IBBZ Accounting

Chartered Accountants & Tax Specialist

 

Useful tips for Small Business

General update by IBBZ Accounting on latest tax news, business growth and technology tips.

Tax updates

What are the tax rules for rental income earned by CFC?

New Zealand Tax Rules for Controlled Foreign Corporation CFC Income

 

A New Zealand tax resident may have a controlled foreign corporation, which is involved in business of rental. Different tax rules apply for such corporations.

The CFC rules were reformed in around 2009 to make New Zealand businesses compete globally and provide certain exemptions to them. If CFC is in a business of rental this can add some complexities in calculating the exemptions.

General rule of thumb is rental income is attributable income. However, certain exemptions are provided in the legislation.

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Speculation Tax – New Zealand New Tax on Real Estate

Do you own or are looking to own residential real estate in New Zealand? Learn more about new tax on real estate


Speculation Tax – New Zealand New Tax on Real Estate

If you own or looking to own residential real estate, you should know about speculation tax. You should also be aware of the Government tax policy to address New Zealand housing affordability.

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Ring Fencing Rental losses: another nail in the coffin of residential rental investment.

Why ring fencing rental losses are being introduced

 

Auckland residential market has been hot topic for several years. It has been going in only one direction upwards. The Government has been trying to make changes in tax policies since 2010. Firstly, they abolished LAQC, and depreciation on building, then introduced bright line test. Currently the bright line test has been extended to 5 years from April 2018 onwards, and Ring fencing of rental losses are being introduced from April 2019.

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Modifying the 63-day rule on employee remuneration Section EA 4 of the Income Tax Act 2007

What is 63-day rule

A person is allowed a deduction for the amount spent on employing people. Payment related to employment could be in the form of wage and salary or payment of leaves. Section EA 4 says payment must be made within 63 days after the end of the income year. Any payment not made within 63 days after the of the income year, becomes income of the person for tax purposes. It means deduction is not allowed for the unpaid portion.

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Financial Hardship Provisions do not apply when Inland Revenue bankrupt taxpayer for the recovery of Tax Debt

Financial Hardship

In the recent tax case of Singh v The commissioner of Inland Revenue [2017] NZCA 506, the court of appeal held the Commissioner can ignore sections 176, 177, 177c of the Tax Administration Act 1994 when pursuing bankruptcy due to non-payment of tax.

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