Reforms to tax rules designed to ensure greater fairness in child support, retail trade, and residential investment have now passed into law.
Revenue Minister Stuart Nash says the Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 has today received the Royal Assent.
“One of the biggest changes will require offshore businesses that supply low-value goods to New Zealand to collect GST,” Mr Nash says.
“From 1 December offshore businesses who supply more than $60,000 of services and low-value goods per year will pass on GST directly to Inland Revenue.
“GST has always been payable on purchases from overseas but administration and collection costs have been prohibitive for Customs. The GST on goods valued above $1000 will continue to be collected by Customs at the border.
“The legislation ensures offshore suppliers are on a level playing field with domestic retailers. There are 26,000 small businesses in the retail sector employing more than 62,000 people. They are required to collect GST on their sales. The same requirement now applies to offshore retail giants.
“It is estimated the tightening of the GST system will collect approximately $126 million in revenue per year by 2022/23.
“The second major change means residential property investors no longer get a tax break by using losses from rental properties to offset tax on other sources of income, such as salary and wages. Those losses will now be ring-fenced to the property portfolio.
“Before now, investors with loss-making rental properties could subsidise part of the cost of their mortgages with reduced tax on other income. This helped them to outbid other home buyers for properties. Yet they often make tax-free capital gains when these properties are sold.
“The new law also provides greater oversight of land transfers to ensure those buying and selling properties are complying with tax rules on property speculation. It will require most people who buy and sell properties to supply their IRD number on transfer documentation.
“Other changes right a wrong which meant some people who became a parent as a result of sexual assault were forced to pay child support if the baby was cared for by others. People required to make such payments in the past may now qualify to be exempted from those payments, backdated to September 2006. This could mean they are eligible for a refund of any payments made.
“The exemptions and possible refunds are decided by the Commissioner of Inland Revenue on a case by case basis.
“As well as these significant initiatives, the new law will enshrine the right of taxpayers to keep their tax records in te reo Maori.
“Inland Revenue has allowed taxpayers to keep records in te reo Māori for more than 20 years but this has never been enshrined as standard practice through legislation. The right to use te reo Māori should be officially recognised in the law rather than at the discretion of a Government department.
“Our revenue system enables vital public services to be funded, but it also needs to be fair in the way it is administered. These changes achieve that,” Mr Nash says.