Late filing penalties
IR has issued a draft standard practice statement (ED0211), which provides commentary on the issue of late filing penalties, what tax returns or other filing obligations they will apply to, and what notification may be given by IR to the taxpayer, prior to a late filing penalty being imposed.
The main points of ED0211 are:
- Application to income tax returns, ICA returns, ACC reconciliation statements, PIE returns, RLWT statements, the new employment income information requirements (payday filing post 1/4/19) and GST returns;
- Penalties range from $50 (default until actual filing occurs) to $500;
- Except for employment income information and GST returns, 30 days advance notice must be given to the taxpayer, where post the expiry of the 30 day period, the penalty will then be imposed if the required filing has not occurred. Notice can be direct to the taxpayer concerned or by public notice to a group of taxpayers;
- Employment income information and GST returns have a “get out of jail free” card for the first offence, however, any further offending in the following 12 months results in an automatic imposition. After 12 months of good behaviour, the taxpayer’s slate is wiped clean and they get to start over;
- There is only a single penalty imposed in respect of employment income information, even if the taxpayer has failed to file a number of times during the same month; and,
- Late filing penalties can be remitted in certain circumstances, including for example, where the employer was registered but did not pay any salaries during a particular month, so no employment income information was provided to IR.
The deadline for comment is 22nd March 2019.
Electronic filing exemption
IR has issued OS 19/01, which is an operational statement setting out the criteria for exemption from electronic filing for:
- from 1st April 2019, employers included in the online employers' group (last years gross tax payable >$50k);
- GST registered persons with taxable supplies exceeding a certain threshold (not yet set); and,
- investment income payers from 1st April 2020.
The operational statement confirms that the Commissioner has a discretion under the legislation to exempt the certain taxpayer from electronic filing and that this may apply where a person is unable to comply with the requirements due to the lack or inadequacy of digital services. Guidance is then given as to the meaning of the phase, lack or inadequacy of digital services, which includes:
- the nature and availability of digital services to the person, including reliability issues (remote rural areas for example);
- the person’s capability to use a computer (disabilities for example); and
- compliance cost issues – unreasonable to expect the taxpayer to have to comply (payers of investment income for example, who may not be in business and therefore do not already own a computer).
OS 19/01 contains a list of details which must be provided to IR when applying for an exemption, including whether the person has a computer capable of connecting to the internet, and a detailed reason why the person requires the exemption.
In granting an exemption, IR will state why it was granted, a time period if applicable, and where no time period set, cancellation notification will be given as appropriate, with a 6 month expiry period.
Short-stay accommodation tax implications
Hold on to your hat as IR has just released 7 draft items on the taxation obligations that may apply if you provide short-stay accommodation. Some may say the release is well overdue, considering the prevalence in the marketplace for some time now, of the likes of Airbnb and Bookabach.
The 7 draft items, which can all be located presently on IR’s public consultation page, are:
- PUB00303 — Overview — Consultation on accommodation items
- PUB00303/a — Set costs for boarders in your home
- PUB00303/b — Set costs for short-stay accommodation in your home
- PUB00303/c — Standard rules for short-stay accommodation in your home
- PUB00303/d — Which income tax rules apply to accommodation in a holiday home?
- PUB00303/e — Applying the mixed-use asset rules to a holiday home
- PUB00303/f — Applying the standard rules to a holiday home
- PUB00303/g — Short-stay accommodation — GST registration
It is recommended that you read the Overview document first, which contains a flow chart, guiding you to the other documents that may be appropriate to your particular scenario. I am yet to read through all the draft items myself, however, I will look to comment further in upcoming issues of AWIR, on any narrative I consider may be of use to you all.
It is advised that there will also be further consultation items of the coming months, namely one focused on GST issues in detail, and the other in respect of properties that are held in trust ownership.
With regard to the present draft items, however, the consultation period ends on 22nd March 2019.