Legislation has been enacted, bringing into effect the government’s tax and social assistance measures in response to the coronavirus (COVID-19) pandemic.
The measures were announced on 17 March 2020. Read TaxNewsFlash
The legislation includes additional detail on the building depreciation rules and, as a new measure, allowing refunds of research and development (R&D) tax credits one tax year earlier than previously planned.
Inland Revenue also announced its approach to the late payment of tax.
The legislation clarifies the definition of “residential buildings” that do not qualify for the bonus depreciation rules.
Dwellings, houses, and apartments that are owner-occupied, rented or used primarily as a place of residence, and short-term accommodations (such as baches rented out) that have less than four units on the property are “residential buildings.” This means that motels and hotels will be depreciable buildings but other small scale short-term accommodations will not.
The depreciation rate is set at a 2% declining value or 1.5% straight line.
Refundability rules for R&D tax credits (which were to have applied from the 2020-21 income year) have been brought forward to the 2019-20 income year. Taxpayers will have the ability to choose between the existing limited rules or the broader rules, with the broader rules as the default position.
It is possible that the limited rules could provide a better result for some businesses. The broader rules may be a good opportunity for businesses to improve their cash flow.
The new measures authorize Inland Revenue to remit use of money interest for taxpayers affected by COVID-19 either physically (e.g., from having to be quarantined) or financially. Also, Inland Revenue has issued a press release announcing that it will “write off” any penalties and interest for late payments of tax.
For more information, contact a KPMG tax professional in New Zealand:
John Cantin | + 64 481 64 518 | email@example.com
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.