New Tax Bill heralds smarter initiatives

Wellington, April 6, 2017

A new Tax Bill introduced into Parliament today will help modernise our tax administration while ensuring that the current system works.

The Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill contains proposals relating to collecting employment and investment income information.

The proposals will help Inland Revenue to ensure that people are on the right tax code and receiving any entitlements correctly.

Employee Share Schemes

The Bill also contains proposals to modernise the taxation of employee share schemes.

Employee share schemes are arrangements where companies provide shares or share options to their employees as part of an employee’s remuneration.

Changes proposed in the Bill include new rules to ensure the tax treatment of employee share schemes is consistent with other forms of employment income. This includes providing a deduction for the employer for the cost of shares in line with other forms of remuneration.

The employee share scheme measures proposed in the Bill are based on feedback from two rounds of public consultation in May and September 2016. The consultation process has been valuable in shaping the reforms contained in this Bill.

For example, the original proposals raised the possibility of abolishing the tax regime for widely offered schemes, but in response to feedback the rules are being retained, but simplified and improved.

There will also be another opportunity to provide feedback on the Bill during the Select Committee process.

Through the consultation process, the Government also became aware of practical issues facing start-up companies offering employee share schemes.

To address these issues, my officials are currently developing a public consultation document that refines the start-up proposal that was contained in the 2016 issues paper. I hope interested parties will provide feedback on these proposals too.

GST matters

A range of measures addressing taxpayers’ concerns such as issues with demergers and decommissioning costs for petroleum miners are addressed by the Bill.

There are also a number of GST-related matters included.

And there is a proposal to add five new charities to the list of donee organisations eligible for tax benefits. These are, Byond Disaster Relief New Zealand, Flying for Life Charitable Trust, Médecins Sans Frontières New Zealand Charitable Trust, Tony McClean Nepal Trust, and Zimbabwe Rural Schools Library Trust.

Judith Collins is Revenue Minister of New Zealand.

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