Recent Changes Include:
- Capital Gains Tax Proposal
- Automatic Assessments for Individuals
- Donation Tax Credits made Easier
- IRD Receiving Payments – When Received in Time
Capital Gains Tax Proposal
The media has widely reported the capital gains tax (CGT) proposals of the tax working group. Their recommendation was for a broad-based GCT capturing all asset classes (other than the family home) and applying the taxpayer's marginal tax rate - which means 28 per cent for companies and 33 per cent for many individuals.
Media commentary has largely been critical of the proposals, and to be politically viable it is expected the Labour-Green-NZ First coalition will significantly water-down the proposals, with a primary focus on residential property. Their policy announcement is expected later this month.
Automatic Assessments for Individuals
From 1 April 2019 all individuals whose only income is from salary or wages and investment income, for example, interest on bank deposits, where tax has already been deducted will receive an Income Tax Assessment notification to finalise your end-of-year tax information automatically. This means you will no longer need to request, receive and confirm a Personal Tax Summary (PTS) to claim a tax refund.
If you have paid too much tax during the year and are due a refund, the IRD pay the refund directly into your bank account. If you have not paid sufficient tax during the year, you will be required to pay the difference. This will stop individuals from cherry-picking only the years they are due a refund to request a PTS.
If you have another source of income such as from business, rental property or from overseas, or have expenses that can be claimed, you'll still need to file an income tax return (IR3) and we will continue supporting you with this process.
Donation Tax Credits made Easier
The IRD also making some improvements to the claim process for donation tax credits, which will give you the option to submit receipts online during the year. This will help you avoid missing out on a refund for donations if, for example, at the end of the year you're unable to find all your donation receipts and run out of time to get a copy. Alternatively you will be able to complete the return online or use the paper form (the current process). Refunds will still be issued at the end of the year.
IRD Receiving Payments – When Received in Time
The IRD has made two changes to the practice of receiving payment. Post-dated cheques will not be accepted by the IRD from 1 February 2019 as a method for payment, and the IRD dropboxes for the physical delivery of tax payments are only available in in-house office reception areas. Taxpayers are being encouraged to use digital methods for making tax payments.