Welcome to our May newsletter,
We hope it has been a busy and productive start to the new financial year by all, given the time of year we thought it would be a good time to let you know about the proposed changes to the Provisional Tax Rules.
The government has issued a paper which aims to simplify Provisional Tax. As some of you will know, Provisional Taxes are tax payments made throughout the year in order to partially discharge a business’ overall tax liability for that given year. Whilst it is often difficult to predict the amount that needs to be paid it does spread large payments throughout the year.
The Proposed Amendments
- Currently Use of Money Interest (which is charged by IRD) does not apply until Residual Income Tax reaches $50,000. It is proposed that this threshold be increased to $60,000 which will provide more leeway when calculating Provisional Tax amounts.
- To remove Use of Money Interest on the initial two Provisional Tax instalments of the year in instances where the Standard Uplift Method has been used to calculate the amount paid. Although for this to be applied all Provisional Tax payments must be made on time.
- Introduction of a new method of calculating Provisional Tax.
- Closely held companies (those with 5 or less shareholders) will be able to pay Provisional Tax on behalf of employee shareholders who do not partake in PAYE.
What does this mean for Business Owners?
- These proposed changes will be beneficial to business owners enabling them to manage their tax obligations in a more straight forward way with less likelihood of penalties.
- Provisional Tax and GST payment dates will be aligned.
- The new method of calculating Provisional Tax is designed to work with modern accounting systems and cloud based technology.
- Whilst an end of year tax return will still have to be filed it is unlikely that there will be any significant adjustments required.
If these changes are brought into action they are likely to become law in early 2017.
If you have any matters that you require advice on please be in touch. We are more than happy to assist you with any questions you may have.
In this Issue:
- The future of privacy law in the Information Age
- Law helps IRD chase student loan defaulters in Australia
- Super City report card: Good job but room for improvement at community level
- Get to the Root of Work Stress
DAVENPORTS WEST LAWYERS LIMITED
The future of privacy law in the Information Age
The Government is re-thinking New Zealand’s privacy laws in response to the “data explosion” that has characterised the start of the 21st century, said Justice Minister Amy Adams in opening the Wellington Privacy Forum last week…
Law helps IRD chase student loan defaulters in Australia
Tens of millions of dollars could be clawed back from student loan defaulters living in Australia under a new law making information sharing between the two countries easier. The Taxation (Residential Land Withholding Tax, GST on Online…
Super City report card: Good job but room for improvement at community level
The Super City has got a big tick from a report card issued today by the Committee for Auckland lobby group. The Governance of Auckland: 5 years on, says the new council has delivered on the 2010 reforms, but there is room for improvement at the…
Get to the Root of Work Stress
There isn’t a working person among us who doesn’t deal with stress — whether you’re an entrepreneur, a freelancer, working for a struggling startup, or clocking in working for a company, work stress is inevitable. But where does this stress origin