As 2018 draws to a close, it has been a big year on the tax front with much of the discussion focussing on the initial deliberations of the Tax Working Group, especially pertaining to the likely taxing of more capital gains from 2021. However, there are a raft of changes which are already gift wrapped for 2019 which we can all look forward to.
On the positive front, from 1 April 2019 the new R&D Tax Credit regime will commence, allowing for a refundable tax credit of 15% of qualifying R&D expenditure (on top of the tax deduction). The first version was disappointing but, through consultation, the new and improved outcome has increased the rate (from 12.5%), lowered the threshold for expenditure to $50k (from $100k) and simplified the definition of what R&D actually is. Although the Government has not solved the issue of how to apply the new regime to loss companies, there is a basic stop-gap measure introduced for one year to allow many of them to get the benefit of the regime.
Another positive news story for taxpayers only on salaries/wages and other source deducted income, is that the IRD will be able to automatically process tax refunds from 1 April 2019, for the 2018/19 tax year. Although final details are still being worked through, the logic is that as the new IRD system collects more regular/accurate information, like pay day reporting from employers, it will be better placed to complete calculations for up to 750,000 taxpayers, and issue automatic refunds to them.
Where Santa or his helpers have been buying Xmas gifts online from offshore suppliers like Amazon and Alibaba, this Christmas will be the last whereby those gifts under $400 will not have GST added. From 1 October 2019, New Zealand will apply GST to those foreign suppliers directly for imported goods under $1,000, so the final cost will probably increase by 15% for Santa’s little helpers here in New Zealand. The good news is that Customs will be less likely to detain low value goods at the border, and charge those horrible “processing” fees. Although these so-called “Amazon tax” measures are seeking to even the playing field for NZ retailers, perhaps it could be considered a lump of coal for your average Kiwi!
If you would like more information about any of these tax measures, speak to your adviser.
Managing Partner – Tax Advisory