Source: New Zealand Government
Legislation implementing coalition Government tax commitments and addressing long-standing tax anomalies will be progressed in Parliament next week, Finance Minister Nicola Willis says.
The legislation is contained in an Amendment Paper to the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill issued today.
“The Amendment Paper represents the first step in delivering on the Government’s tax commitments,” Nicola Willis says.
“The next step will be to ensure ordinary New Zealanders can keep more of what they earn, by providing personal income tax relief in the May Budget.
“The Amendment Paper honours the Government’s commitments to restore interest deductibility for residential investment properties and to reduce the bright-line test for residential property.
“These measures will put downwards pressure on rents by reducing landlord costs and encouraging residential property investment.”
Nicola Willis says the Amendment Paper also removes depreciation deductions for commercial and industrial buildings that were reinstated by the previous government as part of the economic response to COVID-19.
“The change will return the rules to the way they were between 2010 and 2020 and is expected to save $2.31 billion over the next four years,” Nicola Willis says.
Simon Watts says the Amendment Paper also makes a number of other significant changes to the tax system.
They include improving the tax treatment of trading stock disposed of by businesses, requiring offshore online casino operators to pay gaming duty on gross betting revenue and introducing transitional provisions to ensure short-term rental accommodation hosts and marketplace operators are not unfairly disadvantaged by timing issues associated with changes to the tax rules for short term accommodation.
“Businesses often have legitimate reasons for disposing of trading stock at below market value,” Simon Watts says.
“For instance, they may want to donate surplus food to a foodbank or goods to a city mission.
“But the current rules don’t recognise those circumstances and require businesses to pay tax on a deemed market value of the trading stock. That means they can wind up paying tax when there have been no sale proceeds. We are therefore acting to limit the application of the rules.”
Simon Watts says the new gaming duty will close a loophole that enables offshore online casinos to pay less tax than New Zealand operators.
“Currently, the only tax that applies to offshore online casinos is GST. This means that casinos physically present in New Zealand face significantly higher taxes than offshore online casinos. That’s unfair.
“From 1 July offshore operators will be required to pay gaming duty of 12 per cent on gross betting revenue.”
Simon Watts says Cabinet has also made an in-principle decision to regulate online casino gambling.
“New Zealand-based gambling operators are regulated by the Gambling Act which requires them to be licenced in New Zealand. These regulations help ensure New Zealanders can gamble safely and responsibly but they do not apply to online casinos as they are located offshore.
“New Zealand is one of only a handful of developed countries that does not regulate online casinos and that places New Zealanders at risk of being targeted by unscrupulous offshore gambling operators. There is no oversight of harm minimisation and consumer protections currently.
“Regulating online casino gambling will support tax collection, minimise harm and provide consumer protections to New Zealanders.”
Further information on the measures is available in the Commentary on the Amendment Paper at www.taxpolicy.ird.govt.nz.
