The omnibus Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill (the Bill) was introduced last week. The Bill contains a number of legislative amendments, including:
- Changes to the taxation of employee allowances, including accommodation when an employee is working away from their normal workplace.
- Extension of the inbound thin capitalisation rules to cover non-residents acting together when investing in New Zealand.
- To tax certain lease assignment payments.
- To implement the Government’s Budget announcements around deductibility for 'black hole' patent, resource consent and company administration costs.
- Various GST and other policy matters and remedial tax amendments.
The headline change in the Bill is to the treatment of accommodation payments. These will generally be exempt for up to 2 years, provided the absence is reasonably expected to be less than 2 years. Longer time limits are proposed for capital and Christchurch earthquake recovery related projects. We welcome the new rules, as this has been an area of considerable uncertainty to date.
The various changes in the Bill trade off the right tax policy outcome and concerns about gaming with simplicity and certainty. Any trade off is not straight forward and will produce winners and losers. However, we acknowledge the effort that has gone into drawing an appropriate line.
Taxmail discusses this and the other key legislative amendments.