Tighter foreign trust rules, simpler business tax Bill passes third reading

A Bill that tightens the foreign trust disclosure rules, simplifies tax processes and reduces or eliminates use-of-money interest for most business taxpayers passed its final stage in Parliament today.

“The new legislation tightens the disclosure rules for foreign trusts as recommended by the Shewan Inquiry,” says Revenue Minister Judith Collins.

“It also includes measures to implement the G20/OECD standard for the Automatic Exchange of Information, to help detect and prevent tax evasion globally” she says.

The new legislation also contains a number of measures to simplify tax processes. Many businesses report that the most difficult aspect of their tax affairs is calculating and paying provisional tax. The introduction of the accounting income method, the key measure introduced by the new legislation, will give smaller businesses a new pay-as-you go option for provisional tax from 1 April 2018.

The accounting income method, will allow small taxpayers to use their accounting software to calculate and pay their provisional tax taking the guess work out of calculating provisional tax.

Other business-friendly measures, commencing 1 April 2017, include reducing or removing use-of-money interest for the vast majority of business taxpayers and removing the one per cent incremental late payment penalty for new GST, income tax, and overpaid Working for Families tax credits, Ms Collins says.

“Use-of-money interest is often seen by businesses as unfair.  Currently, even if a business pays the correct amount of provisional tax during the year they can still incur the interest. The combination of the accounting income method and the other provisional tax changes will reduce the impact of interest.

“This package gives businesses more certainty about their tax payments and more time to focus on growing their business,” Ms Collins says.