department.

The New Zealand Government has announced a range of changes to the foreign investment consent rules, to be enacted as part of the second phase of its reform of the Overseas Investment Act 2005. A summary of the Government’s announcement can be found here.

The announcement follows the release in April 2019 of a consultation document by the New Zealand Treasury that noted a concern about “overseas persons acquiring sensitive New Zealand assets and not paying enough tax in New Zealand. This could be viewed as contrary to the [Overseas Investment] Act’s purpose, which recognises that it is a privilege for overseas persons to own or control such assets.”

The New Zealand Inland Revenue has released its Multinational Enterprises Compliance Focus document, detailing its strategy and priorities for audit and enforcement in respect of large multinational enterprises. Last released in 2016, the update comes at an interesting time.

Figures recently released by the Minister of Revenue confirm a reduction, in the past 12 months, in the time that Inland Revenue has spent on audit and investigation activities. However, the reduction is likely to be temporary, reflecting a diversion of resources within Inland Revenue to assist with the implementation of its ambitious business transformation.

At least 1600 properties across Christchurch are being used illegally for Airbnb-style accommodation as the city council looks for ways to regulate the industry.

The number of home-share accommodation listings in the city has ballooned in the past three years from 283 in June 2016 to 4229 in August – a 1394 per cent increase.

Xero, the global small business platform, says invoice numbers have rebounded for Kiwi small businesses, indicating underlying stability within the New Zealand small business economy.

New Zealand’s small business sector represents approximately 30 percent of New Zealand’s GDP and Xero’s assessment of the small business economy is based on Xero Small Business Insights (XSBI). This is an anonymous and aggregated data set of actual business behaviour drawn from a sample of Xero’s 367,000 Kiwi subscribers.

Inland Revenue says it is asking countries with tax treaties to share details about Kiwi hosts renting out their homes on Airbnb.

Take care if you’re one of the thousands of Kiwis using Airbnb or other online websites to rent out a hoe, you could be in the crosshairs of Inland Revenue.

This week, an update on Inland Revenue’s Common Reporting Standard initiative, the Future of Tax, and what went wrong with introducing a capital gains tax.

I spoke recently of Inland Revenue’s new initiative on the Common Reporting Standard on Automatic Exchange of Information or CRS as it’s commonly referred to. This is where Inland Revenue has received details of upwards of 700,000 accounts from overseas tax authorities.

Audit quality has broadly improved again but auditors continue to apply standards inconsistently, the FMA’s annual Audit Quality Report 2019 has found.

The annual review is part of a three-year monitoring cycle of licensed auditors. Each of the audit firms reviewed for this report have been reviewed previously and the FMA found most auditors had made improvements.

The Government is believed to be weighing up whether to propose raising the top rate and threshold of income tax, as ministers debate the tax policy it should take to voters at next year’s election.

There has previously been speculation Labour might propose increasing the threshold at which the top rate kicks in to more than $100,000, and pay for that by increasing the top rate of tax by a few per cent.

Inland Revenue is cracking down on multinationals to ensure they pay the correct tax in New Zealand, which could bring in approximately $200 million in tax collected every year.

New Zealand’s international tax rules received an update as part of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018, as a response to the OECD/G20 Base Erosion and Project Shifting (BEPS) project.

This week, Inland Revenue comes knocking, using technology to deal with the hidden economy, and no taxation without representation? Not if you’re not living in America.

Inland Revenue announced that its staff had searched several Queenstown businesses and made unannounced visits to others, as part of a current campaign against the hidden economy targeting the hospitality sector in particular.

Inland Revenue is proposing a change to the law that would stop “habitual” house flippers from avoiding tax on their profits by changing the person who makes the purchase each time.

The move follows the decision by the Government not to pursue a Capital Gains Tax (CGT) in April, which it thought would help flatten the frothy housing market. The Government has since pursued several other policies that crack down on housing speculation.

If you are selling or have sold property recently, you should be aware of the IRD’s recent focus on, and review of, provisions dealing with the taxation of land.

This is evidenced by both IRD sending letters to taxpayers who they believe may have to disclose income from property sales – especially residential properties under the two or five-year BrightLine Tests based on information sourced from Linz (yes, Big Brother is watching) – as well as the proposed redrafting of some of the land tax provisions in the Income Tax Act 2007.

Inland Revenue is being told to butt out and stop communicating directly with accountants’ clients.

Tax agents across the country are complaining that the department is acting outside its remit by sending sometimes-confusing messages straight to their clients, which leaves their accountants “picking up the pieces”.

With continued awful business confidence from NZIER, the Government needs to take a new approach, says the New Zealand Taxpayers’ Union.

Taxpayers’ Union spokesman Louis Houlbrooke says, “NZIER is now suggesting annual economic growth could fall below 1 percent later this year. That would be an awful result – after accounting for population growth New Zealanders would almost certainly be going backwards.

Inland Revenue has posted nearly 1 million letters to Kiwis telling them they are on the wrong tax rate.

In June Inland Revenue discovered 550,000 people underpaid tax on investments such as KiwiSaver in 2018 by an average amount of between $82 and $91. They are being billed for the shortfall but do not have to reimburse Inland Revenue for historical underpayments in previous years.

Following the recent disclosure requirements in terms of Automatic Exchange of Information Agreement, we are now seeing the next wave of enforcement from Inland Revenue.

As a result of these protocols giving rise to more formal automatic exchanges of information between government entities, the Inland Revenue has started issuing letters to taxpayers regarding foreign income and tax residence status.

Inland Revenue and the Accident Compensation Corporation have announced they will no longer accept payments by cheque from March.

Inland Revenue said it received more than 430,000 cheques during the last financial year, while ACC received about 25,000 cheques from businesses including the self-employed.

This morning, I and many other tax agents got a letter from Inland Revenue. It began:

“We have found some errors in the way our old system calculated late payment penalties and interest for the 2018 income year. The errors relate to a legislative change that took effect in the 2018 income year, when new rules around interest were applied under section one 20K(b)(b) of the Tax Administration Act of 1994”.

A bigger-than-expected cut to the official cash rate this week does not signal a recession immediately around the corner, but no one can afford to be complacent about “frightening” economic conditions, economists say.

The Reserve Bank surprised markets when it cut the official cash rate from 1.5 per cent to 1 per cent. Commentators had predicted it would be cut by half that much, to 1.25 per cent.

Revelations the Inland Revenue Department (IRD) doesn’t know how much it has paid and received in interest for over and underpayments of tax have left a tax accountant speechless.

Questions were raised last month over the fact the IRD uses different benchmarks to calculate its ‘use of money’ rates applied to over and underpayments of tax.

The US Federal Reserve’s rate cut on Thursday morning, New Zealand time, can be seen as a pre-cursor for next week that will see rate reviews in Australia on Tuesday, and then in New Zealand, through the Reserve Bank, on Wednesday (August 7).

Inland Revenue has paid $572 million into taxpayers’ bank accounts in automatic refunds over past two months.

This is the first year that Inland Revenue has returned overpaid tax without being asked for a refund, and Revenue Minister Stuart Nash said the completion of this year’s tax refund season was “a significant milestone”.

Last week, I mentioned the issue of the FBT, fringe benefit tax treatment of double cab-Utes and I referenced a blog on the issue by Andrea Black.

It seems that social media really is widely read because Inland Revenue’s ruling units, read Andrea’s post and sent her a polite email explaining that in their words, “We have a couple of comments regarding double cab utes and the work-related exemption.”

Mortgage interest rates may yet fall a bit further but New Zealanders are unlikely to ever pay the 1 per cent or 2 per cent rates seen in other countries.

British home loan borrowers are still able to fix two-year rates of between 1.4 per cent and 1.9 per cent. Even 10-year rates are available at 2.5 per cent.

The New Zealand Government’s recently enacted GST legislation may impact Australian businesses. The new rules, which come into force from December 1, 2019, will require overseas businesses supplying more than $60,000 of low-value goods per year into New Zealand to pass on GST directly to Inland Revenue.

A phishing attack that is designed to scam people who are expecting Inland Revenue refunds appears to be the “current peak scam” but is not otherwise unusual, says Netsafe chief executive Martin Cocker.

Inland Revenue sounded the alarm on Monday after 900 scam emails that were addressed to make them appear to have come from the department were reported to it over the weekend.

The Inland Revenue Department is unsure how many Kiwis had been scammed off the back of a fake tax refund email requesting bank account details.

IRD client Xavier Wallach showed the Herald the “dodgy” email he had been sent in a bid to alert others not to “fall for the trap”.

Wallach said luckily he had already received his tax refund this year so knew straight away it was a scam.

Since Budget day there has been a renewed interest in tax. With capital gains tax (CGT) off the table, speculation has turned toward personal taxation and in particular whether the Government may look to increase the top tax threshold and/or the rate.

None of this speculation has come from what was contained in the Budget, but rather because of what wasn’t covered.  As Aristotle said “nature abhors a vacuum”.

Kiwi business owners spend more than four hours every week meeting tax, regulation and compliance requirements, according to a new employer snapshot survey conducted by leading accounting software provider MYOB.

Larger businesses – those that employ more than 50 people – spend nearly six hours (5.8) a week meeting regulation and compliance requirements, twice that of smaller organisations (2 to 4 people) which, even though they employ only a handful of people, still spend nearly 3 hours (2.7) on compliance every week.

The recent release of New Zealand’s ‘wellbeing’ budget received global attention for its focus on more than just the bottom line and economic growth.

While the previous government was focused on fiscal liability in the context of the global financial crisis and two major earthquakes, the new government under the leadership of Jacinda Ardern has shifted the focus to a much broader range of outcomes that lift wellbeing.

It’s no surprise business confidence is falling despite the economy being in an “okay” place, according to one economist.

The latest NZIER business confidence survey found a net 31 percent of business owners expect conditions to deteriorate in the coming months, its worst result since the depths of the global financial crisis a decade ago.