With Budget 2022 fast approaching, our recent Rethink webinar saw the BDO Eyes on Tax team take a deep dive into all the important tax issues of the day as well as what they’d like to see in this year’s Government Budget.
Mark Lodder, BDO Tax National Leader, spoke about a new discussion document that has come out of the Inland Revenue around protecting the 39% tax rate and measures that will impact how a family company is sold. It is just a discussion document at present but some form of the proposal may become legislation as early as March next year.
More compliance requirements for family trusts
Next, Iain Craig, BDO Tax Partner, spoke about trust compliance – New Zealand has the highest number of family trusts per capita of anywhere in the world. Increased compliance obligations have now been brought in and include requirements that all family trusts must prepare minimum financial statements as well as provide an income statement within their tax return. Exemptions exist for non-active trusts, NZ resident foreign trusts, Māori authorities and charitable trusts.
Iain also spoke about the rise of accidental income via platforms such as online share trading and how that is taxed. Mark then discussed how crypto is currently being taxed – which is considered by Inland Revenue to be property not currency, and is taxed as such.
Wish list for Budget 2022
When it comes to Budget 2022, the team aren’t expecting any huge announcements for tax, as legislative change has been happening throughout the year on tax. Mark spoke about the need to stick to the Generic Tax Policy Process, whereby all parties are involved throughout the process of establishing and determining what could be good tax legislation. The team would also like to see a more simplified tax system – legislation is becoming increasingly complex due to the uprise in anti-avoidance legislation, and this is particularly the case with the depreciation regime.
More support for businesses would also be welcome – we have a very low value asset write off at $1,000, as well as better measures for working from home, as well as the one year carry back for losses permanently.
View the slides from the webinar here.