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New Zealand: Tax relief legislation enacted (COVID-19)

New Zealand: Tax relief legislation enacted (COVID-19)

Legislation has been enacted, bringing into effect the government’s tax and social assistance measures in response to the coronavirus (COVID-19) pandemic.

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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.

Building depreciation

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.

R&D tax credit refundability rules

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.


KPMG observation

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.

Interest and penalties on late tax payments

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 | jfcantin@kpmg.co.nz

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