Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698943204443.pdf (New Zealand)
Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Government Bill Explanatory note General policy statement This taxation omnibus Bill introduces amendments to the— • • • Income Tax Act 2007: Tax Administration Act 1994: Student Loan Scheme Act 2011.

There are 3 main policy proposals in the Bill.


These are— • • • Changes to business taxation to make tax simpler: Implementing the G20/OECD standard for Automatic Exchange of Financial Account Information in Tax Matters: Changes to implement the disclosure requirements for foreign trusts recom- mended by the Government Inquiry into Foreign Trust Disclosure Rules.
The Bill contains 3 measures to support the deployment of stage 1 of Inland Reve- nue’s new computer system, START, including its co-existence with the existing FIRST system over the staged implementation of Inland Revenue’s business transfor- mation programme.

There is also a remedial amendment to the PAYE rules for employee income for share benefits to ensure the rules work as intended.

The Bill also contains a remedial amendment to the Student Loan Scheme Act 2011 to correct a terminology reference.
The following is a brief summary of the policy measures contained in this Bill.

A comprehensive explanation of all the policy items will be included in a Commentary on the Bill.

The Commentary will be available shortly after this Bill is introduced, at http://taxpolicy.ird.govt.nz.

149—1 2 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note Changes to business taxation to make tax simpler The Bill proposes 16 discrete measures to make tax simpler for businesses.
The 16 measures reflect 6 key themes— • • • • • • Changes to provisional tax to increase certainty: More accurate and timely payment of provisional tax: Self-management and integrity: Making the system fairer: Improving the operation of markets through greater tax transparency: Making the system simpler.
Changes to provisional tax to increase certainty Increasing the current $50,000 residual income tax limit for interest to $60,000 (for individuals and non-individuals) The Bill proposes to increase the current “safe-harbour” threshold from use of money interest.

Currently, when businesses who have less than $50,000 of residual income tax pay provisional tax using the standard “uplift” method, they are not subject to use of money interest.
The Bill proposes to increase this limit to $60,000 and extend it so that it applies to non-individuals as well as individuals.

This will reduce the impact of use of money interest for these businesses and therefore provide greater certainty.
Removing use of money interest for the first 2 provisional tax payments for all taxpayers who use the uplift method The Bill proposes amendments so that for taxpayers using the standard uplift method and who fall outside of the $60,000 “safe-harbour”, use of money interest only ap- plies from the final instalment date.
As the final instalment date of provisional tax oc- curs after the end of the income year, these taxpayers will have reasonable certainty as to how much income they have earned before they make their final payment and become liable for use of money interest.

Additional rules are proposed to prevent taxpayers from taking inappropriate advant- age of the new rules by switching income between related parties or by switching be- tween provisional tax payment methods.
More accurate and timely payment of provisional tax The Accounting Income Method The Bill proposes to allow businesses to use the Accounting Income Method (AIM) to pay their provisional tax based on a calculation prepared by accounting software.
AIM is available for businesses where either— • • They have turnover of less than $5 million a year: They have previously used AIM, have a good track record with taking reason- able care, and are continuing to use the same approved software package: Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 3 • They are using an accounting system that the Commissioner has approved as being suitable for persons with turnover greater than $5 million.
For these businesses, AIM enables provisional tax to be calculated within their ac- counting software packages.

Calculation of provisional tax in arrears means payments made under AIM will more closely match the accounting income of the business and be integrated into business practices.

For taxpayers using AIM, provisional tax payments will be made monthly for those on monthly GST filing and 2 monthly for those on 2 or 6 monthly GST filing.
For businesses who aren’t GST registered they will make payments in line with the GST dates that fit with their balance dates.

If the taxpayer makes these required payments, then no use of money interest will apply should a shortfall arrive at year end.

Approval criteria The Bill proposes the Commissioner must approve a software provider before they can become an approved AIM provider.
To become an approved AIM provider, the provider must make a statutory declaration that it has an accounting system— • • • that can make generate and keep comprehensive financial accounts, complete required tax adjustments, filing and payment requirements, and can produce the required reports; and the accounting system is fully documented and that there is support for end- users; and the product is updated regularly to reflect changes in tax law or Commissioner requirements.
If the Commissioner receives a statutory declaration of this and considers that approv- ing the provider would not negatively affect the integrity of the tax system, the Com- missioner may approve the provider as an approved AIM provider.
The Commis- sioner may revoke this approval on the request of the provider or if the Commissioner considers that anything in their statutory declaration is not true, the providers ac- counting system provides a materially inaccurate tax calculation, or that revoking the approval would positively affect the integrity of the tax system.

The Bill provides that the Commissioner may make determinations setting out the re- quired tax adjustments required by the software provider.
Provisional tax attribution for shareholder-employees The Bill proposes to allow a company to make tax payments on behalf of sharehold- er-employees.

This proposal is intended to enable companies to reduce compliance costs for their shareholder-employees by paying tax on their behalf and therefore po- tentially removing the shareholder-employee from the provisional tax rules.
This method would be optional and apply if a company and its shareholder-employ- ees elect to use it by the company’s first provisional tax payment date.

Once elected a company would add to its own provisional tax payments amounts equal to any provisional tax the shareholder-employee would have had in relation to 4 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note their salaries, if they had not elected into provisional tax attribution.
At the end of the income year the company can allocate some of the provisional tax paid to its share- holder-employees which is treated as a tax credit for the shareholder-employee.

If the tax credit is equal to or greater than the shareholder-employees’ total tax liability they will have no further tax to pay.

Self-management and integrity Electing own withholding rate Amendments are proposed to allow contractors subject to the schedular payment rules to elect their own withholding rate.
This will enable contractors to more easily match their withholding rates to their final tax liability without the need to make an applica- tion to Inland Revenue.

There are integrity measures proposed to minimise the risk of contractors picking low rates to defer or avoid paying their tax.

This includes a minimum rate of withholding of 10% for residents and 15% for non-residents and contractors who are on temporary work visas.
In addition the Commissioner has the power to prescribe a rate of with- holding for contractors who are non-compliant with their tax obligations.

There is a “standard rate” of withholding for contractors that do not pick a withhold- ing rate.

In addition, if a contractor has previously changed their withholding rate twice in the year, they will require the consent of the payer to any further changes in their withholding rate.
This is to reduce compliance costs for payers who may have contractors repeatedly changing their withholding rate.

These amendments do not apply to non-resident entertainers.

This is to enable non- resident entertainers to retain their current treatment which allows them to be treated as non-filing taxpayers.

Labour-hire firms Amendments are proposed to extend the current schedular payment rules to cover all contractors operating through labour-hire firms.
This means that labour-hire firms will be required to withhold from any payment they make to their contractors, includ- ing those operating through a company.

Certificates of exemption from withholding will not be available for contractors working through labour-hire firms.

This is a first step in modernising the coverage of the current schedular payment rules and is expected to reduce compliance costs for these contractors as well as address non-compliance issues identified by Inland Revenue.
Voluntary withholding An amendment is proposed to enable contractors that are not subject to the schedular payment rules to opt in to the withholding rules through voluntary withholding agree- ments.

These will be available where a contractor has the mutual consent of their pay- er to have withholding apply.

This enables greater flexibility for contractors to elect into withholding and therefore a more pay-as-you go method of paying their tax.
Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 5 Making the system fairer Changes to late payment penalties The Bill proposes to reform the late payment penalty by no longer imposing the 1% monthly incremental late payment penalty from new GST, income tax, and Working for Families tax credit overpayment debt.
This is intended to reduce the penalties imposed on businesses who may end up pay- ing late so to allow businesses a chance to trade their way out of debt, without having onerous financial penalties being continually imposed.

This measure is proposed to apply to GST for GST periods ending 31 March 2017.

The measure applies for provisional tax, income tax, and Working for Families tax credit debt from the 2017–18 income year.
Improving the operation of markets through greater tax transparency Sharing tax information for significant debts with credit reporting agencies The Bill proposes an amendment to the tax secrecy rules to allow Inland Revenue to disclose information about taxpayer’s tax debts to approved credit reporting agencies.

The will enable businesses contemplating providing credit to make more informed commercial decisions, as they will have a more comprehensive picture of a business- es’ total debt position.
It is proposed that the criteria for initial disclosure of tax debt include— • • • • • • The debt is significant: The debt is not disputed: Reasonable efforts have been made to collect the debt: The debt is not subject to an existing instalment arrangement: The taxpayer has not applied for relief or remissions: The taxpayer has been served notice of the Commissioner’s intention to dis- close tax debt information to credit reporting agencies, and has been given 30 days to repay the debt or to arrange for repayment.
The notice to a company will be served on the company’s directors.

A significant tax debt would be a debt relating to unpaid income tax, GST or an em- ployer’s unpaid PAYE, child support, student loan or KiwiSaver employee deductions where the debt is— • • overdue by a period of 12 months and greater than 30% of a taxpayer’s gross income; or new debt of more than $150,000.

The Bill proposes a regulation making power to be able to adjust the $150,000 thresh- old for “significant tax debt”.
6 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note The Bill also proposes that the Commissioner has the ability to approve an organisa- tion as an approved credit reporting agency when they carry on a business of credit reporting and approval would positively affect the integrity of the tax system.
An additional rule is proposed to enable Inland Revenue to disclose information to credit reporters when a taxpayer repeatedly avoids having their information disclosed through avoiding the thresholds for what is significant tax debt.

The Bill proposes that Inland Revenue will be required to report annually on its use of this amendment including the number of taxpayers whose information has been dis- closed to approved credit reporting agencies.
Information sharing with the Registrar of Companies The Bill proposes to enable Inland Revenue to share information about certain serious offences under the Companies Act 1993 with the Registrar of Companies.

This will enable the Registrar of Companies to more easily investigate and prosecute company directors who are operating outside of the law and reduce the harm that these direc- tors cause.
The Bill proposes that Inland Revenue is permitted to share information with the Registrar of Companies when— • • • there is reasonable suspicion that a serious offence has been, is being, or will be committed; and Inland Revenue considers the information will prevent, detect, aid in the inves- tigation of, or provide evidence of, a serious offence that has been, is being, or will be committed; and Inland Revenue is satisfied that the information is readily available, it is reasonable and practicable to communicate it, and communication is in the public interest.
Making the system simpler Motor vehicle expenditure of close companies The Bill proposes to extend the rules for motor vehicle expenditure for sole traders and partnerships to close companies.

Currently close companies that provide their shareholder-employees with a motor vehicle for private use are required to register and pay FBT on that benefit.
This can result in an increase in compliance cost for these companies as they are required to register and pay FBT solely due to the provi- sion of 1 or 2 motor vehicles to shareholder-employees.

This amendment will mean that companies will have the option to instead apportion expenditure incurred in relation to that vehicle between business and private use.
This will mean that companies that are currently registered for FBT solely due to the pro- vision of a motor vehicle to shareholder-employees will no longer have to file and pay FBT.
Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 7 Increasing the threshold for annual FBT returns Currently businesses are entitled to calculate and return FBT on an annual basis (in- stead of the standard quarterly basis) if they have combined PAYE and employer superannuation contribution tax obligations of not more than $500,000 per year.

The Bill proposes an amendment to increase this $500,000 threshold to $1 million.
Increasing the threshold for self-correction of minor errors Currently, taxpayers who make a minor error in a return which results in a tax dis- crepancy of $500 or less are allowed to correct the error in a subsequent return.

The Bill proposes an amendment to increase this $500 threshold to $1,000.

Simplified calculation of deductions for dual use vehicles and premises The Bill proposes to simplify the calculation of deductions for dual use vehicles and premises.
Currently, small business owners often use their personal vehicles and homes for both business and private purposes.

Because there are numerous expenses for these items, allocating them between business and personal use can create a large compliance ob- ligation compared to the amount of tax at stake.
The Bill proposes to simplify the calculation for vehicles by modifying and extending the current per kilometre options for calculating business use of vehicles so it is avail- able regardless of kilometres travelled.

The current rules only allow the method to be used if the business use is less than 5,000km per year.
The Bill proposes to simplify the calculation of deductions for business use of home premises by allowing taxpayers to simply multiply the number of square metres used primarily for business purposes by a single rate.

This rate would be set by Inland Rev- enue.

This calculation would not cover mortgage interest, rates, or rental costs.

Instead these would be deducted based on actual costs due to these costs being too variable to include in a single representative rate.
Removing the requirement to renew resident withholding tax exemption certificates annually Some taxpayers who hold a certificate of exemption from resident withholding tax must renew their certificate annually.

Taxpayers have indicated that this is creating compliance costs for relatively little value.

To address this, the Bill proposes to legis- latively require most RWT exemption certificates to be issued for an unlimited period.
Modifying the 63 day rule on employee remuneration Currently, there is a special deduction and timing rule for the deferred payment of em- ployee remuneration.

This is intended to prevent taxpayers from claiming deductions for amounts of employee remuneration that have been accrued but not paid.
This rule 8 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note can create an additional compliance burden for taxpayers because they need to track payments accrued at year end and paid within 63 days of the end of the income year.

The Bill proposes to alter this rule to make the deduction for payments made within 63 days of the income year optional for taxpayers.
For those taxpayers that do not wish to undertake the exercise, it would not be required and the deduction for those payments paid after the end of the income year can be claimed in the following year.

Automatic exchange of information The Bill proposes amendments to implement the G20/OECD standard for Automatic Exchange of Financial Account Information in Tax Matters (in short, Automatic Ex- change of Information, or AEOI) in New Zealand.
AEOI is an international initiative that responds to concerns that individuals and en- tities can, with relative ease, evade their home country tax obligations by concealing their wealth in “off-shore” financial accounts.

In broad terms, AEOI implementation involves enacting legislation that requires fi- nancial institutions to— • • undertake due diligence to identify off-shore accounts; and report information on those accounts to the local tax authority.
Then, tax authorities exchange the reported information with applicable jurisdictions, under tax treaties.

In return for New Zealand providing information on off-shore accounts to other juris- dictions, Inland Revenue will receive reciprocal information from other jurisdictions on the off-shore accounts of New Zealand tax residents.

The information will be used to detect and prevent off-shore tax evasion.
Exchange of information New Zealand has a wide network of tax treaties that currently extends to 90 jurisdic- tions.

These treaties all contain exchange of information provisions that oblige the parties to assist each other in tax compliance matters.

This assistance primarily involves responding to specific requests for information.

However, the majority of tax treaties also provide for other forms of assistance, in- cluding the ability to enter into automatic exchange programmes with treaty partners.
Automatic exchange programmes are typically specific to certain categories of infor- mation.

AEOI is an automatic exchange programme for financial account informa- tion.

Inland Revenue has significant experience in automatic exchange programmes, but only has 1 existing precedent for the automatic exchange of financial account infor- mation.
This is with the USA, and is referred to as the FATCA initiative (the term “FATCA” derives from the name of the USA enabling legislation, the Foreign Ac- count Tax Compliance Act).

Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 9 The Common Reporting Standard The Bill proposes incorporating the Common Reporting Standard (CRS) into New Zealand law.
The CRS is an element of the AEOI standard developed by the OECD that sets out the due diligence and reporting obligations to be imposed on financial institutions.

The other elements of the AEOI standard relate primarily to exchange of information with other jurisdictions, and generally do not require additional legislation.

Due diligence The CRS due diligence procedures are complex and highly prescriptive.
The rules set out criteria for identifying the financial institutions that must conduct due diligence and reporting and the financial accounts that the financial institutions must conduct due diligence and reporting on.

Additional rules apply to exclude cer- tain financial institutions and accounts from these obligations.

The principal due diligence requirement for the relevant financial institutions is to identify and determine the tax residence of account holders.
Different due diligence procedures are prescribed for different types of accounts.

For example, for new accounts, financial institutions must generally determine tax resi- dence based on self-certifications from customers.

However, for pre-existing ac- counts, financial institutions can rely generally on information on hand (including in- formation collected pursuant to anti-money laundering/countering the financing of terrorism laws).
In addition, when an account holder is a passive non-financial entity (as defined in the CRS), it must be looked through to identify and determine the tax residence of the natural persons that are its ultimate controlling persons.

Reporting The CRS provides that information on relevant accounts must be reported to Inland Revenue.

The information to be reported includes identity information (including tax residence) and financial account information (such as account balances and interest earned).
If a financial institution is unable to determine the status of a pre-existing account it generally must report it as an “undocumented account”.

The information must be reported to Inland Revenue on an annual basis.

For this pur- pose, the reporting period will be the New Zealand tax year (that is, the period ending 31 March), and the deadline for reporting will be 30 June.

Timing The proposed due diligence obligations will apply in New Zealand from 1 July 2017.
This means that the due diligence procedures for new accounts will apply to all new accounts opened from that date.

The due diligence procedures for pre-existing ac- counts will apply to accounts already open on 1 July 2017.
10 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note For pre-existing accounts that are held by an individual and that have a balance that exceeds US $1 million, the Bill proposes that due diligence and reporting must be completed by 30 June 2018.

For any other pre-existing account, the Bill proposes that due diligence and reporting must be completed by 30 June 2019.
Options Although international consistency is a key requirement, the OECD has included cer- tain options in the CRS that implementing jurisdictions can take to reduce some com- pliance costs.

The circumstances of each reporting financial institution can differ markedly, mean- ing that financial institutions may have different preferences as to whether these op- tions should be adopted.
Accordingly, the general approach proposed in this Bill is to permit each reporting financial institution to make its own decision on whether or not to adopt any particular CRS option.

In a small number of cases, a particular option will be mandated for all reporting fi- nancial institutions.

For example, the New Zealand reporting period will be manda- ted, rather than allowing each financial institution to adopt its own preferred period.
The wider approach New Zealand’s list of tax treaty partners with which it will exchange AEOI informa- tion will increase over time.

Absent specific rules, each addition of a new jurisdiction would trigger a new round of due diligence reviews for financial institutions to search for residents of that jurisdiction.

This would impose significant compliance costs on financial institutions.
In recognition of this problem, a key option offered in the CRS is for implementing jurisdictions to allow financial institutions the option of identifying all non-residents rather than just residents of specific jurisdictions.

This is referred to as the “wider ap- proach”.

This Bill proposes that New Zealand adopt the wider approach, and that this be man- datory for all financial institutions.
This Bill also proposes that financial institutions be permitted the option of reporting all of the non-residents that they have identified irrespective of whether they are resi- dents of jurisdictions that New Zealand will exchange with.

This will be optional rather than mandatory, as some reporting financial institutions may prefer to conduct the sorting and filtering of the data themselves.
However, when financial institutions opt to report all non-residents, the task of sorting and filtering the data will fall to In- land Revenue.

Enforcement The CRS requires implementing jurisdictions to have rules and procedures in place to ensure compliance and address non-compliance.
This includes appropriate anti-avoid- Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 11 ance rules, document retention requirements, auditing programmes, and sanctions to deal with identified non-compliance.

To ensure New Zealand’s full compliance with these requirements, this Bill proposes a comprehensive suite of enforcement rules and penalties.
The proposed approach recognises that New Zealand’s rules will be subject to inter- national peer review, and that any deficiency identified in that peer review could ad- versely affect New Zealand’s international reputation.

Accordingly, strong sanctions are proposed for serious failure by a financial institution to comply or for failure to comply through lack of reasonable care.
The Bill proposes that the following penalties will apply to financial institutions: • • • • • A general (civil) penalty of $300, to be imposed on a financial institution for any failure to comply with its CRS due diligence and reporting requirements: A specific (civil) penalty of $300, to be imposed on a financial institution for each new account where there is a failure to obtain a self-certification on ac- count opening when required by the CRS: The above provisions will be subject to a transitional period (until 31 March 2019) in which penalties will not be imposed if the financial institution is able to demonstrate it has made reasonable efforts to comply with its CRS due dili- gence and reporting obligations: A specific (civil) penalty of $20,000 for a first offence and $40,000 for any subsequent offence, to be imposed in circumstances where a financial institu- tion fails to take reasonable care in complying with its CRS due diligence and reporting requirements: Knowledge based offences by financial institutions will be subject to the appli- cation of existing legislative provisions.
The Bill proposes that the penalties to be imposed on financial institutions will be backed up with specific obligations and penalties to be imposed directly on account holders, controlling persons, or persons that otherwise hold accounts for the benefit of others (including trusts and intermediaries)— • • A specific (civil) penalty of $1,000, if a person provides a false self-certifica- tion or related information, fails to provide a self-certification or related infor- mation within a reasonable time after receiving a request, or fails to provide in- formation about a material change of circumstances relating to a self-certifica- tion or related information within a reasonable period of time: Knowledge based offences by such persons will be subject to the application of existing legislative provisions.
However, these penalties are subject to a no fault defence (for persons providing self- certifications or other information about their own status) and a reasonable care de- fence.

12 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note Record keeping and anti-avoidance rules The Bill proposes specific record-keeping requirements for financial institutions.
The Bill also proposes an anti-avoidance provision that applies to arrangements and prac- tices entered into or by financial institutions, persons, or intermediaries with “a main purpose” of circumventing CRS due diligence or reporting requirements.

Multilateral Convention The Multilateral Convention was given effect in New Zealand in 2014 by means of an Order in Council made under section BH 1 of the Income Tax Act 2007.
The Bill proposes a remedial amendment to section BH 1 to clarify its application to multilat- eral treaties.

FATCA For consistency, the Bill proposes amendments to the FATCA implementation legis- lation to— • • align the FATCA anti-avoidance rule with the AEOI anti-avoidance rule; and provide for the imposition of the same obligations and penalties on persons other than financial institutions under FATCA as for AEOI.
Changes to implement the disclosure requirements for foreign trusts recommended by the Government Inquiry into Foreign Trust Disclosure Rules The Bill proposes amendments to the disclosure requirements for foreign trusts with New Zealand resident trustees.

These amendments largely follow the recommenda- tions of the Government Inquiry into Foreign Trust Disclosure Rules.

The amend- ments in this Bill are intended to deter offshore parties from using NZ trusts for illicit purposes.
This is intended to provide a clear signal about the importance of comply- ing with the disclosure rules.

Registration The Bill proposes an amendment to require foreign trusts to formally register with In- land Revenue.
As part of this registration the trust will be required to declare that— • • • the person establishing the foreign trust; and the settlor(s); and the trustees have all been advised of, and have agreed to comply with the applicable requirements in the— • • • Tax Administration Act 1994; and Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and associated regulations; and AEOI requirements (as proposed in this Bill).
Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 13 Disclosure upon registration The Bill proposes increased disclosure requirements on registration.
Specifically, that on registration the name, e-mail address, foreign residential address, country of tax residence, and taxpayer identification number of all of the following be provided to Inland Revenue: • • • • • The settlor(s): The protector (if there is any): Non-resident trustees: Any other natural person who has effective control of the trust: Beneficiaries of fixed trusts, including the underlying beneficiary where a named beneficiary is a nominee.
The proposed amendments also require the trust deed of the trust to be filed with the registration form, and that, discretionary trusts are required to describe in the registra- tion any class of beneficiary not listed in the trust deed.

This will enable the identity of a beneficiary to be established at the time of a distribution or when vested rights are exercised.
Timing of registration requirements The registration requirement will apply to all trusts formed after enactment of the en- abling legislation.

Existing foreign trusts will be required to meet the new information requirements by 30 June 2017.

Annual filing The proposed amendments require foreign trusts to file annual returns with Inland Revenue.
The proposed amendments require the return to include— • • • Any changes to the information provided at registration: The trust’s annual financial statement: The amount of any distributions paid or credited and the names, foreign ad- dress, taxpayer identification number, and country of tax residence of the re- cipient beneficiaries.

When a foreign trust qualifies to be exempt from New Zealand tax Foreign trusts are not taxable under current law.
The Bill proposes that a foreign trust will lose its exemption from New Zealand tax if it has not registered with Inland Rev- enue and fulfilled its associated disclosure obligations.

This means that a foreign trust that fails to meet these requirements will be taxable in New Zealand on its worldwide income.

The proposed amendment is intended to provide a sanction for non-registra- tion.
14 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note Qualifying resident foreign trustee safe harbour Currently, if a trustee of a foreign trust is convicted of an offence of not providing information requested by Inland Revenue then the foreign trust loses its exemption from New Zealand tax and is subject to New Zealand tax on its worldwide income.
However, legislation currently provides that the tax exemption will still apply, in the case where a trustee is convicted of a knowledge offence if the trustee of the foreign trust is a “qualifying resident foreign trustee”.

To be a “qualifying resident foreign trustee”, the trustee must be a member of a specified professional body.

The Bill proposes an amendment to remove this “qualifying resident foreign trustee” exemption.
Register of foreign trusts shared with law enforcement agencies The proposed amendments require Inland Revenue to share information contained in the foreign trusts register for law enforcement purposes with the Department of Inter- nal Affairs and the New Zealand Police.

This will apply from the date of enactment.

Registration and filing fee The Bill proposes to require foreign trusts to pay a registration fee of $270 and annual filing fee of $50 to Inland Revenue.
The Bill proposes a regulation making power to enable the amount of the fees to be adjusted through an Order in Council.

Other measures Amendments to the UOMI and transfer rules The Bill proposes amendments to the use of money interest and transfer rules to pre- vent taxpayers from artificially obtaining credit use of money interest or reducing debit use of money interest.
Currently taxpayers can transfer amounts of tax to an earlier period and have use of money interest apply from the date of transfer, rather than the applicable date under the use of money interest rules.

This means they can manipulate the amount of use of money interest payable by moving an overpayment or refund to an earlier period.
The proposed amendments address this by preventing taxpayers from transferring amounts of tax to a prior period that exceed the amount of debt or amount in dispute in that period.

The amendments also clarify the difference between a GST refund and a GST overpayment to prevent an overpayment of GST being treated as a GST refund and having an earlier transfer date.
Amending the rules for new and increased assessments by the Commissioner At present, when the Commissioner makes a new assessment or a re-assessment after the original due date of a taxable period, a new due date is set for the payment of the newly assessed tax that is 30 or more days after the date of the notice of assessment.
When this occurs, use of money interest applies from the day after the original due date for the period the assessment or re-assessment applies to, while a late payment Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 15 penalty applies for amounts unpaid from the day after the new due date.
If a taxpayer has excess tax or a credit becomes refundable, for example from a different taxable period or from a different tax type, in the time between the new or increased assess- ment and the new due date for payment, the excess or credit is generally refunded to the taxpayer rather than being offset against the amount of tax as a result of the new assessment or re-assessment.
START has the ability to allow time for payment before the imposition of late pay- ment penalties, whereas the current software platform, FIRST, requires a new due date to be set.

Building a new due date concept into START would add unnecessary complexity.

Setting new due dates increases compliance costs for some taxpayers.

The Bill proposes an amendment to remove the requirement for the Commissioner to set a new due date in these situations.
Under the proposed amendment the Commis- sioner has discretion to set a new due date for a tax type when she considers this necessary because of resource constraints imposed on her during the period of co-ex- istence of 2 Inland Revenue software platforms.

The amendment allows for any refund becoming available to be applied in payment for the new or increased tax liability from the assessment date.

The timing of interest and penalty rules will not change.
Taxpayers will continue to have at least 30 days after a new assessment or re-assessment before a late payment penalty is applied and before any collection action is taken.

Amendments to the late payment penalty grace period rules Currently, if a taxpayer does not pay their tax on time and they have previously paid all taxes due in the 2 years prior to the late payment; they have a “grace period” be- fore the late payment penalty is applied to them.
However, as Inland Revenue moves to its new computer system information relating to the taxpayer’s tax compliance history and payment activity will reside in 2 sys- tems.

This means it will be difficult for the Commissioner to look across all applic- able tax types to determine whether the taxpayer is entitled to a grace period under the current legislation.

The Bill proposes an amendment to simplify the administration of the grace period during this transitional period.
The Bill proposes that in determining whether or not to apply a grace period, the Commissioner has discretion to ignore any failure to pay tax on time if— • • • the Commissioner decides it is appropriate to ignore; and it is necessary because of resource constraints imposed on the Commissioner during the period of co-existence of 2 Inland Revenue software platforms; and it does not impose a greater penalty than would have applied if not for this amendment.
16 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note Remedial amendments to the collection of tax on employment income from employee share benefits The Bill proposes the following remedial amendments to ensure the PAYE rules for employment income from employee share benefits work as intended: • • Provide in the PAYE rules clearer points in time relating to when employment income in the form of a share benefit is derived by the employee for tax pur- poses, and when the employer declares that income to Inland Revenue: Correct a number of terminology references in the Income Tax Act 2007 in rela- tion to when large employers (employers with annual PAYE obligations, in- cluding Employer Superannuation Contribution Tax, of $500,000 or more) are required to disclose information about a share benefit received by an employee.
Departmental disclosure statement Inland Revenue is required to prepare a disclosure statement to assist with the scruti- ny of this Bill.

The disclosure statement provides access to information about the pol- icy development of the Bill and identifies any significant or unusual legislative fea- tures of the Bill.

A copy of the statement can be found at http://legislation.govt.nz/disclosure.aspx?
type=bill&subtype=government&year=2016&no=149 Regulatory impact statement Inland Revenue produced regulatory impact statements to help inform the main poli- cy decisions taken by the Government relating to the contents of this Bill.

Copies of these regulatory impact statements can be found at— • • http://taxpolicy.ird.govt.nz/publications/type/ris http://www.treasury.govt.nz/publications/informationreleases/ris Clause by clause analysis Clause 1 gives the title of the Act.
Clause 2 gives the dates on which the sections come into force.

Part 1 Exchange of information Subpart 1—Amendments to Income Tax Act 2007 Clause 3 provides that Part 1, subpart 1 amends the Income Tax Act 2007.

Clause 4 amends section BH 1(1), which defines double tax agreement.
The amend- ment clarifies that a double tax agreement can be negotiated and agreed with more Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 17 than 1 government and comes into force on 21 October 2013, when the MCMAA convention was brought into force for New Zealand.
Clause 5 amends section HC 26 by inserting new subsection (1)(c), providing that a foreign-sourced amount derived by a resident trustee of a foreign trust is not exempt income if the foreign trust is not registered or the trustee has not complied with re- cord-keeping, registration, or disclosure obligations.

Clause 6 amends section YA 1 by replacing the definition of foreign account informa- tion-sharing agreement.
The new definition refers generally to double tax agreements that facilitate the automatic exchange of information relating to financial accounts and specifically to both the FATCA agreement and MCMAA convention.

Subpart 2—Amendments to Tax Administration Act 1994 Clause 7 provides that Part 1, subpart 2 amends the Tax Administration Act 1994.

Clause 8 amends section 3(1).

Subclause (2) inserts new definitions of CRS applied standard, CRS publication, and CRS standard.
Subclause (3) inserts a new definition of FATCA agreement.

Subclause (4) inserts a new definition of maintain, which refers to the functions of a financial institution in relation to a financial account.

Subclause (5) inserts a new definition of MCA agreement.

Subclause (6) inserts a new definition of MCMAA convention.

Subclause (7) inserts a new definition of passive income.
Subclause (8) repeals the definition of qualifying resident foreign trustee, which is not required under the proposed rules for foreign trusts.

Subclause (9) inserts a new defin- ition of taxpayer identification number, which refers to the equivalent of a tax file number assigned to a taxpayer by a foreign jurisdiction.

Clause 9 amends section 22, which provides for the keeping of business and other re- cords.
Subclause (2) inserts, in the list of persons to which the subsection applies, a reference to persons having obligations of a financial institution.

Subclause (3) in- cludes a specific requirement that such a person keep a record of a failure to obtain a self-certification as required by the CRS applied standard.

Subclause (4) amends sec- tion 22(7), by repealing section 22(7)(d)(i) and (ii).
Those subparagraphs refer to in- formation that a resident trustee of a foreign trust will be required by new section 59B to provide to the Commissioner when applying for registration of the trust.

Clause 10 replaces section 59B with new sections 59B to 59E.

New section 59B re- quires a resident trustee of a foreign trust to register the trust and provide specified information with the application for registration.
New section 59C gives the time limits for a trustee to comply with the requirements of new section 59B.

New section 59D requires a resident trustee of a foreign trust to provide an annual return for the trust to the Commissioner.

New section 59E sets the fees for an application for regis- tration and an annual report.

The section provides a power for the Governor-General to amend the amounts of the fees by Order in Council.
Clause 11 amends section 81 by inserting new subsection (4)(z), which allows the Commissioner to provide information relating to the registration of a foreign trust to a member of the New Zealand Police or an officer, employee, or agent of the Depart- ment of Internal Affairs.
18 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note Clause 12 inserts new sections 91AAU to 91AAW, which give the Commissioner of Inland Revenue powers to issue determinations relating to obligations under the CRS applied standard.

Section 91AAU gives the Commissioner a power to determine whether a territory outside New Zealand is, or has ceased to be, a participating juris- diction.
Section 91AAV gives the Commissioner a power to determine that a territory outside New Zealand is not to be treated as a reportable jurisdiction for a period of 3 months or less, although an earlier Order in Council has provided that the territory is a reportable jurisdiction.
Section 91AAW gives the Commissioner a power to deter- mine that a financial institution or type of financial institution is, or has ceased to be, a non-reporting financial institution and that a financial account or type of financial account is, or has ceased to be, an excluded account.

Clause 13 inserts new sections 142H and 142I, which impose penalties for failures to perform obligations imposed by Part 11B of the Act.
Section 142H imposes penalties on a financial institution under the CRS applied standard that fails to comply with an obligation relating to financial accounts maintained by the financial institution.
Sec- tion 142I imposes penalties on persons or entities that are obliged to provide informa- tion or a self-certification relating to a financial account and that provide false infor- mation or a false self-certification, or fail to provide the information or self-certifica- tion within a reasonable time, or fail to inform the person or entity provided with the information or self-certification of a material change in related circumstances.
Clause 14 amends section 143 by inserting new subsection (2C), which provides that an existing absolute liability offence for failing to satisfy obligations relating to the FATCA agreement does not apply to a failure to satisfy obligations relating to the CRS applied standard.

The offence would otherwise overlap with new section 142H, which imposes penalties for corresponding failures.
Clause 15 amends section 143A, which provides for offences committed knowingly, by inserting a specific offence for failing to provide a self-certification to another per- son or entity and providing for the application of a defence that the person did not have control of the required information.

Clause 16 amends section 185E by inserting new subsections describing the obliga- tions to which the other sections in Part 11B relate.
Clause 17 inserts a new heading after section 185E to indicate the sections relating to obligations under the FATCA agreement.

Clauses 18 to 22 amend sections 185F to 185J by replacing references to foreign ac- count information-sharing agreements with references to the FATCA agreement.

Clause 23 repeals section 185L.

A corresponding anti-avoidance provision applying for foreign account information-sharing agreements is inserted by clause 24 as new section 185R.
Clause 24 inserts a new heading and new sections 185N and 185O, which relate to the application of the CRS applied standard, followed by another new heading and new sections 185P to 185R, which relate to the application of foreign account information- sharing agreements generally.
New section 185N provides for the obligations of a fi- Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 19 nancial institution under the CRS applied standard relating to the due diligence pro- cedures to be applied for financial accounts maintained by the financial institution and the reporting of information to the Commissioner.
In new section 185O, subsec- tion (2) provides for the modification of the published CRS standard in the ways given by the items in new schedule 2 of the Act.

Subsection (3) provides for the modi- fied CRS standard to be applied consistently with the published Commentary on the CRS standard.

Subsection (4) provides that terms defined in the CRS standard or MCMAA convention are to be given those defined meanings when the CRS standard is applied.
Subsection (5) provides for the general availability to persons or entities of elections under the CRS applied standard.

New section 185P provides for the obliga- tions of persons affected by the FATCA agreement or the CRS applied standard to provide information and self-certifications relating to a financial account.

Under sub- section (4), the obligations include providing information about changes affecting in- formation or self-certifications provided previously.
In new section 185Q, subsection (1) provides that where an obligation or penalty under the FATCA agreement, the CRS applied standard, or the Act is expressed as being imposed on an entity that is a relationship rather than a person, the obligation or penalty is treated as being imposed on the persons in the relationship.
Subsection (2) provides that a requirement to pro- vide information to such an entity is treated as being a requirement to provide infor- mation to the persons given by subsection (1) for the entity.
New section 185R is an anti-avoidance provision providing that an arrangement with a main purpose of avoiding an obligation relating to a foreign account information-sharing agreement is treated as having no effect on a person’s obligations under the Act and giving the Commissioner a power to determine the appropriate obligations for the person.
Clause 25 inserts new clause 226D, which provides that the Governor-General may make regulations by Order in Council providing that a territory outside New Zealand is a reportable jurisdiction for the purposes of the CRS applied standard and the Act.
Clause 26 inserts new schedule 2, which lists amendments to the version of the CRS standard published by the Organisation for Economic and Cultural Development, for the purposes of determining the obligations of persons and entities under the CRS ap- plied standard and the Act.

Part 2 Business tax: AIM provisional tax method Subpart 1—Amendments to Income Tax Act 2007 Clause 27 provides that Part 2, subpart 1 amends the Income Tax Act 2007.
Clause 28 amends section LA 6, to enable AIM provisional tax method taxpayers to transfer excess tax credits to shareholders and reduce the shareholders’ use of money interest liability.

Clause 29 amends section RA 14, to provide the correct instalment dates for the AIM provisional tax method.

20 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note Clause 30 amends section RC 1, to provide the correct instalment dates for the AIM provisional tax method.
Clause 31 amends section RC 5, to provide the threshold criteria that a person must meet to be able to use the AIM provisional tax method.

Clause 32 inserts a new section RC 7B, to provide a description of the AIM provision- al tax method.

New section RC 7B contains the definition of AIM-capable accounting system.

Clause 33 amends section RC 9, to provide the correct instalment dates for the AIM provisional tax method, based on GST filing periods and the proposed amendments to schedule 3.
Clause 34 inserts a new section RC 10B, to calculate the amount of provisional tax a person must pay for an instalment date under the AIM provisional tax method.

Clause 35 amends section RC 24, to amend a cross-reference consequential to provid- ing the correct instalment dates for the AIM provisional tax method.

Clause 36 inserts a new section RM 6B, to provide a part-year refund for overpaid provisional tax under the AIM provisional tax method.
Clause 37 amends section RP 17, to ensure that tax pooling can not be used for AIM provisional tax.

Clause 38 amends section RP 17B, to ensure that tax pooling can not be used for AIM provisional tax.

Clause 39 amends section RP 19B, to ensure that tax pooling can not be used for AIM provisional tax.

Clause 40 amends section YA 1.

Subclause (2) inserts a new definition of AIM-cap- able accounting system, to provide minimum standards for software to be used for the AIM provisional tax method.
Subclause (3) inserts a new definition of approved AIM provider, to ensure that only approved software providers can supply software to be used for the AIM provisional tax method.

Subclause (4) inserts a new definition of large business AIM-capable system, to allow businesses with annual gross income of more than $5 million to use an approved AIM-capable accounting system if the Com- missioner has given approval.
Clause 41 amends schedule 3, to provide the correct instalment dates for the AIM provisional tax method, based on GST filing periods.

Subpart 2—Amendments to Tax Administration Act 1994 Clause 42 provides that Part 2, subpart 2 amends the Tax Administration Act 1994.
Clause 43 amends section 3(1), to amend the definition of tax position and ensure that the use of the AIM provisional tax method, including the use of software, counts as a tax position for purposes of the Tax Administration Act 1994, including penalties.

Clause 44 inserts a new heading and new sections 15U to 15X.

New section 15U pro- vides that the Commissioner may approve a person as an approved AIM provider in relation to an AIM-capable accounting system.
New section 15V provides a process Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 21 by which the Commissioner may revoke a person’s approval as an approved AIM provider.

New section 15W provides a process by which a person’s approval as an ap- proved AIM provider is revoked upon notification by the person that they choose revocation.

New section 15X provides that the Commissioner may publish notice of any of the matters in new sections 15U to 15W.
Clause 45 inserts new sections 45 to 45D.

New section 45 provides for the giving of information to the Commissioner by a person in relation to their use of the AIM pro- visional tax method.

New section 45B provides for the giving of information to the Commissioner by an approved AIM provider in relation to their AIM-capable ac- counting system products.
New section 45C provides that the Commissioner may ap- prove an AIM-capable accounting system as a large business AIM-capable system for use by people with annual gross income of more than $5 million.

New section 45D provides that the Commissioner may approve a person’s continued use of an AIM- capable accounting system, if the person has annual gross income of more than $5 million.

Clause 46 inserts a new heading and new sections 91AAX and 91AAY.
New section 91AAX provides for the Commissioner publishing binding determinations of tax ad- justments for accounting income and expenditure under the AIM provisional tax method.

New section 91AAY provides for that Commissioner publishing determin- ations of classes of taxpayers that must not use the AIM provisional tax method.
Clause 47 amends section 119, to provide that the Commissioner may determine the amount of a person’s provisional tax if the AIM-capable accounting system they are using is inaccurate.

Clause 48 inserts a new section 120KBC, to provide concessionary use of money in- terest rules for people who use the AIM provisional tax method.

Clause 49 amends section 120KC, to amend a cross-reference consequential to pro- viding the correct instalment dates for the AIM provisional tax method.
Clause 50 amends section 120KE, to remove AIM method taxpayers from the provi- sional tax safe harbour, as a consequence of their concessionary treatment under new section 120KBC.

Clause 51 inserts a new section 120LB, to enable AIM provisional tax method taxpay- ers to transfer excess tax credits to shareholders and reduce the shareholders’ use of money interest liability.

Clause 52 inserts a new section 120VB, to remove the Commissioner’s obligation to pay use of money interest to AIM method taxpayers.
Clause 53 amends section 141, to ensure the correct basis for calculating the amount of tax shortfall that may be penalised for the AIM provisional tax method.

Clause 54 amends section 141B, to remove the unacceptable tax position penalty in some circumstances for AIM method taxpayers.
22 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note Part 3 Business tax and remedial matters Subpart 1—Amendments to Income Tax Act 2007 Clause 55 provides that Part 3, subpart 1 amends the Income Tax Act 2007.

Clause 56 amends section CD 32, consequential to providing an election to use sub- part DE for shareholder-employee motor vehicles instead of the FBT rules.
Clause 57 amends section CE 2, as part of ensuring that benefits under employee share purchase agreements are valued and recognised appropriately for different-sized employers.

Clause 58 amends section CX 6, to ensure that subpart DE is used if there is an elec- tion to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 59 amends section CX 17, to give an election to use subpart DE for sharehold- er-employee motor vehicles instead of the FBT rules.
Clause 60 amends section DB 7, to ensure that subpart DE is used for interest deduc- tions if there is an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 61 amends section DB 8, to ensure that subpart DE is used for interest deduc- tions if there is an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.
Clause 62 inserts a new section DB 18AA, to provide a square metre rate method to determine the amount of a deduction for a building that is used partly for business and partly for other purposes.

Clause 63 amends section DE 1, as part of providing an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 64 amends section DE 2, as part of providing an election to use a kilometre rate method for business motor vehicle use deductions.
Also, the amendments ensure that interest in relation to shareholder-employee motor vehicles is subject to subpart DE, if there has been an election to use subpart DE for shareholder-employee motor vehicles instead of the FBT rules.

Clause 65 inserts a new section DE 2B, to provide an election to use a kilometre rate method for business motor vehicle use deductions.
Clause 66 amends section DE 3, consequential to providing an election to use a kilo- metre rate method for business motor vehicle use deductions.

Clause 67 amends section DE 4, consequential to providing an election to use a kilo- metre rate method for business motor vehicle use deductions.

Clause 68 replaces the heading before section DE 12 and section DE 12, to provide a kilometre rate method for business motor vehicle use deductions.
Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 23 Clause 69 amends section DF 4, as part of providing an election to not apply the un- paid expenditure rules to shareholder-employee expenditure.

Clause 70 amends section EA 4, as part of providing an election to not apply the un- paid expenditure rules to shareholder-employee expenditure.
Clause 71 amends section EE 49, to turn off depreciation recovery income for a motor vehicle for which a person has used the kilometre rate method for business motor vehicle use deductions.

Clause 72 amends section LA 6, to enable companies under the proposed provisional tax attribution regime to transfer excess tax credits to shareholders who are provision- al tax attributors.
Clause 73 replaces section LB 2, to provide for tax credit transfers to a shareholder who is a provisional tax attributor from a company that has paid provisional tax under the proposed provisional tax attribution regime.

Clause 74 amends section LB 7, to correct cross-references consequential to provid- ing tax rate options for deductions from schedular payments.
Clause 75 amends section LB 8, to correct cross-references consequential to provid- ing tax rate options for deductions from schedular payments.

Clause 76 amends section MD 9, to correct cross-references consequential to provid- ing tax rate options for deductions from schedular payments.

Clause 77 inserts a new section OB 33B, to ensure that a company’s imputation credit account is debited for a tax credit transfer to a shareholder from the company, under the proposed provisional tax attribution regime.
Clause 78 amends table O2, to ensure that a company’s imputation credit account is debited for a tax credit transfer to a shareholder from the company, under the pro- posed provisional tax attribution regime.

Clause 79 amends section RC 3, to turn off the provisional tax rules for shareholders that attribute enough provisional tax to a company under the proposed provisional tax attribution regime.
Clause 80 amends section RC 5, to prevent standard method provisional taxpayers swapping to the estimate method for the last instalment of the year.

Clause 81 amends table R1, as a consequence of allowing a concession for use of money interest for standard method provisional taxpayers who meet their obligations during the year.

Clause 82 amends section RC 10, to calculate the amounts of provisional tax instal- ments for shareholders and companies under the proposed provisional tax attribution regime.
Clause 83 amends section RD 3, to correct cross-references consequential to provid- ing tax rate options for deductions from schedular payments.

24 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note Clause 84 amends section RD 6, as a remedial matter, to ensure that benefits under employee share purchase agreements are valued and recognised appropriately for dif- ferent-sized employers.
Clause 85 amends section RD 7B, as a remedial matter, consequential to ensuring that benefits under employee share purchase agreements are valued and recognised appro- priately for different-sized employers.

Clause 86 amends section RD 8, consequential to providing tax rate options for de- ductions from schedular payments.

Also, the amendments ensure that labour-hire en- tities’ payments to companies are caught as schedular payments.
Clause 87 amends section RD 10, consequential to providing tax rate options for de- ductions from schedular payments.

Clause 88 inserts a new section RD 10B, to provide tax rate options for deductions from schedular payments.

Also, the amendments provide that the tax rate for deduc- tions from schedular payments may be set by the Commissioner for certain payees in certain circumstances.

Clause 89 repeals section RD 18, consequential to providing tax rate options for de- ductions from schedular payments.
Clause 90 amends section RD 60 changes the close company annual FBT payment option threshold from “no more than $500,000” to “no more than $1,000,000”, allow- ing more people to use the option.

Clause 91 amends section RD 61 changes the small business annual FBT payment option threshold from “no more than $500,000” to “no more than $1,000,000”, allow- ing more people to use the option.

Clause 92 amends section YA 1.


Subclauses (2) to (6) amend relevant definitions to correct cross-references consequential to providing tax rate options for deductions from schedular payments.

Subclause (7) inserts a new definition of PAYE income pay- ment form period, as part of ensuring that benefits under employee share purchase agreements are valued and recognised appropriately for different-sized employers.
Subclause (8) inserts a new definition of provisional tax attributor, as part of the pro- posed provisional tax attribution regime.

Subclause (9) inserts a new definition of shareholder attributed income, as part of the proposed provisional tax attribution re- gime.

Subclause (10) inserts a new definition of shareholder attributed tax, as part of the proposed provisional tax attribution regime.
Clause 93 amends schedule 4, consequential to providing tax rate options for deduc- tions from schedular payments.

Also, the amendments provide a new part J, to ensure that labour-hire agreements and entities are under the schedular payments rules.

A new part W is provided, to allow deductions on account of voluntary schedular pay- ments.

Subpart 2—Amendments to Tax Administration Act 1994 Clause 94 provides that Part 3, subpart 2 amends the Tax Administration Act 1994.
Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 25 Clause 95 amends section 3(1).

Subclause (2) inserts a new definition of approved credit reporting agency, as part of allowing the Commissioner to credit report some unpaid tax to third parties.

Subclause (3) inserts a new definition of credit report, as part of allowing the Commissioner to credit report some unpaid tax to third parties.
Subclause (4) inserts a new definition of provisional tax interest avoidance arrange- ment as part of allowing a concession for use of money interest for standard method provisional taxpayers who meet their obligations during the year.

Subclause (5) in- serts a new definition of reportable unpaid tax, as part of allowing the Commissioner to credit report some unpaid tax to third parties.
Subclause (6) inserts a new definition of standard method associate, as part of allowing a concession for use of money in- terest for most standard method provisional taxpayers who meet their obligations dur- ing the year.

Clause 96 inserts a new heading and a new section 15Y, to provide the criteria that a shareholder must meet to use the proposed provisional tax attribution regime.

Clause 97 amends section 24G, consequential to providing tax rate options for deduc- tions from schedular payments.
Clause 98 amends section 24L, to provide notice provisions in relation to the pro- posed tax rate options for deductions from schedular payments.

Clause 99 inserts new sections 24LB and 24LC.

New section 24LB provides the elec- tion mechanism and thresholds in relation to the proposed tax rate options for deduc- tions from schedular payments.
New section 24LC provides the mechanism and thresholds in relation to allowing the Commissioner to set the tax rate for deductions from schedular payments for certain payees in certain circumstances Clause 100 amends section 24M, to ensure that labour-hire agreements and entities are under the schedular payments rules and may not get an exemption.

Clause 101 amends section 32H, to ensure that RWT exemption certificates do not constantly need to be renewed.
Clause 102 inserts a new section 45E, to provide a tax reconciliation statement for the proposed provisional tax attribution regime.

Clause 103 amends section 81, to provide exemptions from secrecy for credit report- ing some unpaid tax to third parties and reporting some offences under the Companies Act 1993 to the Registrar of Companies.

Clause 104 inserts new sections 85M and 85N.


New section 85M provides an exemp- tion from secrecy for reporting some offences under the Companies Act 1993 to the Registrar of Companies.

New section 85N provides an exemption from secrecy for credit reporting some unpaid tax to third parties.

Clause 105 amends section 113A, to increase the threshold below which minor errors may be corrected in subsequent returns, from $500 to $1,000.
Clause 106 amends section 120C, to clarify the date interest starts under the use of money interest rules for GST refunds and GST overpayments.

26 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Explanatory note Clause 107 further amends section 120C, as part of allowing concessionary use of money interest treatment for most standard method provisional taxpayers.
Clause 108 amends section 120KB, as part of allowing concessionary use of money interest treatment for failed instalments for most standard method provisional taxpay- ers.

Clause 109 inserts a new section 120KBB, as part of allowing concessionary use of money interest treatment for most standard method provisional taxpayers.

Clause 110 amends section 120KE, as part of allowing concessionary use of money interest treatment for most standard method provisional taxpayers.
The use of money interest safe harbour is increased from $50,000 to $60,000 and companies may take advantage of it.

The safe harbour is not available to persons involved in a provisional tax interest avoidance arrangement.

Clause 111 amends section 120L, to provide adjustments for use of money interest purposes for shareholders and companies under the proposed provisional tax attribu- tion regime.
Clause 112 amends section 138E, to ensure that the Commissioner’s proposed discre- tion to ignore tax types when determining late payment penalties while there are 2 In- land Revenue software platforms is not a disputable decision.

Clause 113 amends section 139B, to give the Commissioner a discretion to ignore tax types when determining late payment penalties while there are 2 Inland Revenue soft- ware platforms.
Also, the amendments ensure that the Commissioner’s proposed power to set a new collection date, and to allow a concession from that date while there are 2 Inland Revenue software platforms, is correctly accounted for in the late payment penalties regime.

Clause 114 further amends section 139B, to remove incremental late payment penal- ties for most taxpayers.
Also the amendments ensure that the unpaid tax for the late payment penalties regime is the same as the unpaid tax given by the concessionary use of money interest treatment for failed instalments for most standard method pro- visional taxpayers.
Clause 115 amends section 139BA, to ensure that the Commissioner’s proposed pow- er to set a new collection date, and to allow a concession from that date while there are 2 Inland Revenue software platforms, is correctly accounted for in the late pay- ment penalties regime.
Clause 116 amends section 139C, to ensure that the Commissioner’s proposed power to set a new collection date, and to allow a concession from that date while there are 2 Inland Revenue software platforms, is correctly accounted for in the late payment penalties regime.

Clause 117 amends section 142A, to provide the Commissioner a power to set a new collection date, and to allow a concession from that date while there are 2 Inland Rev- enue software platforms.
Explanatory note Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 27 Clause 118 amends section 142B, to ensure that the Commissioner’s proposed power to set a new collection date, and to allow a concession from that date while there are 2 Inland Revenue software platforms, is correctly accounted for in the shortfall penal- ties regime.
Clause 119 amends section 173L, to ensure that a transfer of excess tax to another period or tax type of the taxpayer is not in excess of the amount of tax payable or in dispute for the requested period or tax type.

Also, the amendments clarify the transfer date of GST refunds and GST overpayments.
Clause 120 amends section 173M, to ensure that a transfer of excess tax to a tax period or tax type of another taxpayer is not in excess of the amount of tax payable or in dispute for the requested period or tax type.

Subpart 3—Amendment to other enactment Clause 121 amends section 27E(3)(b) of the Student Loan Scheme Act 2011, to cor- rect a fault of expression.
Schedule 1 New schedule 2 inserted Schedule 1 contains new schedule 2 of the Tax Administration Act 1994, which lists amendments to the version of the CRS standard published by the Organisation for Economic and Cultural Development, for the purposes of determining the require- ments for persons and entities under the CRS applied standard and the Act.
Hon Michael Woodhouse Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Government Bill Contents Title Commencement Part 1 Exchange of information Subpart 1—Amendments to Income Tax Act 2007 Income Tax Act 2007 amended Section BH 1 amended (Double tax agreements) Section HC 26 amended (Foreign-sourced amounts: resident trustees) Section YA 1 amended (Definitions) Subpart 2—Amendments to Tax Administration Act 1994 Tax Administration Act 1994 amended Section 3 amended (Interpretation) Section 22 amended (Keeping of business and other records) Section 59B replaced (Disclosure of foreign trust particulars) Foreign trust with resident trustee: registration and 59B disclosure Time limits for registration and disclosure of changes Annual return for foreign trust Fees: regulations 59C 59D 59E Section 81 amended (Officers to maintain secrecy) New heading and sections 91AAU to 91AAW inserted 149—1 Page 7 7 8 8 8 8 8 9 11 11 11 12 13 14 14 14 1 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Determinations relating to foreign account information- sharing agreements 91AAU Participating jurisdictions for CRS applied standard 91AAV Suspension of reportable jurisdictions for CRS applied standard 91AAW Non-reporting financial institutions and excluded accounts for CRS applied standard New sections 142H and 142I inserted 142H 142I Failures of financial institutions to meet requirements under Part 11B and CRS applied standard Failures to meet requirements under Part 11B to provide information or self-certifications Section 143 amended (Absolute liability offences) Section 143A amended (Knowledge offences) Section 185E amended (Purpose) New heading inserted after section 185E Section 185F amended (Permitted choices in relation to foreign account information-sharing agreements) Section 185G amended (Obligations related to foreign account information-sharing agreements: registration) Section 185H amended (Obligations related to foreign account
 information-sharing agreements: due diligence) Section 185I amended (Obligations related to foreign account information-sharing agreements: information for NZ competent authority) Section 185J amended (Obligations related to foreign account information-sharing agreements: information for third parties) Section 185L repealed (Foreign account information-sharing agreements: anti-avoidance) New headings and sections 185N to 185R inserted Multilateral convention and CRS standard 185N 185O Requirements for financial institution Application of Common Reporting Standard Foreign account information-sharing agreements generally 185P 185Q 185R Requirements for persons to provide information to financial institution Requirements and penalties for entities that are not persons Foreign account information-sharing agreements: anti- avoidance New section 226D inserted (Reportable jurisdictions for CRS standard and Part 11B) Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 226D New schedule 2 inserted (Application of CRS standard) Reportable jurisdictions for CRS standard and Part 11B Part 2 Business tax: AIM provisional tax method Subpart 1—Amendments to Income Tax Act 2007 Income Tax Act 2007 amended Section LA 6 amended (Remaining refundable credits: PAYE, RWT, and certain other items) Section RA 14 amended (Payment dates for provisional tax) Section RC 1 amended (What this subpart does) Section RC 5 amended (Methods for calculating provisional tax liability) New section RC 7B inserted (AIM method) RC 7B AIM method Section RC 9 amended (Provisional tax payable in instalments) New section RC 10B inserted (Calculating amount of instalment for periods using AIM method) RC 10B Calculating amount of instalment for periods using AIM method Section RC 24 amended (Calculating instalments in transitional years: GST ratio method) New section RM 6B
 inserted (Refunds for overpaid AIM method instalments) RM 6B Refunds for overpaid AIM method instalments Section RP 17 amended (Tax pooling intermediaries) Section RP 17B amended (Tax pooling accounts and their use) Section RP 19B amended (Transfers for certain expected tax liabilities) Section YA 1 amended (Definitions) Schedule 3 amended (Payment of provisional tax and terminal tax) Subpart 2—Amendments to Tax Administration Act 1994 Tax Administration Act 1994 amended Section 3 amended (Interpretation) New heading and sections 15U to 15X inserted Approved AIM providers Approval of approved AIM providers Revocation of approval of AIM providers: Commissioner 15U 15V 15W Revocation of approval of AIM providers: provider 15X New sections 45, 45B, 45C, and 45D inserted AIM method information: taxpayers 45 AIM method information: approved AIM providers 45B Publication of approval, revocation, etc Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 45C AIM method: approval of large business AIM-capable system AIM method: approval of person over $5,000,000 45D New heading and sections 91AAX and 91AAY inserted Determinations relating to AIM method 91AAX Accounting determinations relating to AIM method 91AAY Class of taxpayers that must not use AIM method Section 119 amended (Commissioner may determine amount of provisional tax) New section 120KBC inserted (Interest for AIM method provisional taxpayers) 120KBC Interest for AIM method provisional taxpayers Section 120KC amended (Residual income tax of new provisional taxpayer) Section 120KE amended (Provisional tax and rules on use of money interest) New section 120LB inserted (Meaning of unpaid tax and overpaid tax for tax credit transferees under AIM method) 120LB Meaning of unpaid tax and overpaid tax for tax credit transferees under AIM method New
 section 120VB inserted (Interest on overpaid AIM method provisional tax) 120VB Interest on overpaid AIM method provisional tax Section 141 amended (Tax shortfalls) Section 141B amended (Unacceptable tax position) Part 3 Business tax and remedial matters Subpart 1—Amendments to Income Tax Act 2007 Income Tax Act 2007 amended Section CD 32 amended (Employee benefits) Section CE 2 amended (Value and timing of benefits under share purchase agreements) Section CX 6 amended (Private use of motor vehicle) Section CX 17 amended (Benefits provided to employees who are shareholders or investors) Section DB 7 amended (Interest: most companies need no nexus with income) Section DB 8 amended (Interest: money borrowed to acquire shares in group companies) New section DB 18AA inserted (Square metre rate method) DB 18AA Section DE 1 amended (What this subpart does) Square metre rate method Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Section DE 2 amended (Deductions for business use) New section DE 2B inserted (Election to use kilometre rate method or costs method) DE 2B Election to use kilometre rate method or costs method Section DE 3 amended (Methods for calculating proportion of business use) Section DE 4 amended (Default method for calculating proportion of business use) Heading and section DE 12 replaced Kilometre rates Tax credits for provisional tax payments DE 12 Kilometre rate method Section DF 4 amended (Payments for social rehabilitation) Section EA 4 amended (Deferred payment of employment income) Section EE 49 amended (Amount of depreciation recovery income when item partly used for business) Section LA 6 amended (Remaining refundable credits: PAYE, RWT, and certain other items) Section LB 2 replaced (Tax credits for provisional tax payments) LB 2 Section LB 7 amended (Tax credits related to personal
 service rehabilitation payments: providers) Section LB 8 amended (Tax credits related to personal service rehabilitation payments: payers) Section MD 9 amended (Fifth requirement: full-time earner) New section OB 33B inserted (ICA transfer of provisional tax credit) OB 33B ICA transfer of provisional tax credit Table O2 amended (Imputation debits) Section RC 3 amended (Who is required to pay provisional tax?)
Section RC 5 amended (Methods for calculating provisional tax liability) Table R1 amended (Summary of instalment dates and calculation methods for provisional tax) Section RC 10 amended (Calculating amount of instalment under standard and estimation methods) Section RD 3 amended (PAYE income payments) Section RD 6 amended (Certain benefits and payments) Section RD 7B amended (Treatment of certain benefits under employee share agreements) Section RD 8 amended (Schedular payments) Section RD 10 amended (Amounts of tax for PAYE income payments) New section RD 10B inserted (Amounts of tax for schedular payments) Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill RD 10B Amounts of tax for schedular payments Section RD 18 repealed (Schedular payments without notification) Section RD 60 amended (Close company option) Section RD 61 amended (Small business option) Section YA 1 amended (Definitions) Schedule 4 amended (Rates of tax for schedular payments) Subpart 2—Amendments to Tax Administration Act 1994 Tax Administration Act 1994 amended Section 3 amended (Interpretation) New heading and new section 15Y inserted Provisional tax attribution Provisional tax attributor Schedular tax rate elected by payee Schedular tax rate prescribed by Commissioner 15Y Section 24G amended (Use of incorrect tax codes) Section 24L amended (Schedular notification) New sections 24LB and 24LC inserted 24LB 24LC Section 24M amended (Exemption certificates for schedular payments) Section 32H amended (Providing RWT exemption certificate when person meets requirements) New section 45E inserted (Provisional tax attribution reconciliation statement) 45E Section 81 amended (Officers to maintain secrecy) New sections 85M and 85N inserted 85M Provisional tax attribution reconciliation statement Disclosure of information relating to some offences to the Registrar of
 Companies Disclosure of information to approved credit reporting agencies 85N Section 113A amended (Correction of minor errors in subsequent returns) Section 120C amended (Definitions) Section 120C amended (Definitions) Section 120KB amended (Provisional tax instalments and due dates generally) New section 120KBB inserted (Interest for most standard method provisional taxpayers) 120KBB Interest for most standard method provisional taxpayers Section 120KE amended (Provisional tax and rules on use of money interest) Section 120L amended (Meaning of unpaid tax and overpaid tax for provisional tax purposes) Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 112 113 114 115 116 117 118 119 120 121 Section 138E amended (Certain rights of challenge not conferred) Section 139B amended (Late payment penalty) Section 139B amended (Late payment penalty) Section 139BA amended (Imposition of late payment penalties when financial relief sought) Section 139C amended (Late payment penalty and provisional tax) Section 142A amended (New due date for payment of tax that is not a penalty) Section 142B amended (Due date for shortfall penalties) Section 173L amended (Transfer of excess tax within taxpayer’s accounts) Section 173M amended (Transfer of excess tax to another taxpayer) Subpart 3—Amendment to other enactment Section 27E of Student Loan Scheme Act 2011 amended (Commissioner may remove entity’s listing as charity) Schedule 1 New schedule 2 inserted cl 2 65 65 65 66 66 66 68 68 68 69 70 The Parliament of New Zealand enacts as follows: 1 Title This Act is the Taxation (Business Tax, Exchange of Information, and Remed- ial Matters) Act 2016.
2 (1) (2) (3) (4) (5) (6) Commencement This Act comes into force on the date on which it receives the Royal assent, except as provided in this section.

Section 4 is treated as coming into force on 21 October 2013.

Section 121 is treated as coming into force on 14 May 2016.

Sections 6, 8(1) to (7), 9(1), (2), and (3), 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, and 26 come into force on 1 July 2017.
Sections 92(2), (3), (4), (5), (6), and (7), 93, 95, 97, 98, 99, 100, 101, 103, 104, 105, 107, 108, 109, 110, 114, and 116 come into force on 1 April 2017.

Part 2 and sections 72, 73, 77, 78, 79, 82, 92(8), (9), and (10), 96, 102, and 111 come into force on 1 April 2018.
5 10 15 7 Part 1 cl 3 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 1 Exchange of information Subpart 1—Amendments to Income Tax Act 2007 3 4 5 (1) Income Tax Act 2007 amended This subpart amends the Income Tax Act 2007.

Section BH 1 amended (Double tax agreements) In section BH 1(1)(b)(i), replace “the government of any territory” with “1 or more governments of territories”.
Section HC 26 amended (Foreign-sourced amounts: resident trustees) In section HC 26(1)(b)(ii), replace “year).” with “year); and”.

(2) After section HC 26(1)(b), insert: (c) for a foreign trust, the trust is registered before the income is derived and the trustee complies with the trustee’s requirements under sections 22, 59B, and 59C of the Tax Administration Act 1994 for the income year.

(3) Repeal section HC 26(2), (3), and (4).
6 Section YA 1 amended (Definitions) In section YA 1, replace the definition of foreign account information-shar- ing agreement with: foreign account information-sharing agreement means a double tax agree- ment that facilitates the automatic exchange by the parties of information relat- ing to financial accounts, including— (a) (b) the Agreement between the Government of New Zealand and the Gov- ernment of the United States of America to Improve International Tax Compliance and to Implement FATCA brought into force for New Zea- land by the Double Tax Agreements (United States of America—FAT- CA) Order 2014 (LI 2014/209), as amended from time to time: the multilateral Convention on Mutual Administrative Assistance in Tax Matters, as amended by 2010 Protocol which was brought into force for New Zealand by the Double Tax Agreements (Mutual Administrative Assistance) Order 2013 (SR 2013/437), as amended from time to time Subpart 2—Amendments to Tax Administration Act 1994 7 Tax Administration Act 1994 amended This subpart amends the Tax Administration Act 1994.
8 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 1 cl 8 8 (1) (2) Section 3 amended (Interpretation) This section amends section 3(1).
Insert, in appropriate alphabetical order: CRS applied standard means the CRS standard as modified by section 185O for the determination of requirements under this Act CRS publication means the Standard for Automatic Exchange of Financial Account Information in Tax Matters, published by the Organisation for Eco- nomic and Cultural Development CRS standard means the Common Standard on Reporting and Due Diligence for Financial Account Information, as amended from time to time, which is a standard— (a) developed by the Organisation for Economic and Cultural Development and the Group of Twenty countries, to govern the application of the MCMAA convention and the MCA agreement to accounts that are fi- nancial accounts as defined; and (b) agreed by the Council for the Organisation for Economic and Cultural Development on 15 July 2014; and 5 10 15 (c) contained in Part IIB of the CRS publication (3) Insert, in appropriate alphabetical order: FATCA agreement means the Agreement between the Government of New 20 Zealand and the Government of the United States of America to Improve Inter- national Tax Compliance and to Implement FATCA, which was brought into force for New Zealand by the Double Tax Agreements (United States of Amer- ica—FATCA) Order 2014 (LI 2014/209), as amended from time to time (4) Insert, in appropriate alphabetical order: maintain, for a financial institution to which the CRS applied standard or the FATCA agreement applies in relation to a financial account, includes,— (a) (b) (c) (d) if the financial account is a custodial account, holding custody over the assets in the financial account, including by holding assets in street name for an account holder in the financial institution: if the financial account is a depository account, having an obligation to make payments with respect to the financial account, other than as agent for another financial institution: if the financial account is an equity or debt interest, being the financial institution in which the interest is held: 35 if the account is a
 cash value insurance contract or an annuity contract, having an obligation to make payments with respect to the contract 25 30 (5) Insert, in appropriate alphabetical order: 9 Part 1 cl 8 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill MCA agreement means the Multilateral Competent Authority Agreement, which was signed under Article 6 of the MCMAA convention for the New Zealand competent authority on 3 June 2015 and provides a mechanism for a competent authority of a territory to exchange routinely with other competent authorities the information collected under the MCMAA convention, as amended from time to time (6) Insert, in appropriate alphabetical order: MCMAA convention means the multilateral Convention on Mutual Adminis- trative Assistance in Tax Matters, as amended by 2010 Protocol, which was brought into force for New Zealand by the Double Tax Agreements (Mutual Administrative Assistance) Order 2013 (SR 2013/437), as amended from time to time (7) Insert, in appropriate alphabetical order: passive income, in the application of the FATCA agreement or the CRS ap- plied standard to a person or entity for a period, means an amount that is not income from a transaction entered into in the ordinary course of the business of a dealer in financial assets and that is— (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) a dividend: interest: income equivalent to interest: rent or a royalty, other than rent or a royalty derived in the active con- duct of a business conducted, partly or wholly, by employees of the per- son or entity: an annuity: for financial assets that give rise to amounts included under para- graphs (a) to (e), the amount by which gains from the sales or ex- changes of the financial assets in the period exceed losses from the sales or exchanges: the amount by which gains from the transactions in financial assets in the period exceed losses from the transactions: 30 the amount by which gains from the foreign currency
 transactions in the period exceed losses from the transactions: the amount by which gains from the swaps in the period exceed losses from the swaps: an amount received under a cash value insurance contract 35 Repeal the definition of qualifying resident foreign trustee.
Insert, in appropriate alphabetical order: taxpayer identification number, for a person who is (without taking into ac- count any double tax agreement that would otherwise apply) treated as tax resi- (8) (9) 10 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 1 cl 10 dent in a jurisdiction other than New Zealand, means the equivalent of the per- son’s tax file number in that jurisdiction 9 (1) Section 22 amended (Keeping of business and other records) In section 22(2), paragraph (fc), replace “Act,—” with “Act:”.
(2) After section 22(2)(fc), insert: (fd) must meet requirements under Part 11B, including requirements ex- pressed as being imposed on an entity other than a person, of— (i) (ii) a financial institution, as defined in the FATCA agreement: a financial institution, as defined in the CRS applied standard,— (3) After section 22(2)(lc), insert: (ld) a failure by the person to obtain a self-certification as required by the CRS applied standard; and Repeal section 22(7)(d)(i) and (ii).
Section 59B replaced (Disclosure of foreign trust particulars) Replace section 59B with: (4) 10 5 10 15 59B Foreign trust with resident trustee: registration and disclosure (1) (2) The Commissioner may register a foreign trust if the foreign trust has a resi- dent trustee and a trust deed and a trustee pays the prescribed fee.

Resident trustees of a foreign trust having a trust deed must apply to the Com- missioner for registration of the foreign trust and pay the prescribed fee.
20 (3) A trustee applying for registration of a foreign trust (the applicant trustee) must provide, with the application and fee, all that is relevant to the trust of— (a) (b) (c) the name and other identifying particulars of the trust: the date and detail of each settlement on the trust: the name, email address, residential address, country of tax residence, and taxpayer identification number of: 25 (i) (ii) (iii) (iv) (v) each settlor: each person with a power under the trust deed to control the dis- missal or appointment of a trustee, to amend the trust deed, or to add or remove a beneficiary: 30 each person with a power under the trust deed to control a trustee in the administration of the trust: each trustee: for a fixed trust, each beneficiary and nominee for an underlying beneficiary: 35 11 Part 1 cl 10 (d) Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill for a discretionary trust, details of each class of beneficiary sufficient for the Commissioner to determine, when a distribution is made under the trust or when rights apparently vested under the trust are exercised, whether a person is a member of the class: (e) a copy of the trust deed.
(4) The applicant trustee must provide with the application a signed declaration that each person referred to in subsection (3)(c)(i) to (iv) has been informed of, and has agreed to provide the information necessary for compliance with, the requirements relating to the provision of information imposed by all of— (a) (b) (c) the Tax Administration Act 1994: the Anti-Money Laundering and Countering Financing of Terrorism Act 2009: the regulations made under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
5 10 (5) A resident trustee must provide to the Commissioner the details of an alteration 15 to a particular to which subsection (3) refers.
59C Time limits for registration and disclosure of changes (1) A resident trustee of a foreign trust who becomes required to register the for- eign trust under section 59B— (a) (b) on the date of enactment of this section, is required to apply for the registration by 30 June 2017, except if subsection (3) applies: after the date of enactment of this section, is required to apply for the registration within 30 days after the day on which the liability commen- ces, except if subsection (3) applies.
(2) A resident trustee who is required by section 59B(5) to provide information to the Commissioner, must provide the information within 30 days after be- coming aware of the alteration, except if subsection (3) applies.
(3) A period for the meeting of a requirement that would otherwise be given by subsection (1) or (2) for a trustee is given by subsection (4) for the trustee if— 20 25 30 (a) (b) (c) (d) the trustee is a natural person who was appointed a trustee of the foreign trust before becoming a New Zealand resident; and the trustee becomes a New Zealand resident on or after 1 October 2006; and the trustee is not in the business of providing trustee services; and 35 the trustee has not been resident in New Zealand on any day in the period of 5 years that ends immediately before the trustee becomes a New Zealand resident; and 12 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 1 cl 10 (e) the end of the period of 2 years and 30 days beginning with the date on which the trustee becomes a New Zealand resident (the grace period) occurs after the period that would otherwise be given by subsection (1) or (2).
(4) If subsection (3) applies for a requirement imposed on a trustee, the trustee must meet the requirement within the grace period.
5 59D Annual return for foreign trust (1) A resident trustee of a foreign trust must provide to the Commissioner a return for the foreign trust, and the prescribed fee, for each year that— (a) (b) includes a period during which the foreign trust is registered or section 59B requires a resident trustee to register the foreign trust; and ends with— 10 (i) (ii) a date (the balance date) for which the foreign trust prepares fi- nancial statements; or a 31 March if the foreign trust does not prepare financial state- ments; and 15 begins after 31 March 2017, if a resident trustee is liable to register the foreign trust on the date of enactment of this section; and if the resident trustee has a grace period referred to in section 59C(3), ends after the grace period.
20 (c) (d) (2) A return must be in the prescribed form and include— (a) (b) (c) (d) (e) (f) each change during the year to information that is required to be provi- ded when the trust is registered: the financial statements for the trust and the year: the date and nature of each settlement made on the trust in the year: 25 the name, email address, residential address, country of tax residence, and taxpayer identification number of each settlor making the settle- ment: the date and amount of each distribution made by the trustee of the trust in the year: 30 the name, email address, residential address, country of tax residence, and taxpayer identification number of each beneficiary to which the dis- tribution is made.
(3) A return and the prescribed fee for a foreign trust and a year must be provided by a resident trustee to the Commissioner by— 35 (a) (b) the date that is 3 months after the balance date for the trust and the year, if the trust has a balance date; or the 30 June following the end of the year, if the trust does not have a bal- ance date.
13 Part 1 cl 11 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 59E Fees: regulations (1) The Governor-General may from time to time, by Order in Council, make regulations prescribing both— (a) (b) the fee for an application for the registration of a foreign trust: the fee for an annual return for a foreign trust.

(2) A regulation made under subsection (1) may set out the period for which a fee prescribed by the regulations is to apply.
(3) Until the commencement of the first regulation made under subsection (1),— the prescribed fee for an application for the registration of a foreign trust is $270: (a) (b) the prescribed fee for an annual return for a foreign trust and a year is $50.

(4) Subsection (3) and this subsection are repealed when that first regulation commences.
11 Section 81 amended (Officers to maintain secrecy) After section 81(4)(y), insert: (z) communicating to a person who is a member of the New Zealand Police or an officer, employee, or agent of the Department of Internal Affairs any information relating to a registration, or absence of registration, for a foreign trust that the person is authorised by the Commissioner of Police or the chief executive of the Department of Internal Affairs to receive.
12 New heading and sections 91AAU to 91AAW inserted After section 91AAT, insert: Determinations relating to foreign account information-sharing agreements 91AAU Participating jurisdictions for CRS applied standard (1) (2) (3) The Commissioner may determine that a territory outside New Zealand is a participating jurisdiction for the purposes of the CRS applied standard and Part 11B.

The determination may set out the period for which it is to apply, which must begin after 31 March 2017.
30 The determination may provide for the change, extension, limitation, suspen- sion, or cancellation of an earlier determination.
(4) Within 30 days of issuing, changing, extending, limiting, suspending, or can- celling a determination under this section, the Commissioner must publish in a publication chosen by the Commissioner— 35 (a) the determination: 14 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 1 cl 13 (b) details of a changed, extended, limited, suspended, or cancelled deter- mination.
91AAV Suspension of reportable jurisdictions for CRS applied standard (1) (2) The Commissioner may make a determination, relating to a territory outside New Zealand that has been provided by an Order in Council to be a reportable jurisdiction for the purposes of the CRS applied standard and requirements im- posed by Part 11B, that the territory is not to be treated as a reportable jurisdic- tion.
The determination must set out the period for which it is to apply, which must begin after 31 March 2017 and end no more than 3 months after the date of the determination.

(3) Within 30 days of issuing a determination under this section, the Commissioner must publish the determination in a publication chosen by the Commissioner.
91AAW Non-reporting financial institutions and excluded accounts for CRS applied standard 5 10 15 (1) The Commissioner may determine that, for the purposes of the CRS applied standard and requirements under Part 11B,— (a) a financial institution, or type of financial institution, is a non-reporting financial institution: (b) a financial account, or type of financial account, is an excluded account.
20 (2) (3) The determination may set out the period for which it is to apply, which must begin after 31 March 2017.

The determination may provide for the change, extension, limitation, suspen- sion, or cancellation of an earlier determination.
(4) Within 30 days of issuing, changing, extending, limiting, suspending, or can- celling a determination under this section, the Commissioner must publish in a publication chosen by the Commissioner— 25 (a) (b) the determination: details of a changed, extended, limited, suspended, or cancelled deter- mination.
30 13 New sections 142H and 142I inserted After section 142G, insert: 142H Failures of financial institutions to meet requirements under Part 11B and CRS applied standard (1) If a financial institution fails to meet a requirement under Part 11B and the CRS applied standard for financial accounts maintained by the financial institu- tion, other than a requirement referred to in subsection (3), the financial in- 35 15 Part 1 cl 13 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill stitution is liable to pay a penalty of $300 for each failure to which subsec- tion (2) does not apply.
(2) A financial institution is not liable to pay a penalty under subsection (1) for a failure that occurs before 1 April 2019 if the Commissioner is satisfied that the financial institution makes reasonable efforts to meet the requirement and reasonable efforts to correct the failure within a reasonable period after the fi- nancial institution becomes aware of the failure.
(3) If a financial institution fails to meet a requirement under Part 11B and the CRS applied standard to obtain self-certifications when opening a financial ac- count, the financial institution is liable to pay a penalty of $300 for each ac- count if subsection (4) does not apply to the failure.
(4) A financial institution is not liable to pay a penalty under subsection (3) for a failure that occurs before 1 April 2019 for an account if the Commissioner is satisfied that the financial institution makes reasonable efforts to meet the re- quirement and makes reasonable efforts to correct the failure for the account within a reasonable period after the financial institution becomes aware of the failure.
(5) If a financial institution fails to take reasonable care to meet a requirement of a financial institution under Part 11B and the CRS applied standard for financial accounts, the financial institution is liable to pay a penalty of— 5 10 15 20 (a) (b) $20,000 for the first failure: $40,000 for each further failure.
142I Failures to meet requirements under Part 11B to provide information or self-certifications This section applies to a person or entity (the information provider) required under Part 11B to provide information, or a self-certification, relating to a per- son or entity for a financial account.
25 The information provider is liable to pay a penalty of $1,000 if the information provider— (a) (b) (c) (d) (e) (f) provides false information relating to the information provider: 30 signs or otherwise affirms a false self-certification for the information provider: provides false information relating to another person or entity: provides a false self-certification for another person or entity: fails to provide information relating to the information provider within a reasonable time after receiving a request for which the information is re- quired to be provided: fails to sign, or otherwise affirm, and provide a self-certification relating to the information provider within a reasonable time after receiving a re- quest for which the self-certification is required to be provided: 35 40 (1) (2) 16 (g) (h) (i) Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 1 cl 16 fails to provide information relating to another person or entity within a reasonable time after receiving a request for which the information is re- quired to be provided: fails to provide a self-certification relating to another person or entity within a reasonable time after receiving a request obliging the self-certif- ication to be provided: 5 after providing a person or entity with a self-certification or information, fails to inform the person or entity of a material change in the circum- stances relating to the self-certification or information within a reason- able time after the information provider becomes aware of the change.
10 15 20 25 (3) An information provider is not liable to pay a penalty under subsection (2) for a failure to provide information, or a self-certification, within the control of the information provider, if the Commissioner is satisfied that the failure occur- red through no fault of the information provider.
(4) An information provider is not liable to pay a penalty under subsection (2) for a failure to provide information, or a self-certification, relating to another person or entity and not within the control of the information provider, if the Commissioner is satisfied that the information provider makes reasonable ef- forts to meet the requirement.
14 Section 143 amended (Absolute liability offences) After section 143(2B), insert: (2C) No person may be convicted of an offence against subsection (1) if the require- ment with which the person fails to comply is a requirement under the CRS ap- plied standard and Part 11B.
15 Section 143A amended (Knowledge offences) (1) After section 143A(1)(ab), insert: (ac) knowingly fails to provide a self-certification to another person when re- quired to do so under Part 11B; or (2) In section 143A(2), words before paragraph (a),— (a) after “offence against”, insert “subsection (1)(ac) for knowingly fail- ing to provide a self-certification to another person or against”: 30 (b) delete “by the Commissioner”.
16 Section 185E amended (Purpose) In section 185E, insert as subsections (2) to (4): (2) (3) Sections 185F to 185M impose requirements on a person relating to informa- tion that is the subject of the FATCA agreement.

35 Sections 185N and 185O impose requirements on a person relating to infor- mation that is the subject of the CRS applied standard.
17 Part 1 cl 17 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (4) Sections 185P to 185R impose requirements on a person relating to either of the FATCA agreement and the CRS applied standard.

17 New heading inserted after section 185E After section 185E, insert as a heading “FATCA agreement”.
Section 185F amended (Permitted choices in relation to foreign account information-sharing agreements) 5 In section 185F, heading, replace “foreign account information-sharing agreements” with “FATCA agreement”.

In section 185F(1), replace “a foreign account information-sharing agreement” with “the FATCA agreement”.
10 Section 185G amended (Obligations related to foreign account information-sharing agreements: registration) In section 185G, heading, replace “foreign account information-sharing agreements” with “FATCA agreement”.

In section 185G, replace “a foreign account information-sharing agreement” with “the FATCA agreement”.
15 Section 185H amended (Obligations related to foreign account information-sharing agreements: due diligence) In section 185H, heading, replace “foreign account information-sharing agreements” with “FATCA agreement”.

20 In section 185H, replace “a foreign account information-sharing agreement” with “the FATCA agreement”.
Section 185I amended (Obligations related to foreign account information- sharing agreements: information for NZ competent authority) In section 185I, heading, replace “foreign account information-sharing agreements” with “FATCA agreement”.

25 In section 185I(1), replace “a foreign account information-sharing agreement” with “the FATCA agreement”.
Section 185J amended (Obligations related to foreign account information-sharing agreements: information for third parties) 30 In section 185J, heading, replace “foreign account information-sharing agreements” with “FATCA agreement”.

In section 185J(1), replace “a foreign account information-sharing agreement” with “the FATCA agreement”.
18 (1) (2) 19 (1) (2) 20 (1) (2) 21 (1) (2) 22 (1) (2) 18 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 1 cl 24 23 Section 185L repealed (Foreign account information-sharing agreements: anti-avoidance) Repeal section 185L.
24 New headings and sections 185N to 185R inserted (1) After section 185M, insert: Multilateral convention and CRS standard 185N Requirements for financial institution (1) A financial institution must comply with this section for a period in which the financial institution is— (a) (b) resident in New Zealand under the CRS applied standard: a branch located in New Zealand under the CRS applied standard.
(2) For the purposes of subsection (1), the requirements for a financial institu- tion that is resident in New Zealand do not include requirements for a branch of the financial institution that is not located in New Zealand.
(3) The financial institution must, for each reporting period,— 5 10 15 (a) (b) (c) perform the due diligence procedures required by the CRS applied stand- ard for each financial account that is maintained by the financial institu- tion in the reporting period; and obtain the documents and information, for each financial account, that the CRS applied standard requires the financial institution to obtain; and 20 obtain, as part of the due diligence procedures for each new financial ac- count, for each account holder or controlling person identified by the fi- nancial institution as being a resident of a foreign jurisdiction,— (i) (ii) the date of birth for an individual; and the taxpayer identification number (TIN), if the foreign jurisdic- tion issues a TIN and has domestic law requiring that the TIN be collected; and (d) give to the Commissioner a report of the information that this Part re- quires the financial institution to provide to the competent authority.
(4) (5) The report by the financial institution for a reporting period must be given to the Commissioner by the 30 June following the 31 March that is the end of the reporting period, except as given by subsection (5).
The first report by the financial institution for information with respect to a fi- nancial account that is maintained by a financial institution in a reportable period must be given to the Commissioner by— (a) 30 June 2018, if the financial account is identified before that date as a reportable account that is a pre-existing individual account and a high value account: 25 30 35 19 Part 1 cl 24 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (6) (7) (b) 30 June 2019, if the financial account is identified before that date as a reportable account that is a pre-existing entity account or that is a pre- existing individual account and a lower value account.
In determining the aggregate balance or value of financial accounts, the finan- cial institution must apply the rules in Section VII, subparagraph C(1) to (3) of the CRS applied standard.
5 The financial institution may choose that the reporting requirements given by the CRS applied standard for financial accounts held or controlled by a resident of a reportable jurisdiction apply to all financial accounts maintained by the fi- nancial institution and held or controlled by a resident of a foreign jurisdiction.

(8) A financial institution that makes the election referred to in subsection (7) must make reports that are consistent with the chosen reporting requirements.
(9) A financial institution that chooses to review all pre-existing entity accounts must complete the review by the date given in Section V, subparagraph D(1) of the CRS applied standard for completion of the review of pre-existing entity accounts with the specified aggregate account balance or value.
(10) A financial institution that chooses to treat a discretionary beneficiary of a trust as not being a controlling person for the trust until the beneficiary receives a distribution must have reasonable safeguards and procedures for identifying when a distribution is made to the beneficiary.
(11) The financial institution is not permitted to choose for a report— (a) (b) to use a reporting period other than a period ending with a 31 March: to give the average balance of a financial account for a reporting period as being the balance for the financial account for the reporting period.

(12) The report must be in the prescribed electronic format.
185O Application of Common Reporting Standard This section provides for the application of the CRS standard in determining the requirements for a person or entity under the Inland Revenue Acts.

The CRS standard is modified for the purposes of determining the require- ments for a person or entity under the Inland Revenue Acts in the ways speci- fied in schedule 2.
The CRS standard is treated as applying at a time— (a) (b) as modified by subsection (2); and consistently with the Commentary on the CRS standard contained in Part IIIB of the CRS publication, as amended at the time.

In the application of the CRS standard at a time, a term defined in the CRS standard or the MCMAA convention and used in the Inland Revenue Acts has the meaning that it has at the time under the CRS standard or the MCMAA convention, as modified by subsection (2).
(1) (2) (3) (4) 20 10 15 20 25 30 35 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 1 cl 24 (5) A person or entity may make an election that is expressed as being available to a person or entity, if the election is not contrary to this Act and not otherwise contrary to the law of New Zealand.
Foreign account information-sharing agreements generally 185P Requirements for persons to provide information to financial institution 5 (1) This section applies to a person or entity associated with a financial account if the financial institution that maintains the financial account is required under the FATCA agreement or CRS applied standard (the account requirements) to perform due diligence for the financial account.
(2) When a financial institution requests a person or entity (the institution con- tact) to provide information or a self-certification that the financial institution is required to obtain under the account requirements for the financial account, the institution contact must— 10 (a) provide to the financial institution the required information or self-certif- ication for the institution contact; and 15 (b) make reasonable efforts to obtain the required information or self-certifi- cation for each other person or entity associated with the financial ac- count, and provide the information and self-certifications to the financial institution.
(3) When a person or entity associated with the financial account (the secondary contact) is asked by an institution contact or other person or entity (the re- questing person) to provide information or self-certifications related to the fi- nancial account and referred to in subsection (2)(b), the secondary contact must— 20 (a) provide the requesting person with the required information or self-cer- tification for the secondary contact; and 25 (b) make reasonable efforts to obtain the required information or self-certifi- cation for each other person or entity associated with the financial ac- count and the secondary contact, and provide the information and self- certifications to the requesting person.
(4) If a person or entity provides information or a self-certification to another per- son or entity as required by this section, the person or entity must inform the other person or entity of any material change in circumstances affecting that in- formation or self-certification within a reasonable time of becoming aware of the material change.
185Q Requirements and penalties for entities that are not persons (1) If the FATCA agreement or CRS applied standard, or a related provision in this Act, is expressed as imposing a requirement or penalty on an entity that is not a person, the meeting of the requirement or the payment of the penalty for the entity is treated as being a joint and several requirement,— 30 35 40 21 Part 1 cl 25 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (a) (b) (c) (d) if the entity is a trust, for each trustee: if the entity is a partnership, for each partner: if the entity is a joint venture, for each member of the joint venture: if the entity is a legal relationship between persons or entities that is not referred to in paragraphs (a) to (c), for each person or entity in the relationship.
5 (2) If the FATCA agreement or CRS applied standard, or a related provision in this Act is expressed as requiring information to be provided to an entity that is not a person, the requirement is treated as being to provide the information to the persons given for the entity by subsection (1)(a) to (d).
10 185R Foreign account information-sharing agreements: anti-avoidance (1) (2) (2) 25 If a main purpose of a person in entering an arrangement is to avoid a require- ment under this Part, the arrangement is treated as having no effect in relation to the person’s requirements under this Part.

The person has the requirements under this Part that the Commissioner con- siders to be appropriate in the absence of the arrangement.
15 Subsection (1) applies for arrangements affecting the requirements of a per- son under this Part for a reporting period ending after 31 March 2017.
New section 226D inserted (Reportable jurisdictions for CRS standard and Part 11B) 20 After section 226C, insert: 226D Reportable jurisdictions for CRS standard and Part 11B (1) The Governor-General may from time to time, by Order in Council, make regulations providing that a territory outside New Zealand is a reportable juris- diction for the purposes of the CRS applied standard.

25 (2) A regulation may set out the period for which it is to apply, which must begin after 31 March 2017.
(3) A regulation may provide for the change, extension, limitation, suspension, or cancellation of an earlier regulation.

(4) Within 30 days of the making of a regulation under this section, the Commis- 30 sioner must publish in a publication chosen by the Commissioner— (a) (b) the new or changed regulation: details of the extension, limitation, suspension, or cancellation of the regulation.
The effect of a regulation providing that a territory outside New Zealand is a reportable jurisdiction may be suspended by a determination made by the Com- missioner under section 91AAV.

35 (5) 22 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 2 cl 29 26 New schedule 2 inserted (Application of CRS standard) After the schedule in the Tax Administration Act 1994, insert the schedule 2 set out in schedule 1 of this Act.
Part 2 Business tax: AIM provisional tax method Subpart 1—Amendments to Income Tax Act 2007 27 Income Tax Act 2007 amended This subpart amends the Income Tax Act 2007.

28 Section LA 6 amended (Remaining refundable credits: PAYE, RWT, and certain other items) (1) After section LA 6(2)(d), insert: (db) sixth, if the person is a company and uses the AIM method for provi- sional tax, transfer a tax credit to a shareholder of the company of the amount described in subsection (2C).
The amount transferred does not give rise to a tax credit, but is treated as a transferred amount for the shareholder for the purposes of Part 7 of the Tax Administration Act 1994, for the tax year that the tax credit relates to, as provided by sec- tion 120LB of that Act.

The amount is also treated as a refund of in- come tax paid to the company for the purposes of section OB 32 (ICA refund of income tax): In section LA 6(2)(e), replace “fifth” with “seventh”.
Before section LA 6(3), insert: AIM method amount (2) (3) (2C) The amount must not be more than the least of the following: (a) (b) (c) the amount chosen by the company; and the amount of the shareholder’s tax credit under section LB 2 for the tax year less the shareholder’s residual income tax for the tax year, treat- ing a negative amount as zero; and the amount of the company’s tax credit under section LB 2 for the tax year less its residual income tax for the tax year, treating a negative amount as zero.
In section LA 6, in the list of defined terms insert “company”, “income tax”, “residual income tax”, and “shareholder”.

Section RA 14 amended (Payment dates for provisional tax) In section RA 14, replace “F” with “F1”.

This section applies for the 2018–19 and later income years.
(4) 29 (1) (2) 23 Part 2 cl 30 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 30 (1) (2) 31 Section RC 1 amended (What this subpart does) In section RC 1(2) replace “the letters A to F” with “the alphanumeric designa- tions A to F1”.

This section applies for the 2018–19 and later income years.
Section RC 5 amended (Methods for calculating provisional tax liability) 5 (1) After section RC 5(5), insert: AIM method (5B) A person must use the AIM method under section RC 7B to determine their provisional tax liability for the tax year (the current tax year) if the person— (a) (b) has chosen to use the AIM method for the current tax year before the first instalment date for them under the AIM method; and 10 has an AIM-capable accounting system that is up-to-date for tax law for the corresponding income year and for determinations under section 91AAX of the Tax Administration Act 1994 for the corresponding in- come year; and (c) has— (i) (ii) annual gross income of $5,000,000 or less for the tax year before the current tax year: annual gross income of $5,000,000 or less for the first tax year for which the person used the AIM method, and the Commissioner has approved under section 45D of the Tax Administration Act 1994 the person’s continued use of an AIM-capable accounting system for tax years in which the person has annual gross income of more than $5,000,000: (iii) a large business AIM-capable system; and 15 20 25 (d) (e) (f) (g) has not been liable, in 1 of the last 4 tax years before the current tax year, for a shortfall penalty in relation to their use of the AIM method and an approved AIM provider’s AIM-capable accounting system; and has not consistently and systematically returned tax liabilities using the AIM method that are inaccurate assessments of their tax liabilities; and 30 is not a member of a class of taxpayers that the Commissioner has deter- mined, under section 91AAY of the Tax Administration Act 1994, must not use the AIM method; and for the current tax year, has not failed more than twice to give the Com- missioner information in the prescribed form, as provided by section 45 of the Tax Administration Act 1994.
35 AIM method: exception (5C) A person who does not meet the requirements of subsection (5B) can not use the AIM method for the current tax year.

If they can not use the AIM method 24 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 2 cl 32 for the current year because part-way through the corresponding income year the person stops meeting the requirements of subsection (5B), the person is treated as using the estimation method for the whole of the current tax year.
In section RC 5, in the list of defined terms, insert “AIM-capable accounting system”, “annual gross income”, “instalment date”, “large business AIM-cap- able system”, “shortfall penalty”, and “taxpayer”.

5 This section applies for the 2018–19 and later income years.
New section RC 7B inserted (AIM method) (2) (3) 32 (1) After section RC 7, insert: RC 7B AIM method When this section applies (1) This section applies to— (a) (b) a person who meets the requirements of section RC 5(5B); and the calculation of the amount of provisional tax payable for a tax year under the AIM method.

AIM method (2) A person must use an AIM-capable accounting system for the calculation of provisional tax payable for a tax year.
Meaning of AIM-capable accounting system 10 15 (3) AIM-capable accounting system means a double-entry accounting system 20 that is an approved AIM provider’s product, and uses a core software package from an approved AIM provider, if the system has the following features: (a) a core software accounting package that provides the ability to— (i) (ii) (iii) (iv) (v) generate and keep comprehensive financial accounts, including accounting income and expenditure, ledger accounts, trial balan- ces, bank account reconciliations, and journals, on an on-demand basis, in accordance with good accounting and tax practice; and calculate tax liabilities for the tax year using tax adjustments for the financial accounts, in accordance with a determination under section 91AAX of the Tax Administration Act 1994; and for amounts not covered by a determination under subpara- graph (ii), calculate tax liabilities for the tax year using tax ad- justments for the financial accounts that result in reasonably ac- curate assessments of tax liabilities for a person; and 25 30 recalculate all financial accounts and tax liabilities, if retrospect- ive adjustments are required for the year to date; and 35 produce reports and other information as required by the Commis- sioner, in formats prescribed by the Commissioner; and 25 Part 2 cl 33 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (b) electronic communication facilities for— (i) giving information in the form prescribed by the Commissioner; and (ii) sending and receiving messages and notifications; and (c) help documentation for end-users and their tax agents on the use of the package, with ongoing support provided by the approved AIM provider on the use of the package.
5 Defined in this Act: AIM-capable accounting system, approved AIM provider, Commissioner, per- son, provisional tax, tax agent, tax year (2) 33 This section applies for the 2018–19 and later income years.
Section RC 9 amended (Provisional tax payable in instalments) (1) After section RC 9(4)(b), insert: (bb) to a person that uses the AIM method for the tax year: (2) After section RC 9(4), insert: AIM method (4B) A person liable to pay provisional tax who uses the AIM method for the current tax year must pay provisional tax— (a) (b) (c) if the person is not registered for GST, or has a 6-month taxable period under section 15 of the Goods and Services Tax Act 1985, on the 6 in- stalment dates in the months set out in schedule 3, part A, columns A, B, C, D, E, and F for their balance date.
The amount of each instalment is provided by section RC 10B; or if the person has a 2-month taxable period under section 15 of the Goods and Services Tax Act 1985, on the group of 6 instalment dates in the months set out in either schedule 3, part A, columns A, B, C, D, E, and F or in schedule 3, part A, columns A1, B1, C1, D1, E1, and F1 that cor- responds to the due dates for their GST returns.
The amount of each in- stalment is provided by section RC 10B; or if the person has a 1-month taxable period under section 15 of the Goods and Services Tax Act 1985, on the 12 instalment dates in the months set out in schedule 3, part A, columns A to F1 for their corresponding in- come year.

The amount of each instalment is provided by section RC 10B.

10 15 20 25 30 In section RC 9(6), replace “columns A to F” with “columns A, B, C, D, E, and F”.
35 In section RC 9, in table R1, after the row labelled “Estimation RC 5(5)”, insert the following row: AIM RC 5(5B) 2 month 1 month RC 7B RC 7B 6: RC 9(4B)(a) A, B, C, D, E, and F A to F1 RC 10B RC 10B 120K BC (3) (4) 26 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 12: RC 9(4B)(b) Part 2 cl 36 120K BC (5) (6) 34 In section RC 9, in table R1, in the row labelled “GST ratio RC 5(6)”, replace “A to F” with “A, B, C, D, E, and F” in both places in which it appears.
This section applies for the 2018–19 and later income years.
New section RC 10B inserted (Calculating amount of instalment for periods using AIM method) (1) After section RC 10, insert: RC 10B Calculating amount of instalment for periods using AIM method For a person who uses the AIM method, the amount of provisional tax payable on an instalment date for a tax year is the amount calculated using an AIM- capable accounting system for the 2-monthly or monthly period given by schedule 3, part AB (Payment of provisional tax and terminal tax) for the applicable instalment date.
Defined in this Act: AIM-capable accounting system, instalment date, person, provisional tax This section applies for the 2018–19 and later income years.

Section RC 24 amended (Calculating instalments in transitional years: GST ratio method) In section RC 24(2), replace “instalments A to F” with “instalments A, B, C, D, E, and F”.

This section applies for the 2018–19 and later income years.
New section RM 6B inserted (Refunds for overpaid AIM method instalments) (2) 35 (1) (2) 36 (1) Before section RM 7, insert: RM 6B Refunds for overpaid AIM method instalments Refund (1) The Commissioner must refund to a person the amount given by the formula in subsection (2), if the person uses the AIM method for a tax year and gives the Commissioner the required information in the form prescribed under sec- tion 45 of the Tax Administration Act 1994 (the form).
Formula (2) For the purposes of subsection (1) the refund amount is— AIM payments year to date − AIM year to date.
Definition of items in formula (3) In the formula— 27 Part 2 cl 37 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (a) AIM payments year to date means the amount of provisional tax paid by the person for the tax year on and before the last day of the instalment period that the form relates to: (b) AIM year to date means the amount of provisional tax liability that the person would have if the AIM method was applied for the period starting at the beginning of the tax year and finishing on the last day of the in- stalment period that the form relates to.
Defined in this Act: Commissioner, instalment date, provisional tax, tax year This section applies for the 2018–19 and later income years.

Section RP 17 amended (Tax pooling intermediaries) In section RP 17(1)(a), replace “provisional tax” with “provisional tax other than under the AIM method”.

This section applies for the 2018–19 and later income years.
5 10 Section RP 17B amended (Tax pooling accounts and their use) In section RP 17B(2)(a), replace “provisional tax” with “provisional tax other than under the AIM method”.

15 In section RP 17B(4), in the words before the paragraphs, replace “provisional tax” with “provisional tax other than under the AIM method”.

This section applies for the 2018–19 and later income years.
Section RP 19B amended (Transfers for certain expected tax liabilities) 20 In section RP 19B(1)(a), replace “provisional tax liability” with “provisional tax liability other than under the AIM method”.

This section applies for the 2018–19 and later income years.

Section YA 1 amended (Definitions) This section amends section YA 1.
Insert, in appropriate alphabetical order: AIM-capable accounting system is defined in section RC 7B (AIM method) Insert, in appropriate alphabetical order: approved AIM provider means a person that the Commissioner has approved as an approved AIM provider under section 15U of the Tax Administration Act 1994, if the approval has not been revoked under section 15V of that Act Insert, in appropriate alphabetical order: large business AIM-capable system means an AIM-capable accounting sys- tem approved by the Commissioner under section 45C of the Tax Adminis- tration Act 1994 for use by an approved class of taxpayers with annual gross income of more than $5,000,000 25 30 35 (2) 37 (1) (2) 38 (1) (2) (3) 39 (1) (2) 40 (1) (2) (3) (4) 28 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 2 cl 41 41 (1) (2) Schedule 3 amended (Payment of provisional tax and terminal tax) In schedule 3, in the shoulder references, insert “RC 10B”.
In schedule 3, part A, replace the table with: 29 Part 2 cl 41 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (3) In schedule 3, after part A, insert: 30 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part
 2 cl 44 Part AB Calculation periods for AIM method Instalment date 6 instalments: 2-monthly period 12 instalments: monthly period 15 Jan 28 Jan 28 Feb 28 Mar 7 May 28 May 28 Jun 28 Jul 28 Aug 28 Sep 28 Oct 28 Nov Oct, Nov Nov, Dec Dec, Jan Jan, Feb Feb, Mar Mar, Apr Apr, May May, Jun Jun, Jul Jul, Aug Aug, Sept Sept, Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct How to use this table: Find the applicable instalment date in the first column, and use the period for that instalment in the second column if section RC 9(4B)(a) applies or use the period in the third column if section RC 9(4B)(c) applies.
(4) This section applies for the 2018–19 and later income years.

Subpart 2—Amendments to Tax Administration Act 1994 42 Tax Administration Act 1994 amended 5 This subpart amends the Tax Administration Act 1994.

Section 3 amended (Interpretation) In section 3(1), in the definition of tax position, after paragraph (k), insert: (kb) the use of the AIM method for provisional tax and the software product of an approved AIM provider: 10 This section applies for the 2018–19 and later income years.
New heading and sections 15U to 15X inserted 43 (1) (2) 44 (1) After section 15T, insert: Approved AIM providers 15U Approval of approved AIM providers The Commissioner may approve a person as an approved AIM provider in rela- tion to 1 or more of the person’s AIM-capable accounting systems (the prod- ucts), if approving the person would not negatively affect the integrity of the tax system and the person makes a statutory declaration of the following mat- ters and gives it to the Commissioner, namely a declaration: (a) specifying the name of the products; and 15 20 31 Part 2 cl 44 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (b) (c) declaring that the product is updated regularly, to reflect changes in tax law or Commissioner’s requirements (for example: the software is up- dated to reflect a change in a determination by the Commissioner under section 91AAX); and declaring any other matters required by the Commissioner to be declared for the purposes of assuring the Commissioner that the person’s product accurately calculates and communicates, in accordance with the Com- missioner’s requirements, tax liabilities that are reasonably accurate as- sessments of tax liabilities for the relevant accounting income and ex- penditure.
15V Revocation of approval of AIM providers: Commissioner (1) The Commissioner’s approval of a person as an approved AIM provider under section 15U is revoked if— (a) anything in their statutory declaration under section 15U is not true, or does not continue to be true after it is made; or (b) revoking the approval positively affects the integrity of the tax system.
(2) A revocation under subsection (1) does not take effect until the tax year after the tax year in which the Commissioner has notified the approved AIM pro- vider of the revocation.

5 10 15 The Commissioner must consult the approved AIM provider before the appro- val is revoked.
20 The Commissioner may reverse a revocation before it takes effect, if the cir- cumstances that gave rise to the revocation have been remedied by the ap- proved AIM provider and there are no other circumstances requiring revocation under subsection (1).
(3) (4) 15W Revocation of approval of AIM providers: provider (1) The Commissioner’s approval of a person as an approved AIM provider under section 15U is revoked if the person notifies the Commissioner of the per- son’s choice to revoke the Commissioner’s approval.

(2) A revocation under subsection (1) does not take effect until the tax year after the tax year in which the Commissioner has received notification of the revoca- tion.
(3) A person who has given notice under subsection (1) must immediately give notice of their choice to revoke to all end-users of the person’s products that will be affected by the revocation.

15X Publication of approval, revocation, etc The Commissioner may publish a notice in a publication chosen by the Com- missioner in relation to any matter in sections 15U, 15V, and 15W.

This section applies for the 2018–19 and later income years.
(2) 32 25 30 35 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 2 cl 46 45 New sections 45, 45B, 45C, and 45D inserted (1) After section 44D, insert: 45 AIM method information: taxpayers A person that uses the AIM method as described in section RC 5(5B) of the Income Tax Act 2007 must give to the Commissioner on or before an instal- ment date, information required by the Commissioner in relation to the instal- ment, the person’s use of the AIM method, and their use of an approved AIM provider’s AIM-capable accounting system, and any other information required by the Commissioner in the form prescribed by the Commissioner, even if the amount to pay for the instalment date is zero or a refund.
45B AIM method information: approved AIM providers (1) An approved AIM provider must give to the Commissioner information re- quired by the Commissioner in relation to their AIM-capable accounting sys- tem products, end-user’s use of the products for a tax year, and any other mat- ters relevant to the AIM method for the tax year, in the form prescribed by the Commissioner.

5 10 15 (2) (3) The Commissioner must not require taxpayer-specific information under this section.
The form must be given to the Commissioner within 6 months of the end of the tax year.
20 45C AIM method: approval of large business AIM-capable system For the purposes of section RC 5(5B)(c)(iii) and the definition of large busi- ness AIM-capable system in section YA 1 of the Income Tax Act 2007, the Commissioner may approve an AIM-capable accounting system for use by a class of taxpayers with annual gross income of more than $5,000,000, if the Commissioner decides that there is minimal risk that the approval will result in less net revenue collectable from the class of taxpayers over time.
45D AIM method: approval of person over $5,000,000 For the purposes of section RC 5(5B)(c)(ii) of the Income Tax Act 2007, the Commissioner may approve a person’s continued use of an AIM-capable ac- counting system for tax years in which the person has annual gross income of more than $5,000,000, if the Commissioner decides that there is minimal risk that the approval will result in less net revenue collectable from the person over time.

This section applies for the 2018–19 and later income years.
New heading and sections 91AAX and 91AAY inserted Before Part 5A, insert: (2) 46 (1) 25 30 35 33 Part 2 cl 47 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Determinations relating to AIM method 91AAX Accounting determinations relating to AIM method (1) The Commissioner may determine, for the purposes of section RC 7B(3)(iv) of the Income Tax Act 2007, tax adjustments for accounting income and ex- penditure under the AIM method.
5 (2) In making a determination the Commissioner must have regard to— (a) (b) (c) the accuracy of assessments of tax liabilities that would result from the use of the tax adjustments: the compliance costs incurred by taxpayers: the resources available to approved AIM providers.

(3) A determination may set out the tax year or years for which it is to apply, or a date from which it is to apply (the implementation date).
(4) A determination (a later determination) may provide for the extension, limita- tion, variation, cancellation, or revocation of an earlier determination.

The Commissioner must give at least 120 days notice of the implementation date of that later determination, in a publication chosen by the Commissioner.

(5) All determinations under this section must be published within 30 days of the making of the determination, in a publication chosen by the Commissioner.
The implementation date must not be retrospective.

91AAY Class of taxpayers that must not use AIM method (1) (2) The Commissioner may determine, for the purposes of section RC 5(5B)(f) of the Income Tax Act 2007, that a class of taxpayers must not use the AIM method.

In making a determination the Commissioner must have regard to the risk that allowing the class of taxpayers to use the AIM method will result in less net revenue collectable from the class of taxpayers over time.
(3) A determination may set out the tax year or years for which it is to apply, or a date from which it is to apply (the implementation date).

(4) A determination (a later determination) may provide for the extension, limita- tion, variation, cancellation, or revocation of an earlier determination.

The Commissioner must give at least 120 days notice of the implementation date of that later determination, in a publication chosen by the Commissioner.
(5) All determinations under this section must be published within 30 days of the making of the determination, in a publication chosen by the Commissioner.

(2) 47 This section applies for the 2018–19 and later income years.
Section 119 amended (Commissioner may determine amount of provisional tax) (1) After section 119(1)(c), insert: 10 15 20 25 30 35 34 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 2 cl 49 (cb) the taxpayer is using the AIM method and the approved AIM provider’s product that they are using calculates tax liabilities that are not reason- ably accurate assessments of tax liabilities for the relevant income and expenditure; or This section applies for the 2018–19 and later income years.
New section 120KBC inserted (Interest for AIM method provisional taxpayers) (2) 48 (1) Before section 120KC, insert: 120KBC Interest for AIM method provisional taxpayers (1) This section applies if, for a tax year,— 5 10 (a) (b) a person is liable to pay provisional tax for the tax year and uses the AIM method described in section RC 5(5B) of the Income Tax Act 2007; and there is no provisional tax interest avoidance arrangement in relation to the person.
15 (2) If the person pays the amount of all 6 or 12 instalments, as applicable, on the instalment dates for the tax year in accordance with sections RC 9 and RC 10B of the Income Tax Act 2007, then, despite section 120KB(2) of this Act,— (a) (b) the person’s residual income tax for the tax year is not due and payable as set out in section RC 9 of the Income Tax Act 2007; and the amount of their residual income tax minus the total amount paid in relation to the instalments for the tax year is due and payable in 1 instal- ment on their terminal tax date.
If the person fails to pay the amount of an instalment on the relevant instalment date for the tax year (a failed instalment) in accordance with sections RC 9 and RC 10B of the Income Tax Act 2007, then, despite section 120KB(2) of this Act, the person’s residual income tax for the tax year is not due and paya- ble as set out in section RC 9 of the Income Tax Act 2007 for the instalment date.

20 25 30 This section applies for the 2018–19 and later income years.
Section 120KC amended (Residual income tax of new provisional taxpayer) In section 120KC(2) replace “the letters A to F” with “the alphanumeric desig- nations A to F1”.

35 (3) (2) 49 (1) (2) This section applies for the 2018–19 and later income years.
35 Part 2 cl 50 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 50 Section 120KE amended (Provisional tax and rules on use of money interest) (1) After section 120KE(1)(c), insert: (cb) they have not used the AIM method under section RC 7B of that Act in the tax year to determine the amount of provisional tax payable for the tax year; and 5 In section 120KE(8) replace “the letters A to F” with “the alphanumeric desig- nations A to F1”.
This section applies for the 2018–19 and later income years.
New section 120LB inserted (Meaning of unpaid tax and overpaid tax for tax credit transferees under AIM method) 10 (2) (3) 51 After section 120L, insert: 120LB Meaning of unpaid tax and overpaid tax for tax credit transferees under AIM method (1) For the purposes of determining amounts of unpaid tax, overpaid tax, and inter- est under a provision of this Part in relation to an instalment date for a tax year, for a person that is a provisional taxpayer for the year,— (a) (b) (c) the total amounts transferred to them for the year as a shareholder under section LA 6(2)(db) of the Income Tax Act 2007 (the total transfer- red amounts), are pro-rated against all instalments for the year; and if there is an amount of overpaid or underpaid tax under a provision for the instalment, the pro-rated amount for the instalment is subtracted from the underpaid tax amount or added to the overpaid tax amount under the provision; and to the extent to which paragraph (b) does not apply for the pro-rated amount for the instalment, the amount is overpaid tax under the provi- sion for an instalment.
(2) If section 120KBB(2) applies to the person, subsection (1) does not apply, and— (a) (b) if there is an amount of overpaid or underpaid tax under section 120KBB for the third instalment, the person’s total transferred amounts are subtracted from the underpaid tax amount or added to the overpaid amount under section 120KBB; and to the extent to which paragraph (a) does not apply for the total trans- ferred amounts, the amounts are overpaid tax under section 120KBB(2) for the third instalment.
52 New section 120VB inserted (Interest on overpaid AIM method provisional tax) 15 20 25 30 35 (1) After section 120V, insert: 36 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 56 120VB Interest on overpaid AIM method provisional tax No interest shall be payable by the Commissioner under section 120D(3) on an amount of AIM method provisional tax described in section RM 6B(2) of the Income Tax Act 2007.

This section applies for the 2018–19 and later income years.
Section 141 amended (Tax shortfalls) In section 141(14), in the words before paragraph (a), replace “provisional tax- payer,” with “provisional taxpayer other than a date and taxpayer using the AIM method,”.

This section applies for the 2018–19 and later income years.
Section 141B amended (Unacceptable tax position) (2) 53 (1) (2) 54 (1) After section 141B(1D), insert: (1E) A taxpayer does not take an unacceptable tax position merely by using the AIM method and an approved AIM provider’s AIM-capable accounting sys- tem.

(1F) Subsection (1E) does not apply for a taxpayer that— (a) (b) is approved under section 45D: uses a large business AIM-capable system.

(2) This section applies for the 2018–19 and later income years.
Part 3 Business tax and remedial matters Subpart 1—Amendments to Income Tax Act 2007 55 Income Tax Act 2007 amended This subpart amends the Income Tax Act 2007.
56 (1) Section CD 32 amended (Employee benefits) Replace section CD 32(1), other than the heading, with: (1) A benefit provided to an employee is not a dividend if— (a) (b) it is a fringe benefit subject to fringe benefit tax; or it would be a fringe benefit subject to fringe benefit tax if an election had not been made under section CX 17(4B) (Benefits provided to em- ployees who are shareholders or investors).

(2) (3) In section CD 32, in the list of defined terms, insert “employee”.
This section applies for the 2017–18 and later income years.

5 10 15 20 25 30 37 Part 3 cl 57 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 57 Section CE 2 amended (Value and timing of benefits under share purchase agreements) (1) Replace section CE 2(11), other than the heading, with: (11) The employee is treated as deriving employment income in relation to the benefit in the PAYE income payment form period after the 1 in which they re- ceive the benefit.
5 (2) (3) 58 In section CE 2, in the list of defined terms, insert “PAYE income payment form period”.

This section applies for the 2017–18 and later income years.
Section CX 6 amended (Private use of motor vehicle) (1) After section CX 6(2), insert: Exclusion: election by close company (2B) Subsection (1) does not apply if the employee is a shareholder-employee of a close company and the close company made an election under section CX 17(4B) to apply subpart DE (Motor vehicle expenditure) instead of the FBT rules.

(2) (3) 59 (1) In section CX 6, in the list of defined terms, insert “close company”, “FBT rules”, and “shareholder-employee”.
This section applies for the 2017–18 and later income years.

Section CX 17 amended (Benefits provided to employees who are shareholders or investors) In the title to section CX 17(3), replace “Exclusion” with “Exclusion: benefit provided to non-executive director”.
(2) After section CX 17(4), insert: Exclusion: election by close company (4B) Despite subsection (4), subsection (2) does not apply and the benefit is neither a fringe benefit nor a dividend in an income year if— 10 15 20 25 (a) the benefit— (i) arises when a close company makes a motor vehicle available to a shareholder-employee for their private use; and 30 (ii) would, in the absence of this subsection, be a fringe benefit arising under section CX 6; and (b) (c) the total benefits the close company provides to all shareholder-employ- ees in the income year are 1 or 2 of the benefits described in paragraph (a); and the close company chooses to apply subpart DE (Motor vehicle expend- iture) for the motor vehicle and the shareholder-employee instead of the FBT rules.
35 38 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 61 When election may be made (4C) An election by a close company under subsection (4B) may be made for the income year which includes the day on which the close company— (a) (b) acquires the motor vehicle; or first starts using the motor vehicle for business use.
5 Election continues to apply (4D) An election under subsection (4B) applies for the income year described in subsection (4C), and continues to apply until the end of the income year that includes the earlier of— (a) the day on which the close company stops using the motor vehicle for business use; or 10 (b) the day on which the close company disposes of the motor vehicle.

(3) In the title to section CX 17(5), replace “election” with “election under subsec- tion (2)”.
(4) After section CX 17(5), insert: Notice of election under subsection (4B) (5B) The close company must give notice to the Commissioner of an election re- ferred to in subsection (4B) in the time allowed for filing a return of income for the income year in which the election was made.

(5) (6) 60 In section CX 17, in the list of defined terms, insert “business use”, “close company”, “income year”, “motor vehicle”, “return of income”, and “share- holder-employee”.
This section applies for the 2017–18 and later income years.
Section DB 7 amended (Interest: most companies need no nexus with income) (1) After section DB 7(6), insert: Relationship with subpart DE (6BA) Subpart DE (Motor vehicle expenditure) overrides this section for expenditure to which that subpart relates, if a company is a close company that has chosen to apply that subpart instead of the FBT rules, in accordance with section CX 17(4B)(c) (Benefits provided to employees who are shareholders or in- vestors).
(2) (3) 61 In section DB 7, in the list of defined terms, insert “close company” and “FBT rules”.

This section applies for the 2017–18 and later income years.
Section DB 8 amended (Interest: money borrowed to acquire shares in group companies) (1) After section DB 8(6), insert: 15 20 25 30 35 39 Part 3 cl 62 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Relationship with subpart DE (6BA) Subpart DE (Motor vehicle expenditure) overrides this section for expenditure to which that subpart relates, if a company is a close company that has chosen to apply that subpart instead of the FBT rules, in accordance with section CX 17(4B)(c) (Benefits provided to employees who are shareholders or in- vestors).
(2) (3) 62 (1) In section DB 8, in the list of defined terms, insert “close company” and “FBT rules”.

This section applies for the 2017–18 and later income years.
New section DB 18AA inserted (Square metre rate method) Before section DB 18A, insert: DB 18AA Square metre rate method When this section applies (1) A person may choose to apply this section to determine the amount of a deduc- tion, in an income year, for the proportion of business use of a building (the premises) that is used partly for business purposes and partly for other pur- poses.
Amount of deduction 5 10 15 (2) The amount of the deduction allowed in an income year for the business use of the premises is calculated using the formula— 20 (total premise costs × business proportion) + (business square metres × square metre rate).
Definition of items in formula (3) In the formula,— (a) (b) (c) (d) total premise costs is the total amount of actual mortgage interest, rates, and rent that the person has paid with respect to the premises in the in- come year: business proportion is determined by dividing business square metres by the total area of the premises in square metres: business square metres is the total area, in square metres, of any separ- ately identifiable parts of the premises that are used primarily for busi- ness purposes: square metre rate is the applicable square metre rate that is published by the Commissioner.
No other deductions allowed 25 30 35 (4) A person who makes an election to apply this section under subsection (1) is not entitled to claim any other deductions for the business use of the premises.

40 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 64 (5) (2) 63 (1) Setting square metre rates For the purposes of this section, the Commissioner must from time to time set and publish square metre rates.
Defined in this Act: amount, business use, Commissioner, deduction, income year This section applies for the 2017–18 and later income years.
Section DE 1 amended (What this subpart does) Replace section DE 1(2)(a) with: (a) to a company, unless the company is a close company to which section CX 17(4B)(b) and (c) (Benefits provided to employees who are share- holders or investors) applies: (2) After section DE 1(2), insert: Application of subpart to close companies (3) When this subpart applies to a close company to which section CX 17(4B)(b) and (c) (Benefits provided to employees who are shareholders or investors) applies, business use of a motor vehicle by a shareholder-employee of the close company is treated as being business use by the close company.
(3) (4) 64 In section DE 1, in the list of defined terms, insert “close company”.

This section applies for the 2017–18 and later income years.
Section DE 2 amended (Deductions for business use) (1) After section DE 2(1)(a), insert: (ab) interest on amounts used to fund, directly or indirectly, expenditure the person incurs for the business use of a motor vehicle, if the person is a close company that has chosen to apply this subpart instead of the FBT rules, in accordance with section CX 17(4B)(c) (Benefits provided to employees who are shareholders or investors): (2) After section DE 2(1), insert: Costs method or kilometre rate method (1B) A person can choose under section DE 2B to calculate the total amount of the deduction described in subsection (1)— (a) under subsections (2) and (4) (the costs method) by adding together— 30 (i) (ii) a deduction amount for expenditure, calculated under subsection (2); and a deduction amount for depreciation loss, calculated as described in subsection (4); or (b) by using the kilometre rate method described in section DE 12.
35 (3) (4) In section DE 2(3), replace “DE 3 to DE 12” with “DE 3 to DE 11”.

In section DE 2(6)(b), replace “DE 3 to DE 12” with “DE 3 to DE 11”.

41 Part 3 cl 65 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (5) (6) 65 In section DE 2(12)(b), replace “DE 3 to DE 12” with “DE 3 to DE 11”.

This section applies for the 2017–18 and later income years.
New section DE 2B inserted (Election to use kilometre rate method or costs method) (1) After section DE 2, insert: DE 2B Election to use kilometre rate method or costs method Election to use kilometre rate method (1) A person may, in their return of income for an income year, choose to apply the kilometre rate method described in section DE 12 to calculate a deduction for the business use of a motor vehicle and for the income year that includes the latest of— 5 10 (a) (b) (c) 1 April 2017, unless the person disposes of the motor vehicle in that in- come year: the day on which they acquire the motor vehicle: the day on which they first start using the motor vehicle for business pur- poses.
15 Election to use costs method (2) If a person does not make an election under subsection (1), they are treated as making an election in the return of income to use the costs method for the corresponding income year.

Election cannot be revoked (3) An election made under subsection (1) or (2) in relation to a particular motor vehicle cannot be revoked, and applies for all subsequent income years until the end of the income year that includes the day on which the person dis- poses of the motor vehicle.
Defined in this Act: business, business use, deduction, income year, motor vehicle, return of income 20 25 (2) 66 (1) (2) (3) (4) 67 This section applies for the 2017–18 and later income years.

Section DE 3 amended (Methods for calculating proportion of business use) In section DE 3, before paragraph (a), replace “3 methods” with “2 methods”.

30 In section DE 3(b), replace “DE 11:” with “DE 11.” Repeal section DE 3(c).

This section applies for the 2017–18 and later income years.
Section DE 4 amended (Default method for calculating proportion of business use) 35 (1) Replace section DE 4(1)(c) with: 42 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 69 (c) the person has not elected to use the kilometre rate method for the motor vehicle.

This section applies for the 2017–18 and later income years.
Heading and section DE 12 replaced Replace the heading before section DE 12 and section DE 12 with: 5 (2) 68 (1) Kilometre rates DE 12 Kilometre rate method When this section applies (1) (2) This section applies for the purposes of calculating a deduction for the business use of a motor vehicle under section DE 2(1) if a person made an election under section DE 2B to apply this section.
Amount of deduction The amount of the deduction allowed for the business use of the vehicle in an income year is the sum of the amounts calculated under the following formula for each applicable kilometre rate for the vehicle for the income year: 10 15 kilometre rate × kilometres travelled × business proportion.
Definition of items in formula (3) In the formula,— kilometre rate is the applicable kilometre rate that is published by the Commissioner: 20 kilometres travelled is the total number of kilometres the vehicle has travelled, for both business purposes and other purposes, to which the applicable kilometre rate applies: business proportion is the proportion of business use of the vehicle for the income year, calculated using a method described in sections DE 5 to DE 11, and expressed as a decimal.
Setting kilometre rates (4) For the purposes of this section, the Commissioner must from time to time set and publish kilometre rates.

Defined in this Act: amount, business, business use, Commissioner, deduction, income year, motor vehicle.

(2) 69 This section applies for the 2017–18 and later income years.
Section DF 4 amended (Payments for social rehabilitation) Replace section DF 4(3)(b) with: 25 30 (a) (b) (c) (b) tax rate is the rate of tax applying to the personal service rehabilitation payment under section RD 10B (Amounts of tax for schedular pay- ments).
35 43 Part 3 cl 70 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 70 Section EA 4 amended (Deferred payment of employment income) After section EA 4(1)(b)(i), insert: (ib) the income year, if they choose, in a return of income, to not use paragraph (i) or (ii); or 71 Section EE 49 amended (Amount of depreciation recovery income when item partly used for business) 5 (1) After section EE 49(2), insert: No depreciation recovery income (2B) Despite subsections (1) and (2), there is no depreciation recovery income under this section for a motor vehicle which is dealt with under subpart DE if the per- son has made an election under section DE 2B(1) (Election to use kilometre rate method or costs method) to use the kilometre rate method described in sec- tion DE 12 (Kilometre rate method) for that vehicle.
(2) 72 This section applies for the 2017–18 and later income years.

Section LA 6 amended (Remaining refundable credits: PAYE, RWT, and certain other items) (1) After section LA 6(2)(c), insert: (cb) fourth, if the person is a company that has 1 or more provisional tax at- tributors, transfer a tax credit of the amount described in subsection (2B).
The amount transferred is treated as tax credit for the relevant at- tributor under section LB 2 for the tax year that the tax credit relates to, and is also treated as a refund of income tax paid to the company for the purposes of section OB 32 (ICA refund of income tax): (2) In section LA 6(2)(d), replace “fourth” with “fifth”.
(3) After section LA 6(2), insert: Tax credits for provisional tax attributors (2B) For the purposes of subsection (2)(cb), the amount for a provisional tax at- tributor is the portion of the tax credit that is equal to the proportion of the at- tributor’s residual income tax arising from shareholder attributed income (shareholder RIT) to the total of all attributors’ shareholder RITs.

However, the maximum amount for a provisional tax attributor is their shareholder RIT.
10 15 20 25 30 This section applies for the 2018–19 and later income years.
Section LB 2 replaced (Tax credits for provisional tax payments) Section LB 2 is replaced with: (4) 73 (1) 44 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 76 LB 2 Tax credits for provisional tax payments Tax credit (1) A person has a tax credit for a tax year equal to the amount of provisional tax for the tax year paid by— (a) (b) the person; or an agent of the person, if the agent is liable to pay provisional tax on be- half of the person.
Additional tax credit for provisional tax attributors (2) A person who is a provisional tax attributor for a company also has a tax credit for the tax year equal to the amount transferred to them— (a) (b) by the company for the tax year, as provided in a reconciliation state- ment under section 45C of the Tax Administration Act 1994: under section LA 6(2)(cb) (Remaining refundable credits: PAYE, RWT, and certain other items).
Subtraction of tax credits transferred to provisional tax attributors (3) A person that is a company that has 1 or more provisional tax attributors must subtract from its tax credit under subsection (1) the total amount transferred by it to its provisional tax attributors for the tax year, as described in subsec- tion (2)(a).

Defined in this Act: agent, amount, company, pay, provisional tax, provisional tax attributor, tax credit, tax year (2) 74 This section applies for the 2018–19 and later income years.
Section LB 7 amended (Tax credits related to personal service rehabilitation payments: providers) Replace section LB 7(4)(b) with: (b) tax rate is the rate of tax applying to the personal service rehabilitation payment under section RD 10B (Amounts of tax for schedular pay- ments).
75 Section LB 8 amended (Tax credits related to personal service rehabilitation payments: payers) Replace section LB 8(3)(c) with: (c) tax rate is the rate of tax applying to the personal service rehabilitation payment under section RD 10B (Amounts of tax for schedular pay- ments).
76 Section MD 9 amended (Fifth requirement: full-time earner) Replace section MD 9(2)(d)(i) with: (i) by a person (the claimant), who receives a personal service re- habilitation payment from which an amount of tax has been with- Part 3 cl 77 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill held at a rate specified in section RD 10B (Amounts of tax for schedular payments); and 77 New section OB 33B inserted (ICA transfer of provisional tax credit) (1) After section OB 33, insert: OB 33B ICA transfer of provisional tax credit Debit (1) An ICA company has an imputation debit for the total amount of tax credit transferred by the company to its provisional tax attributors, as described in section LB 2(3) (Tax credits for provisional tax payments).
Table reference (2) (3) (2) 78 The imputation debit in subsection (1) is referred to in table O2: imputation debits, row 5B (ICA transfer of provisional tax credit).

Debit date The debit date is the day the company gives the Commissioner a reconciliation statement under section 45C of the Tax Administration Act 1994 for the transfer.

Defined in this Act: Commissioner, ICA company, imputation debit, provisional tax attributor, tax credit This section applies for the 2018–19 and later income years.
Table O2 amended (Imputation debits) In table O2, after row 5, insert: 5B ICA transfer of provisional tax set out in section OB 33B credit section OB 33B 5 10 15 20 79 Section RC 3 amended (Who is required to pay provisional tax?)

(1) After section RC 3(3), insert: No obligation: provisional tax attributor (4) A person has no obligation to pay provisional tax for a tax year if they are a 25 provisional tax attributor and the following amount is $2,500 or less: residual income tax − shareholder attributed.
Definition of items in formula (5) In the formula— (a) (b) residual income tax is the person’s residual income tax for the preced- ing tax year: 30 shareholder attributed is, if the person is a provisional tax attributor for 1 or more companies, the total of the person’s shareholder attributed tax for the companies for the preceding tax year.
46 (2) (3) 80 (1) (2) 81 (1) (2) 82 (1) Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 82 In section RC 3, in the list of defined terms, insert “provisional tax attributor” and “shareholder attributed tax”.

This section applies for the 2018–19 and later income years.

Section RC 5 amended (Methods for calculating provisional tax liability) In section RC 5(1), replace “subsections (2) to (7).” with “subsections (2) to (7).
However, a person who pays amounts of provisional tax for the first 2 in- stalments of the tax year equal to the amounts given by section RC 10 for the standard method can not choose the estimation method for the tax year.” 5 This section applies for the 2017–18 and later income years.

Table R1 amended (Summary of instalment dates and calculation methods for provisional tax) 10 In table R1, in the row labelled “Standard RC 5(2), (3)”, replace “120KE(1), (2)” with “120KBB, 120KE(1), (2)”.
This section applies for the 2017–18 and later income years.

Section RC 10 amended (Calculating amount of instalment under standard and estimation methods) In section RC 10(2), in the words before the formula, replace “The amount of an instalment of provisional tax” with “The amount of an instalment of provi- sional tax for a person that is neither a provisional tax attributor nor a company with 1 or more shareholders that are provisional tax attributors”.
(2) In section RC 10(3), replace “In the formula” with “In the formula in subsec- tion (2)”.

(3) After section RC 10(3) insert: Calculation (3B) The amount of an instalment of provisional tax for a person that is a provision- al tax attributor or that is a company and 1 or more shareholders is a provision- al tax attributor is calculated using the formula— ((residual income tax − shareholder attributed + company attributed) × instalment number ÷ total instalments) − provisional tax.
Definitions of items in formula (3C) In the formula in subsection (3B)— (a) residual income tax is a person’s residual income tax, as applicable— (i) for the preceding tax year, uplifted by 5% (modified as applicable by sections RZ 5 (Calculating amounts under standard method: 2010–11 to 2012–13 income years) and RZ 5D (Standard method or GST method: transition for Maori authorities); or (ii) for the tax year before the preceding tax year, uplifted by 10% (modified as applicable by sections RZ 5 and RZ 5D); or 47 15 20 25 30 35 Part 3 cl 82 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (iii) the amount estimated by them: (b) shareholder attributed is, if the person is a provisional tax attributor, the total of the following amounts for the relevant companies in relation to which the person is an attributor, as applicable: (i) (ii) (iii) the person’s shareholder attributed tax for the relevant company for the preceding tax year, uplifted by 5%; or 5 the person’s shareholder attributed tax for the relevant company for the tax year before the preceding tax year, uplifted by 10%; or the person’s estimate of their shareholder attributed tax for the relevant company: 10 (c) company attributed is, if the person is a company with 1 or more share- holders that are provisional tax attributors, the total of the following amounts for the attributors, as applicable: (i) (ii) (iii) the relevant attributor’s shareholder attributed tax for the person for the preceding tax year, uplifted by 5%; or 15 the relevant attributor’s shareholder attributed tax for the person for the tax year before the preceding tax year, uplifted by 10%; or the relevant attributor’s estimate of the amount of tax payable by them for their shareholder attributed income: (d) (e) (f) instalment number is the number of the instalment for the tax year, whether first, second, or third: 20 total instalments is the total number of the instalment for the tax year: provisional tax is the amount of a person’s provisional tax liabilities for the tax year to date.
Consistency (3D) For the purposes of the formula in subsection (2), a shareholder attributed amount for a provisional tax attributor in relation to a company must be the same as the company attributed amount for the company in relation to the pro- visional tax attributor.
(4) After section RC 10(4), insert: Meaning of provisional tax attributor Provisional tax attributor means a person who is a shareholder of a company, if the company is a provisional taxpayer, and the company and the shareholder meet the requirements of section 15Y of the Tax Administration Act 1994.
Meaning of shareholder attributed income Shareholder attributed income means, for a company and an income year, amounts paid to a shareholder of the company in their capacity as employee of the company, to the extent to which the amounts are income other than from a PAYE income payment.
(5) (6) 48 25 30 35 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 85 Meaning of shareholder attributed tax (7) Shareholder attributed tax means, for a company and a tax year,— (a) (b) 28% of a shareholder’s shareholder attributed income for the corres- ponding income year; or the shareholder’s residual income tax for the tax year minus the amount that would be their residual income tax for the tax year if their share- holder attributed income for the corresponding income year were ignor- ed.
In section RC 10, in the list of defined terms, insert “company”, “PAYE income payment”, “provisional tax attributor”, “shareholder attributed income”, and “shareholder attributed tax”.

This section applies for the 2018–19 and later income years.
Section RD 3 amended (PAYE income payments) Replace section RD 3(1)(b)(iii) with: (iii) an amount paid or benefit provided, by a person (the claimant), who receives a personal service rehabilitation payment from which an amount of tax has been withheld at a rate specified in section RD 10B.
Section RD 6 amended (Certain benefits and payments) Replace sections RD 6(3)(a), (ab), and (b) with: (a) for a benefit referred to in subsection (1)(d),— (i) for an employer described in section CE 2(10) (Value and timing of benefits under share purchase agreements), on the first day of the PAYE income payment form period in which the employee de- rives the benefit under section CE 2(11) (Value and timing of benefits under share purchase agreements); or (ii) for employers not described in section CE 2(10), on the date the benefit vests in the employee: (b) (c) for a benefit referred to in subsection (1)(a) to (c) that constitutes the on- ly salary or wages of the employee, on the last day of the pay period: 30 for a benefit that paragraphs (a) and (b) do not apply to, when the last amount of salary or wages for the pay period is paid.
In section RD 6, in the list of defined terms, insert “PAYE income payment form period”.

This section applies for the 2017–18 and later income years.

35 Section RD 7B amended (Treatment of certain benefits under employee share agreements) (5) (6) 83 84 (1) (2) (3) 85 (1) In section RD 7B(3)(c), replace “RD 6(3)(ab)” with “RD 6(3)(a)”.

49 Part 3 cl 86 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (2) 86 (1) (2) This section applies for the 2017–18 and later income years.
Section RD 8 amended (Schedular payments) In section RD 8(1)(a)(i), replace “Rates of tax for schedular payments” with “Standard rates of tax for schedular payments”.

In section RD 8(1)(b)(iii), after “non-resident entertainer,”, insert “a company that receives a payment described in schedule 4, part J,”.
5 87 Section RD 10 amended (Amounts of tax for PAYE income payments) Replace section RD 10(3)(a) with: (a) under section RD 10B; and 88 New section RD 10B inserted (Amounts of tax for schedular payments) 10 After section RD 10, insert: RD 10B Amounts of tax for schedular payments When this section applies (1) (2) (3) This section applies to determine the amount of tax for a schedular payment for the purposes of section RD 10(3)(a).
Rate when no notification of tax file number The person making the schedular payment must withhold, as tax, 45% of the schedular payment if the person has not been notified of the payee’s name and tax file number under section 24L of the Tax Administration Act 1994.
Basic rates If the person making the schedular payment has been notified of the payee’s name and tax file number under section 24L of the Tax Administration Act 1994, the tax rate that applies to a schedular payment is— (a) (b) (c) the payee’s elected rate under section 24LB of the Tax Administration Act 1994, if the payee chooses an elected rate under that section and paragraph (c) of this subsection does not apply: the relevant rate set out in schedule 4 (Standard rates of tax for schedu- lar payments), if the payee does not choose an elected rate under sec- tion 24LB of the Tax Administration Act 1994 and paragraph (c) of this subsection does not apply: if the Commissioner has provided the payee with a special tax rate certif- icate under section 24N of the Tax Administration Act 1994, the tax rate set out in the certificate.
Commissioner prescribed tax rate and deduction amount (4) Despite subsection (3), if the person making the schedular payment has been notified of an applicable tax rate prescribed by the Commissioner under sec- tion 24LC(1) of the Tax Administration Act 1994, the person must use that 15 20 25 30 35 50 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 92 prescribed and notified tax rate for the payment.
The person must also deduct or extract from schedular payments payable to the payee, the amount pre- scribed under section 24LC(2) of that Act and pay it to the Commissioner.

Non-resident entertainer rate (5) Despite subsections (2), (3), and (4), the tax rate, if the payee is a non-resi- 5 dent entertainer, is 0.20.
Defined in this Act: amount of tax, non-resident entertainer, notify, pay, schedular payment, tax, tax file number 89 Section RD 18 repealed (Schedular payments without notification) Repeal section RD 18.

10 90 (1) (2) 91 (1) (2) 92 (1) (2) (3) (4) (5) (6) Section RD 60 amended (Close company option) In section RD 60(1)(a), replace “$500,000; or” with “$1,000,000; or”.

This section applies for the 2017–18 and later income years.
Section RD 61 amended (Small business option) In section RD 61(1)(a), replace “$500,000; or” with “$1,000,000; or”.

15 This section applies for the 2017–18 and later income years.

Section YA 1 amended (Definitions) This section amends section YA 1.

In the definition of agricultural, horticultural, or viticultural company, re- place “Rates of tax for schedular payments” with “Standard rates of tax for schedular payments”.
In the definition of contract payment, paragraph (c), replace “Rates of tax for schedular payments” with “Standard rates of tax for schedular payments”.

In the definition of employee, in paragraph (c)(ii), replace “parts A and I (Rates of tax for schedular payments)” with “parts A, I, and W (Standard rates of tax for schedular payments)”.
20 25 In the definition of employer, paragraph (c)(ii), replace “parts A and I (Rates of tax for schedular payments)” with “parts A, I, and W (Standard rates of tax for schedular payments)”.

In the definition of Part F activity, replace “Rates of tax for schedular pay- ments” with “Standard rates of tax for schedular payments”.
30 (7) Insert, in appropriate alphabetical order: PAYE income payment form period means the payment period for which an employer must provide a PAYE income payment form under section RD 22(2) (Returns for amounts of tax paid to Commissioner) 35 (8) Insert, in appropriate alphabetical order: 51 Part 3 cl 93 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill provisional tax attributor is defined in section RC 10(5) (Calculating amount of instalment under standard and estimation methods) (9) Insert, in appropriate alphabetical order: shareholder attributed income is defined in section RC 10(6) (Calculating amount of instalment under standard and estimation methods) 5 (10) Insert, in appropriate alphabetical order: shareholder attributed tax is defined in section RC 10(7) (Calculating amount of instalment under standard and estimation methods) Schedule 4 amended (Rates of tax for schedular payments) Replace the heading to schedule 4 with “Standard rates of tax for schedular payments”.
10 In schedule 4, part A, clause 1, replace “0.15 rate of tax” with “standard rate of tax of 0.15”.

In schedule 4, part B, clause 1, replace “0.33 rate of tax” with “standard rate of tax of 0.33”.

15 In schedule 4, part B, clause 1B, replace “0.33 rate of tax” with “standard rate of tax of 0.33”.

In schedule 4, part C, clause 1, replace “0.15 rate of tax” with “standard rate of tax of 0.15”.

In schedule 4, part D, clause 1, replace “0.20 rate of tax” with “standard rate of tax of 0.20”.
20 In schedule 4, part D, clause 2, replace “0.15 rate of tax” with “standard rate of tax of 0.15”.

In schedule 4, part E, clause 1, replace “0.20 rate of tax” with “standard rate of tax of 0.20”.

25 In schedule 4, part F, clause 1, replace “0.25 rate of tax” with “standard rate of tax of 0.25”.

In schedule 4, part F, clause 2, replace “0.20 rate of tax” with “standard rate of tax of 0.20”.

In schedule 4, part F, clause 3, replace “0.20 rate of tax” with “standard rate of tax of 0.20”.
30 In schedule 4, part F, clause 4, replace “0.20 rate of tax” with “standard rate of tax of 0.20”.

In schedule 4, part F, clause 5, replace “0.20 rate” with “standard rate of tax of 0.20”.

35 In schedule 4, part F, clause 6, replace “0.15 rate” with “standard rate of tax of 0.15”.
93 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) 52 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 95 (15) (16) (17) (18) In schedule 4, part G, clause 1, replace “0.20 rate of tax” with “standard rate of tax of 0.20”.

In schedule 4, part H, clause 1, replace “0.25 rate of tax” with “standard rate of tax of 0.25”.

In schedule 4, part H, clause 2, replace “0.25 rate of tax” with “standard rate of tax of 0.25”.
5 In schedule 4, part I, clause 1, replace “0.105 rate of tax” with “standard rate of tax of 0.105”.
(19) In schedule 4, after part I, insert: Part J Payments under labour-hire arrangements 1 A payment by an entity to a person (the payee) has a standard rate of tax of 0.20 for each dollar of the payment if— (a) (b) 1 of the entity’s main activities is the business of arranging for a person or persons to perform work or services directly for clients of the entity; and the payment is made under an arrangement the performance of which, in whole or in part, involves the performance of work or services by the payee directly for a client of the entity, or directly for a client of another entity described in paragraph (a).
10 15 20 Part W Voluntary schedular payments 1 A payment to a person is treated as a schedular payment (a voluntary schedu- lar payment) and has a standard rate of tax of 0.20 for each dollar of the pay- ment if— 25 (a) (b) there is no obligation to withhold an amount from the payment under this Act or under the Tax Administration Act 1994; and the payer and the payee have agreed that the payment is a voluntary schedular payment, and have recorded their agreement in a document.
Subpart 2—Amendments to Tax Administration Act 1994 30 94 Tax Administration Act 1994 amended This subpart amends the Tax Administration Act 1994.

95 (1) (2) Section 3 amended (Interpretation) This section amends section 3(1).
Insert, in appropriate alphabetical order: 35 53 Part 3 cl 96 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill approved credit reporting agency is defined in section 85N for the pur- poses of Part 4 (3) Insert, in appropriate alphabetical order: (4) (5) (6) 96 (1) credit report is defined in section 85N for the purposes of Part 4 Insert, in appropriate alphabetical order: provisional tax interest avoidance arrangement is defined in section 120KBB(4) for the purposes of Part 7 Insert, in appropriate alphabetical order: reportable unpaid tax is defined in section 85N for the purposes of Part 4 Insert, in appropriate alphabetical order: standard method associate is defined in section 120KBB(4) for the pur- poses of Part 7 New heading and new section 15Y inserted Before Part 3, insert: Provisional tax attribution 5 10 15 15Y Provisional tax attributor (1) A person is a provisional tax attributor for a company and a tax year if— (a) (b) (c) (d) (e) the person is a natural person; and the person is a shareholder of the company on the first day of the compa- ny’s income year corresponding to the tax year; and 20 the person and the company agree that the person is a provisional tax at- tributor for the company; and the company is a provisional taxpayer; and the company has given the Commissioner notice of the agreement de- scribed in paragraph (c) before the company’s first provisional tax in- stalment date for the tax year, in the form prescribed by the Commis- sioner.
(2) A person ceases to be a provisional tax attributor for a company and a tax year if the Commissioner receives notice from the company of the cancellation of an agreement under subsection (1) before the company’s first provisional tax in- stalment date for the tax year in the form prescribed by the Commissioner.

This section applies for the 2018–19 and later income years.

Section 24G amended (Use of incorrect tax codes) In the title to section 24G, after “tax codes”, insert “or tax rates”.
In section 24G(1), after “tax code”, insert “or tax rate”.

(2) 97 (1) (2) 54 25 30 35 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 99 (3) (4) In section 24G(2), replace “incorrect code and provide the tax code” insert “incorrect code or tax rate, and provide the correct tax code and tax rate, as re- quired,”.

In section 24G(3), replace “tax code” with “tax code or tax rate”, in each place where it appears.
5 98 Section 24L amended (Schedular notification) Replace section 24L(2) with: (2) Before the person (the payee) receives the schedular payment, the payee must give the person making the payment a notice that states— (a) (b) the tax rate that the payee has elected under section 24LB to be applied to the schedular payment; or 10 if the Commissioner has notified the payee that a different tax rate ap- plies to the schedular payment, as provided by section 24LC, that dif- ferent tax rate.
99 New sections 24LB and 24LC inserted After section 24L, insert: 24LB Schedular tax rate elected by payee (1) A person who is entitled to receive a schedular payment (the payee) may choose the tax rate to be applied to the payment for the purposes of section RD 10B(3)(a) of the Income Tax Act 2007 (the elected rate).
The elected rate must be a minimum of— (2) (a) 15% if the payee is— 15 20 (i) (ii) a non-resident: a holder of a temporary entry class visa as defined in section 4 of the Immigration Act 2009; or 25 (b) 10% for all other payees.
(3) Despite subsection (1), if the payee has notified a person making a schedular payment (the payer) of two different elected rates within 12 months of each other, then the last notified rate is the elected rate, and the payee may not choose another elected rate in relation to the payer within a 12 month period of the first notified rate.
(4) Despite subsection (3), the payee may choose another elected rate under subsection (1) in relation to the payer in the 12 month period and notify it to the payer, if the payer and the payee agree that the payee may choose and noti- fy that other rate.
30 35 55 Part 3 cl 100 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 24LC Schedular tax rate prescribed by Commissioner (1) Where a person who is entitled to receive a schedular payment (a payee) has not met a liability under the Inland Revenue Acts, the Commissioner may pre- scribe the tax rate to be applied to the payee’s schedular payments by notifying the rate to— (a) (b) the payee; or the payee and a person (a payer) making a schedular payment to the payee.
(2) The Commissioner may also prescribe and notify, at the same time as prescrib- ing and notifying a tax rate under subsection (1), a percentage of the payee’s schedular payments that payers must— (a) (b) deduct or extract from schedular payments payable to the payee; and pay to the Commissioner.

5 10 (3) The tax rate prescribed under subsection (1) and the percentage prescribed under subsection (2) must not total more than 60%.
15 (4) An amount received by the Commissioner under subsection (2) is to the credit of the payee’s liabilities under the Inland Revenue Acts and is not a tax credit under part L of the Income Tax Act 2007.

(5) (6) The Commissioner may revoke or prescribe and notify a new tax rate under subsection (1) and percentage under subsection (2) from time to time.
The Commissioner does not have to notify the payee under subsection (1)(b), if, after making reasonable inquiries, the Commissioner does not have a valid address for the payee.

100 Section 24M amended (Exemption certificates for schedular payments) Replace section 24M(2) with: (2) Subsection (1) does not apply to a payment— 20 25 (a) (b) to a non-resident entertainer: that is a payment described in schedule 4, part J of the Income Tax Act 2007.
101 Section 32H amended (Providing RWT exemption certificate when person 30 meets requirements) (1) In section 32H(2), replace “The certificate is valid from the starting date set out in the certificate.” with “The certificate is valid on and after the starting date set out in the certificate, and is valid for an unlimited period if no end date is specified under subsection (3).” 35 (2) Replace section 32H(3) with: (3) An end date— 56 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 104 (a) must be set out in the certificate by the Commissioner if the person is described in section 32E(2)(j): (b) may be set out in the certificate by the Commissioner in exceptional cir- cumstances.
102 New section 45E inserted (Provisional tax attribution reconciliation 5 statement) (1) Before section 46, insert: 45E Provisional tax attribution reconciliation statement A company that has one or more shareholders who are provisional tax attribu- tors for the company and a tax year must give the Commissioner and each pro- visional tax attributor the following information, in the form prescribed by the Commissioner, at the time the company files its annual return of income: (a) (b) (c) the name and tax file number of each shareholder who is a provisional tax attributor for the tax year; and the amount of provisional tax paid by the company for the tax in relation to each provisional tax attributor for the tax year under section RC 10 of the Income Tax Act 2007; and the amount of tax credit that is transferred from the company to each provisional tax attributor for the purposes of section LB 2(2) of the In- come Tax Act 2007.
(2) This section applies for the 2018–19 and later income years.
103 Section 81 amended (Officers to maintain secrecy) After section 81(4)(s), insert: (sb) (sc) communicating, for the purpose of section 85M, information relating to some offences under the Companies Act 1993 to the Registrar of Companies: communicating, for the purpose of section 85N, information relating to a taxpayer and reportable unpaid tax to an approved credit reporting agency: 104 New sections 85M and 85N inserted After section 85L, insert: 85M Disclosure of information relating to some offences to the Registrar of Companies (1) The purpose of this section is to facilitate the exchange between the Commis- sioner and the Registrar of Companies (the Registrar) of information for the purpose of preventing, detecting, investigating, or providing evidence of, some 10 15 20 25 30 35 57 Part 3 cl 104 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill offences under the Companies Act 1993 that have been, are being, or will be committed.
(2) The Commissioner may communicate the information only if— (a) the Commissioner or the Registrar reasonably suspects that— (i) (ii) an offence under section 138A(1), 377, 382(4), 383(6), 385(9), 385AA(9), or 386A(2) of the Companies Act 1993 has been, is being, or will be committed; and 5 the information is relevant for the purposes of preventing, detect- ing, investigating, or providing evidence of, the offence; and (b) the Commissioner is satisfied that the information is readily available, that it is reasonable and practicable to communicate the information, and that communication of the information is in the public interest.
85N Disclosure of information to approved credit reporting agencies (1) The purpose of this section is to facilitate the exchange between the Commis- sioner and approved credit reporting agencies of information relating to a tax- payer’s reportable unpaid tax.
(2) This section applies when— (a) (b) (c) (d) a taxpayer has an amount of reportable unpaid tax; and the Commissioner has formally notified the taxpayer that— (i) (ii) the taxpayer has reportable unpaid tax; and the Commissioner may give an approved credit reporting agency information in relation to the taxpayer and any amount of reporta- ble unpaid tax under this section; and the Commissioner has made reasonable efforts to recover reportable un- paid tax from the taxpayer before the day on which the taxpayer is for- mally notified under paragraph (b); and 30 days after the formal notification under paragraph (b), — (i) the taxpayer has an amount of reportable unpaid tax that is— (A) (B) greater than $150,000; but if the Governor-General has prescribed an amount by Order in Council for the purposes of this section, greater than that prescribed amount: (ii) the taxpayer has an amount of reportable unpaid tax that has been unpaid for a year, and, in the Commissioner’s judgement, the pro- portion of the unpaid amount to the taxpayer’s income for the year is 30% or more.
10 15 20 25 30 35 (3) This section also applies when— (a) a taxpayer has an amount of reportable unpaid tax; and 58 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 104 (b) the Commissioner has formally notified the taxpayer that— (i) (ii) the taxpayer has reportable unpaid tax; and the Commissioner may give an approved credit reporting agency information in relation to the taxpayer and any amount of reporta- ble unpaid tax under this section; and 5 (c) (d) (e) the Commissioner has formally notified the taxpayer under subsection (2)(b) twice in the year before the notice in paragraph (b) of this sub- section; and the Commissioner has made reasonable efforts to recover an amount of reportable unpaid tax from the taxpayer before the day on which the tax- payer is formally notified under paragraph (b); and but for amounts paid to the Commissioner in the 2 periods of 30 days after the days on which the Commissioner has formally notified the tax- payer under subsection (2)(b), this section would have applied, as pro- vided by subsection (2), 30 days after both of those notices.
10 15 (4) The Commissioner may communicate to an approved credit reporting agency information relating to the taxpayer and any amount of reportable unpaid tax for the purposes of— (a) (b) enabling the approved credit reporting agency to include information in the taxpayer’s credit report; and 20 evidencing and maintaining the accuracy of the credit report in relation to the information.
The Commissioner may also communicate to an approved credit reporting agency information for the purposes described in subsection (4) if— (a) the information relates to the taxpayer and any amount that would be re- portable unpaid tax if it was not subject to an instalment arrangement re- quested by the taxpayer and entered into by the Commissioner (the in- stalment arrangement); and (b) the instalment arrangement was entered into by the Commissioner after the Commissioner has communicated to an approved credit reporting agency information relating to the taxpayer under subsection (4).
The Commissioner may not communicate to an approved credit reporting agen- cy until the Commissioner has finished considering an application under sec- tion 177 or 183H, if the application was made in the 30 days after the day on which the taxpayer is formally notified under subsection (2)(b).
The Commissioner must publish annually, in a publication chosen by the Com- missioner, the following: (a) the number of taxpayers that the Commissioner has formally notified under this section in the previous tax year; and 25 30 35 (5) (6) (7) 59 Part 3 cl 104 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (b) (c) (d) the number of taxpayers in relation to which the Commissioner has given information to an approved credit reporting agency in the previous year; and the number of taxpayers that have ceased having reportable unpaid tax in the previous year and which had been formally notified under this sec- tion at some time; and 5 any other matter relating to the Commissioner’s use of this section that the Commissioners decides it is appropriate to publish.
(8) The Commissioner may approve, or revoke the approval of, an organisation de- scribed in subsection (9)(a) for the purposes of the definition in that subsec- tion, if the approval or revocation positively affects the integrity of the tax sys- tem.
10 (9) For the purposes of this Part, approved credit reporting agency means an or- ganisation that— (a) (b) (c) carries on a business of reporting to other organisations, for payment, in- formation relevant to the assessment of a person’s creditworthiness; and 15 has been approved by the Commissioner under subsection (8); and the Commissioner has published the name of, in a publication chosen by the Commissioner.
(10) For the purposes of this Part, credit report means credit information about a 20 person that is disclosed by an approved credit reporting agency.
(11) For the purposes of this Part, reportable unpaid tax— (a) means, for a taxpayer, unpaid tax— (i) (ii) (iii) (iv) that results from liability for or refunds of income tax, excluding refunds under section MF 5 or MF 6 of the Income Tax Act 2007, or is otherwise the overpayment or over-crediting of WFF tax credits; and that results from liability for or refunds of GST, amounts required to be deducted under the PAYE rules, amounts required to be de- ducted under the Student Loan Scheme Act 2011, amounts re- quired to be deducted under the Child Support Act 1991, ESCT, RSCT, or any tax credits under Part L of the Income Tax Act 2007 excluding tax credits under section LB 4 of that Act; and 25 30 that is not subject to a dispute or challenge under Part 4A or 8A of this Act; and 35 that is not subject to an instalment arrangement requested by the taxpayer and entered into by the Commissioner; and (b) includes, for a taxpayer, unpaid interest under Part 7 and unpaid civil penalties, to the extent to which they relate to an amount of reportable unpaid tax described in paragraph (a).
40 60 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 109 105 Section 113A amended (Correction of minor errors in subsequent returns) In section 113A(1)(c), replace “$500 or less.” with “$1,000 or less.” 106 Section 120C amended (Definitions) In section 120C(1), in the definition of date interest starts,— (a) (b) in paragraph (b), in the words before the subparagraphs, replace “GST” with “a GST refund provided by section 19C(8) or 20(5) of the Goods and Services Tax Act 1985,”: 5 in paragraph (c), in the words before the subparagraphs, replace “a GST refund” with “a GST refund provided by section 19C(8) or 20(5) of the Goods and Services Tax Act 1985”: 10 (c) repeal paragraph (c)(iii).
107 Section 120C amended (Definitions) (1) After section 120C(2), insert: (2B) Despite subsection (2), for some standard method provisional taxpayers who fail to pay the amount of 1 or both of the first 2 instalments on the relevant in- stalment dates for the tax year (a failed instalment), the amount of unpaid tax for a failed instalment is given by section 120KBB(3).

This section applies for the 2017–18 and later income years.
(2) 108 Section 120KB amended (Provisional tax instalments and due dates generally) (1) (2) In section 120KB(4), replace “120KC” with “120KBB”.

This section applies for the 2017–18 and later income years.
109 New section 120KBB inserted (Interest for most standard method provisional taxpayers) (1) After section 120KB, insert: 120KBB Interest for most standard method provisional taxpayers (1) This section applies if, for a tax year that is not a transitional year for a provi- sional taxpayer (the person), the person is not a new provisional taxpayer, and— (a) (b) (c) section 120KE does not apply for the person for the tax year (for ex- ample: a person does not make a required payment, so section 120KE does not apply); and the person is liable to pay provisional tax for the tax year and uses 1 of the standard methods described in section RC 5(2) or (3) of the Income Tax Act 2007 for the tax year; and all standard method associates of the person that are liable to pay provi- sional tax use, for the tax year, either the GST ratio method described in 15 20 25 30 35 61 Part 3 cl 109 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill section RC 5(6) of that Act or 1 of the standard methods described in section RC 5(2) or (3) of that Act; and (d) there is no provisional tax interest avoidance arrangement in relation to the person.
(2) If the person pays the amount of the first 2 instalments on the first 2 instalment dates for the tax year in accordance with sections RC 9 and RC 10 of the Income Tax Act 2007, then, despite section 120KB(2) of this Act,— 5 (a) (b) the person’s residual income tax for the tax year is not due and payable as set out in section RC 9 of the Income Tax Act 2007 for those first 2 instalment dates; and the amount of their residual income tax minus the total amount of the first 2 instalments for the tax year is due and payable on the third instal- ment date for the tax year.
A negative amount is treated as overpaid tax on the third instalment date, with nothing due and payable on the date.
(3) If the person fails to pay the amount of 1 or both of the first 2 instalments on the relevant instalment dates for the tax year (a failed instalment) in accord- ance with sections RC 9 and RC 10 of the Income Tax Act 2007, then, de- spite section 120KB(2) of this Act,— (a) (b) the person’s residual income tax is not due and payable as set out in sec- tion RC 9 of the Income Tax Act 2007 for the failed instalment; and the amount of unpaid tax that a person has in relation to a failed instal- ment is equal to the lesser of the following amounts, treating a negative amount as zero: 10 15 20 (i) (ii) one-third of their residual income tax minus the amount paid in relation to the failed instalment: 25 the amount they are liable to pay in accordance with sections RC 9 and RC 10 of the Income Tax Act 2007 in relation to the failed instalment date minus the amount paid in relation to the failed instalment date; and (c) one-third of the person’s residual income tax is due and payable as set out in section RC 9 of the Income Tax Act 2007 for an instalment date that is not a failed instalment.
(4) In this Part,— (a) provisional tax interest avoidance arrangement means an arrange- ment involving the manipulation of 1 or more amounts of residual in- come tax, including a zero amount of residual income tax, with the pur- pose or effect of defeating the intent and application of this Part: (b) standard method associate means, for a person (person A),— 30 35 (i) if person A is a company, another company in the same wholly- owned group of companies as person A: 40 62 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 111 (ii) (iii) if person A is a company, another person that is associated with person A under section YB 3 of the Income Tax Act 2007, treating section YB 3 as requiring 50% voting interests and market value interests instead of 25%: if person A is not a company or is a company acting as a trustee, another person that is associated with person A, treating section YB 3 of the Income Tax Act 2007 as requiring 50% voting inter- ests and market value interests, instead of 25%.
(2) This section applies for the 2017–18 and later income years.

110 Section 120KE amended (Provisional tax and rules on use of money interest) (1) Replace section 120KE(1)(a) with: (a) they have paid all 3 instalments on the instalment dates for the tax year in accordance with sections RC 9 and RC 10 of the Income Tax Act 2007; and (2) In section 120KE(1)(b), replace “$50,000” with “$60,000”.
(3) After section 120KE(1)(d), insert: (db) there is no provisional tax interest avoidance arrangement in relation to the person; and (4) This section applies for the 2017–18 and later income years.
5 10 15 20 111 Section 120L amended (Meaning of unpaid tax and overpaid tax for provisional tax purposes) After section 120L(1), insert: (1B) For the purposes of determining amounts of unpaid tax, overpaid tax, and inter- est under a provision of this Part for an instalment date for a tax year,— 25 (a) for a provisional tax attributor that is a provisional taxpayer for the year,— (i) (ii) the total shareholder attributed amounts for the year, described in section RC 10(3C)(b) of the Income Tax Act 2007, are pro-rat- ed against all instalments for the year; and if there is an amount of overpaid or underpaid tax under a provi- sion for the instalment, the pro-rated amount for the instalment is subtracted from the underpaid tax amount or added to the over- paid tax amount under the provision; and (iii) to the extent to which subparagraph (ii) does not apply for the pro-rated amount for the instalment, the amount is overpaid tax under the provision for an instalment: 30 35 (b) for a company that has 1 or more shareholders who are provisional tax attributors,— 63 Part 3 cl 111 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (i) (ii) the total company attributed amounts for the year, described in section RC 10(3C)(c) of the Income Tax Act 2007, are pro-rat- ed against all instalments for the year; and if there is an amount of overpaid or underpaid tax under a provi- sion for the instalment, the pro-rated amount for the instalment is added to the underpaid tax amount or subtracted from the over- paid tax amount under the provision; and (iii) to the extent to which subparagraph (ii) does not apply for the pro-rated amount for the instalment, the amount is underpaid tax under the provision for an instalment.
(1C) If section 120KBB(2) applies to a provisional tax attributor, subsection (1B)(a) does not apply, and— (a) if there is an amount of overpaid or underpaid tax under section 120KBB for the third instalment, the attributor’s total shareholder attrib- uted amounts are subtracted from the underpaid tax amount or added to the overpaid amount under section 120KBB; and (1D) (b) to the extent to which paragraph (a) does not apply for total sharehold- er attributed amounts, the amounts are overpaid tax under section 120KBB(2) for the third instalment.
If section 120KBB(2) applies to a company that has 1 or more shareholders who are provisional tax attributors, subsection (1B)(b) does not apply, and— if there is an amount of overpaid or underpaid tax under section (a) 120KBB for the third instalment, the company’s total company attrib- uted amounts are added to the underpaid tax amount or subtracted from the overpaid tax amount under section 120KBB; and to the extent to which paragraph (a) does not apply for total sharehold- er attributed amounts, the amounts are underpaid tax under section 120KBB(2) for the third instalment.
(b) (1E) For the purposes of determining the amounts of unpaid tax or overpaid tax for an instalment for a tax year, the residual income tax for the year of a company that has a shareholder who is a provisional tax attributor is increased by the amount of that shareholder’s residual income tax for the year, if— (a) (b) the shareholder is not a provisional taxpayer because section RC 3(4) of the Income Tax Act 2007 applies; and the shareholder’s residual income tax for the year is $60,000 or more for the year.
35 (1F) If subsection (1E) applies for a company and a shareholder, the company’s company attributed amount for the year relating to the shareholder is excluded from the company’s total company attributed amounts for the year under sub- section (1B)(b)(i).

40 64 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 114 112 Section 138E amended (Certain rights of challenge not conferred) In section 138E(1)(e)(iv), replace “138N” with “138N, 139B”.
113 (1) (2) (3) Section 139B amended (Late payment penalty) In section 139B(1), replace “the due date (the default date)” with “the default date”.

5 In section 139B(1)(b), replace “the taxpayer has failed to pay on time” with “the Commissioner determines that the taxpayer has failed to pay on time”.

In section 139B(1)(c), replace “the taxpayer has paid on time all amounts” with “the Commissioner determines that the taxpayer has paid on time amounts”.
(4) After section 139B(1), insert: (1B) When determining whether a person has paid amounts of tax on time or failed to pay amounts of tax on time under subsection (1)(b) or (c), the Commis- sioner has a discretion to ignore any failure to pay tax on time for any tax type that the Commissioner decides it is appropriate to ignore.
The discretion may only be exercised if— 10 15 (a) (b) it is necessary because of resource constraints imposed on the Commis- sioner during the period of co-existence of 2 Inland Revenue Department software platforms; and it does not impose a penalty greater than that which the person would otherwise be liable for in the absence of this subsection.
20 (5) Before section 139B(6)(a), insert: (aa) the term default date means, for an amount of tax,— (i) (ii) its due date; or its collection date, described in section 142A(6), if the amount has a new due date set under section 142A(5): 25 114 Section 139B amended (Late payment penalty) (1) After section 139B(2), insert: (2B) Despite subsection (2)(b), a taxpayer is not liable to pay an incremental late payment penalty to the extent to which the relevant tax to pay is— (a) GST for a GST return period ending within 7 days of 31 March 2017: 30 (b) GST for a GST return period ending after 31 March 2017: (c) (d) provisional tax or income tax for the 2017–18 or later income years: described in section MF 5 or MF 6 of the Income Tax Act 2007, or is otherwise the overpayment or over-crediting of WFF tax credits, and re- lates to the 2017–18 or later income years.
35 (2) In section 139B(3B), replace “section 157 of this Act” with “section 24LC(2) or 157 of this Act”.

65 Part 3 cl 115 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill (3) In section 139B(5A), replace “section 157 of this Act” with “section 24LC(2) or 157 of this Act”.
(4) After section 139B(6)(b), insert: (bb) for a person that section 120KBB applies to, the term unpaid tax in- cludes, for a failure to pay 1 or both of the first 2 instalments of provi- sional tax on the relevant instalment dates for the tax year, the amount of unpaid tax given by section 120KBB(3) for the date: (5) Subsection (4) applies for the 2017–18 and later income years.
115 (1) (2) 116 (1) Section 139BA amended (Imposition of late payment penalties when financial relief sought) In section 139BA(1), replace “due date” with “default date”.

In section 139BA(2), replace “due date” with “default date”.

Section 139C amended (Late payment penalty and provisional tax) In section 139C(1), replace “Subsection (1B) overrides this subsection” with “Subsection (1B) overrides this subsection and subsection (1D) modifies this subsection”.
(2) After section 139C(1C), insert: (1D) Despite subsection (1), for a person that section 120KBB applies to, the only amount of unpaid tax for a failure to pay 1 or both of the first 2 instalments of provisional tax on the relevant instalment dates for the tax year is amount of unpaid tax given by section 120KBB(3)(b) for the date.

This section applies for the 2017–18 and later income years.
(3) 5 10 15 20 Section 142A amended (New due date for payment of tax that is not a penalty) In section 142A(1), replace “This section applies” with “Subsection (2) applies for a transfer concession tax type”.
25 Replace section 142A(5) with: Subsections (5), (6), and (7) apply for a tax type that is not a transfer con- cession tax type if the Commissioner makes for a taxpayer, other than by an assessment (an electronic default assessment) made in the absence of a return and to which section 106(2) applies,— (a) an assessment (the new assessment) of tax for the taxpayer, if the tax- payer has not been assessed earlier for the tax, except by an electronic default assessment: (b) an amended assessment (the increased assessment)— 30 35 (i) (ii) to which paragraph (a) does not apply; and of an amount of tax exceeding the amount for which the taxpayer is liable immediately before the increased assessment; and 117 (1) (2) (4) 66 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 117 (iii) made less than 30 days before, or on or after, the due date for the tax for which the taxpayer is liable immediately before the in- creased assessment.
(5) The date of the notice of the relevant assessment is the due date for the pay- ment of— 5 (a) (b) the tax under a new assessment: the increase of tax under an increased assessment.
(6) Despite subsection (5),— (a) (b) (c) the Commissioner must fix a date (the collection date) before which the Commissioner must not require payment of the tax or increased tax; and 10 the collection date must be 30 or more days after the due date set under subsection (5); and the Commissioner must not take any action to collect the tax or in- creased tax before the collection date, other than under section RM 10(3) of the Income Tax Act 2007 or section 46(6) of the Goods and Services Tax Act 1985.
15 (7) The Commissioner must give notice, in the notice of assessment, of the collec- tion date and that— (a) (b) the Commissioner does not require payment of the tax or increased tax before the collection date; but 20 despite the collection date, any refund of tax that the taxpayer is entitled to may be credited against the tax or increased tax before the collection date, under section RM 10(3) of the Income Tax Act 2007 or section 46(6) of the Goods and Services Tax Act 1985.
(8) Subsections (5), (6), and (7) do not apply— (a) to any provisional tax that remains unpaid on an instalment date; or (b) if the Commissioner has notified the taxpayer before the due date for the payment of the tax that subsections (5), (6), and (7) will not apply in respect of the tax as calculated by the taxpayer, or in respect of an amount of tax estimated by the taxpayer; or (c) if the Commissioner considers that setting a collection date may preju- dice the Commissioner’s ability to recover the tax or increased tax.
(9) In this section,— (a) transfer concession tax type means a tax type for which the Commis- sioner decides it is appropriate to allow a concession from subsection (4), and the concession is necessary because of resource constraints im- posed on the Commissioner during the period of co-existence of 2 Inland Revenue Department software platforms: (b) tax does not include a civil penalty.
25 30 35 67 Part 3 cl 118 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill 118 Section 142B amended (Due date for shortfall penalties) Replace section 142B(1)(a)(ii) with: (ii) which has a new due date set under section 142A(2), on the due date for the payment of the unpaid tax; or (iii) which has a new due date set under section 142A(5), on the col- 5 lection date, described in section 142A(6), for the unpaid tax: 10 15 119 (1) Section 173L amended (Transfer of excess tax within taxpayer’s accounts) Replace section 173L(1) with: (1) A taxpayer or their agent may request that the Commissioner transfer an amount of the excess to another period or another tax type of the taxpayer.
If the date chosen under subsection (2) is after the start of the requested period for the taxpayer, the maximum amount that the Commissioner may transfer is the total of— (a) (b) debt owing by the taxpayer to the Commissioner for the requested period at the date chosen under subsection (2); and the taxpayer’s deferrable tax for the requested period at the date chosen under subsection (2).

In section 173L(2), in the words before the paragraphs, replace “all or part of the excess” with “the amount”.
In section 173L(2)(a), replace “GST refund” with “GST refund provided by section 19C(8) or 20(5) of the Goods and Services Tax Act 1985”.

20 (2) (3) 120 Section 173M amended (Transfer of excess tax to another taxpayer) (1) Replace section 173M(1) with: (1) A taxpayer or their agent may request that the Commissioner transfer an amount of the excess to another taxpayer.
If the date chosen under subsection (4) is after the start of the requested period for the other taxpayer, the maxi- mum amount that the Commissioner may transfer is the total of— (a) (b) debt owing by that other taxpayer to the Commissioner at the date chos- en under subsection (4) for the requested period; and the other taxpayer’s deferrable tax at the date chosen under subsection (4) for the requested period.
(2) Replace section 173M(3) with: (3) A taxpayer, being a trustee of a family trust, may request a transfer to a benefi- ciary of the trust.
If the date chosen under subsection (4) is after the start of the requested period for the beneficiary, the maximum amount that the Com- missioner may transfer is the total of— (a) debt owing by the beneficiary to the Commissioner at the date chosen under subsection (4) for the requested period; and 25 30 35 68 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Part 3 cl 121 (b) the beneficiary’s deferrable tax at the date chosen under subsection (4) for the requested period.
(3) In section 173M(4), in the words before the paragraphs, replace “all or part of the excess” with “the amount”.

Subpart 3—Amendment to other enactment 5 121 Section 27E of Student Loan Scheme Act 2011 amended (Commissioner may remove entity’s listing as charity) In section 27E(3)(b) of the Student Loan Scheme Act 2011, replace “applicant” with “entity”.
69 Schedule 1 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Schedule 1 New schedule 2 inserted Schedule 2 Application of CRS standard s 26 s 185O Items modifying CRS standard The terms reporting period and calendar year or other appropriate report- ing period mean a 12-month period ending with 31 March, unless the context requires a different interpretation.
Sections I to VII are replaced by the Sections I to VII included in Annex 5 (Wider Approach to the Common Reporting Standard) of the CRS publication, as amended from time to time, modified by items 3 to 12.

In Section I, paragraph C, the words “or with respect to each Financial Account that is opened prior to becoming a Reportable Account” are disregarded.

Section I, paragraph F is disregarded.

In Section III, subparagraph C(6), the date reference is replaced by 30 June 2017.
In Section III, paragraph D, the date reference is replaced by the words “30 June 2018, for pre-existing individual accounts that are high value accounts, or 30 June 2019 for pre-existing individual accounts that are lower value ac- counts”.

In Section V, paragraph A, the date reference is replaced by 30 June 2017.

In Section V, paragraph B, the date references are replaced by 30 June 2017.
5 10 15 20 In Section V, subparagraph D(1), the first date reference is replaced by 30 June 2017 and the second date reference is replaced by 30 June 2019.

25 In Section V, subparagraph D(2), the date reference is replaced by 30 June 2017.

In Section VII, paragraph B, the alternative procedures under the special due diligence rules include the procedure given in paragraph 13 of the Commentary on Section VII.
30 Under Section VII, subparagraph C(4), an entity has the option of treating all dollar amounts referred to in the CRS standard as being in New Zealand dol- lars.
In Section VIII, subparagraph B(1)(c), the term Non-Reporting Financial In- stitution includes a person or entity determined by the Commissioner to be a 35 70 Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill Schedule 1 non-reporting financial institution for the purposes of the CRS applied stand- ard.

In Section VIII, subsubparagraph B(8)(b), the date reference is replaced by 1 July 2017.
In Section VIII, subsubparagraph B(9)(a), the date reference is replaced by 30 June 2017.

5 In Section VIII, subsubparagraph B(9)(d), the date reference is replaced by 30 June 2018.

In Section VIII, subparagraph C(9), the definition of the term Preexisting Ac- count is the replacement definition given in paragraph 82 of the Commentary on Section VIII, with the date reference in subsubparagraph (a) of the replace- ment definition being 30 June 2017.
10 In Section VIII, subparagraph C(10), the definition of the term New Account is— New Account means a Financial Account maintained by a Reporting Financial Institution that is not a Pre-existing Account.

15 In Section VIII, subparagraph C(14), the date reference is replaced by 30 June 2017.

In Section VIII, subparagraph C(15), the date reference is replaced by 30 June 2017.

20 In Section VIII, subsubsubparagraph C(17)(f)(ii), the date reference is replaced by 1 July 2017.
In Section VIII, subparagraph C(17)(g), the term Excluded Account includes an account determined by the Commissioner to be an excluded account for the purposes of the CRS applied standard.

In Section VIII, paragraph D(4), the term Reportable Jurisdiction means a jurisdiction identified as a reportable jurisdiction by the Governor-General by Order in Council and not subject at the time to a suspension under an Order in Council or a determination of the Commissioner.
In Section VIII, paragraph D(5), the term Participating Jurisdiction includes New Zealand in addition to jurisdictions determined by the Commissioner to be participating jurisdictions.

In Section VIII, subparagraph E(4), the definition of the term Related Entity is the replacement definition given in paragraph 82 of the Commentary on Sec- tion VIII.

25 30 35 Wellington, New Zealand: Published under the authority of the New Zealand Government—2016 71