Greg Neill
Tax matters are not at the forefront of most people's minds at this time of year, but the wind down for the holiday period provides an opportune time to look forward to the coming year and consider what it may bring on the tax front.
At an international level, the term "BEPS" ("base erosion and profit shifting") is the current buzz word among the tax community and media.
Essentially this refers to strategies employed by multi-national enterprises to shift taxable profits to jurisdictions with no or low tax. Plenty has been said in the media recently about how little tax the likes of Google or Apple pay in certain countries relative to the income earned from those countries.
However, the issue is broader than that as, for example, many New Zealand companies seek to ensure tax is only paid in New Zealand irrespective of where they trade.
Although that may seem a bit distant from the activities of businesses locally, BEPS work is being undertaken by our government and others around the world to address this problem and to ensure our tax rules work sensibly in the digital age. The IRD recently released a policy document in this area which noted several issues of focus over the coming year.
Those issues include interest paid cross-border between related parties and so-called "hybrid" entities and financial instruments that produce differing tax treatments in different countries.
If your business has non-resident shareholders, borrows from or pays fees to non-residents or regularly makes offshore supplies, then there may be law reform proposals of relevance for you in the New Year.
Exchange of information between tax authorities will also become increasingly common in 2015. From January 1 the "Convention on Mutual Administrative Assistance in Tax Matters" becomes fully operative in New Zealand. This will allow Inland Revenue to request information from the tax authorities of other countries and to seek assistance in collecting outstanding tax debts from taxpayers who have disappeared overseas. We have already seen many situations where the IRD have asked follow-up questions of New Zealand taxpayers as a consequence of information received from offshore.
At a more local level, new rules relating to employer-provided accommodation and employee allowances will apply from April 1.
If you provide allowances to your employees for things such as meals, accommodation or clothing, you need to be aware the tax rules in relation to those allowances will change in 2015.
Finally, we will be keeping an eye on the Australian government as it conducts the "white paper" review of its tax laws throughout next year. The outcome of that process could have a knock-on effect for our own tax laws, including any potential reduction in the company tax rate. It promises to be another year full of activity in the tax world.
Happy holidays to all.
-Greg Neill is head of tax advisory at Crowe Horwath - Hastings, Napier and Waipukurau and can be contacted at greg.neill@crowehorwath.co.nz
This information is general in nature and readers should seek specialist advice before making financial decisions.