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

The Court of Appeal reconfirm Permanent Place of Abode is very crucial in determining New Zealand Tax Residency.

In a tax case Van Uden v Commissioner of Inland Revenue [2018] NZCA 487 the decision was delivered on 08th November 2018. High court decision was upheld in the favor of IRD explaining New Zealand Tax Residency and Permanent Place of Abode Test.


The decision confirms the interpretation of permanent place of abode as set out in Commissioner of Inland Revenue v Diamond [2015] NZCA 613. Permanent place of abode in New Zealand can be seen as “a home in New Zealand”


This case provides very good explanation on New Zealand Tax Residency and Permanent Place of Abode Test.


The permanent Place of Abode test overrides 183 days test for New Zealand Tax Residency.

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GST: zero-rating of services related to land

 GST:  zero-rating of services related to land

Legislation

As amended, section 11A(1)(k) land related services provided to non-residents outside New Zealand at the time the services are performed are eligible for zero-rating, if they are:
• not directly in connection with land in New Zealand or
• not in connection with land in New Zealand and intend to enable or assist a change in physical condition, ownership or other legal status of that land or
• directly in connection to land outside New Zealand

Tagged in: GST Land Zero-Rated
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Comprehensive Capital Gains Tax is being introduced in New Zealand

On 01 Feb 2019 Tax working group headed by sir Michal Cullen has recommended the Government to introduce capital gain tax. The formal report is due to be released to the public on 21 Feb 2019. The government may consider the introduction from 01 April 2021


It is expected the scheme will be broad based with very little and no exemptions, excluding family home.


Sir Michael Cullen is the same person who was behind the introduction of GST in New Zealand. The GST scheme is a broad based with very little exemptions, almost everything in New Zealand attract GST. It makes New Zealand GST unique in the world. New Zealand is the only country in the world who has broad based consumption tax with no exemptions not even on essential items. GST collects significant revenue for the government.

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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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