GST – New Due Dates
The recent passing of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018, saw the inclusion of section 142AB into the Tax Administration Act 1994.
The provision sets a new due date for certain assessments and provides that the Commissioner must set a new due date of 30 days or more after the date of the notice of the assessment, for the payment of either the tax under a new assessment or the increase of tax under an increased assessment. However section 142AB will not apply to default assessments or to subsequent amendments to default assessments, where in these cases, any tax will be payable on its original due date.
Section 142AB has a commencement date of 1st April 2023, unless an Order in Council brings the section into force at an earlier date for a particular tax type or purpose. In this regard, the Taxation (New Due Date for New and Increased Assessments) Commencement Order 2018 (2018/73) specifies a commencement date of 18th June 2018 in relation to GST.
Bad Debts Write-Offs
While not intended to reflect any change in the Commissioner’s present position, PUB00300 has been released for public consultation. The item covers bad debts and the writing off as bad for income tax and GST purposes, and is a re-issue and update to the previous BR Pub 05/01.
The commentary is dedicated to two main discussions, whether or not a debt is “bad” and what actions are required which will be sufficient to satisfy the Commissioner that the “write-off” has taken place within the legislative timeframe – i.e. the income tax year or GST period in which the bad debt deduction is being claimed.
The notion of when a debt is considered to have become bad, retains the “reasonably prudent commercial person” test, whereby sufficient information is held to support a view that there is no reasonable likelihood that the debt will be paid. Factors which may assist in concluding a debt has reached this position, include the length of time the debt has been outstanding, the creditor’s efforts to collect the debt, the creditor’s knowledge of the debtor’s financial situation and debtors who are essentially “missing in action”. It should be noted that continued efforts to recover the debt post the write-off claim being made, will not in itself place in jeopardy the prior claim, provided the “prudent person” test and write-off timing qualifications can be shown to have been satisfied at the time the claim was made.
Whether the debt has actually been written off is important, because the time that this occurs will, in accordance with the relevant Act, determine what income tax year or GST period, the amount of the bad debt deduction can be claimed. In this regard, case law, which the Commissioner now relies upon, indicates that the requirements will naturally vary for different classes of taxpayers based on the differing nature and level of sophistication of the taxpayers accounting records. PUB00300 then sets out for various taxpayer groups, what the Commissioner would consider to be sufficient to meet the “written off” test.
The deadline for submissions on PUB00300 is 4th July 2018.
Regional Fuel “Tax” Bill Progress
Stated as not a “new tax” by a Government who promised not to introduce any new taxes during their first term, the aptly named Land Transport Management (Regional Fuel Tax) Amendment Bill has been reported back to Parliament.
Initially only available to the Auckland region, the tax of up to 10 cents per litre plus GST (up to, but I’m picking it will be 10 cents, although actually 11.5 cents to the ordinary consumer) will be charged in order to fund transport infrastructure programmes that would otherwise be delayed or not funded.
Other regions will be able to introduce the tax from 1st January 2021, provided the relevant council have submitted an appropriate proposal for joint approval by the Ministers of Finance and Transport. Once approved, the tax has a 10 year lifespan, although the council can extend the time period prior to expiry, subject to a review. NZTA will administer, monitor and enforce the new tax.
“Milkers” QWBA Finalised
IR has now finalised, further to public submissions, its QWBA on whether sharemilkers and contract milkers can use the approach in IS 17/02 (deductibility of farmhouse expenses) to claim a 20% deduction for farmhouse expenditure without the need to calculate the actual business use of the farmhouse.
QB 18/09 provides a “yes” answer to those sharemilkers and contract milkers who:
- carry on a sharemilking or contract-milking business as sole traders or a partnership independent from the farm owner’s business;
- undertake a business of sufficient scale to require its own home office and centre of operations in the sharemilker’s or contract milker’s farmhouse; and,
- use that farmhouse in a similar manner and to a similar extent as other farmhouses on type 1 farms. A type 1 farm is one where the value of the farmhouse is less than 20% of the total value of the farm.
It should be noted that QB 18/09 does not have to be applied, and taxpayers may still undertake their own calculations if they so wish.
Richard Ashby BBus, CA, CPA
PARTNER
Ph: +64 9 365 5532
Fx: +64 9 309 5260
Mb: +64 21 823 464
