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Tax changes from 1 April 2021: NZ International Tax & Property Advisors Explains

Friday 16 April 2021, 9:03AM
By Media Giant
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From 1 April 2021, several new tax changes have been introduced in New Zealand. Let NZ International Tax & Property Advisors explain some of these and how they might affect you!

Motor Vehicle’s kilometre rates

New kilometre rates have been announced, which can be used to reimburse employees for the usage of their own vehicles for business purposes or to determine the deduction available for businesses for their vehicle usage. The kilometre rate is based on the vehicle type and the kilometre usage for the year. 

The Tier One rate of 82 cents per kilometre can be used for the first 14,000 kilometres per year. Tier Two rates of 28 cents for petrol or diesel, 17 cents for petrol hybrid and 9 cents for electric vehicles per kilometre are used for all usage after 14,000 kilometres.

Given the changes, it might be time for your business to consider whether employees should continue to be provided with motor vehicles or whether it would be more cost-effective to reimburse them for business use of their motor vehicle. Contact NZ International Tax & Property Advisors if you wish to discuss motor vehicle options available to you.

Low value assets

Given COVID tax concessions, low value asset’s threshold was increased from $500 to $5,000 until 16 March 2021. From 17 March 2021, low value asset’s threshold was reduced from $5,000 to $1,000 (GST exclusive).

If you are planning on acquiring assets, contact NZ International Tax & Property Advisors to see how you can maximise your low value assets deductions this year.

RWT/NRWT returns

From 1 April 2021, resident withholding tax or non-resident withholding tax returns must be filed in standard electronic format by the 20th of the month in the month the amount was paid. Other new changes include:

  • it is no longer a requirement to file a return if interests, dividends, and royalties have not been paid;
  • parties that are paying taxable dividends, regardless of whether RWT or NRWT is payable, are required to file a return.

NZ International Tax & Property Advisors can assist with preparing RWT and NRWT returns, which can include a review of dividend documents to ensure they meet the Companies Act and tax requirements.

Automatic Assessments

IRD has issued automatic assessments of income tax returns since 2019. Where there is incomplete information, IRD will request from the taxpayer and the taxpayer will have the opportunity to provide this information to the IRD.

Over time, IRD identifies that taxpayers incorrectly lodge the IR3 return instead of simply providing the requested information. Other issues include

  • incorrect information held by IRD
  • Unexpected tax bills
  • Amendments made after terminal tax due date not following the correct procedure

If you have received an automatic assessment but unsure about its accuracy, have been asked to provide more information or expect to file a tax return, please get in touch with NZ International Tax & Property Advisors.

NZ International Tax & Property Advisors is a chartered accounting firm offering accounting, tax, property, and training services to locals, migrants and businesses. We have over ten years of experience in Big Four, Mid Tier and boutique cross border tax Chartered Accountant firms specialising in cross border tax for migrants and expats, taxation on land transactions, IRD disputes and resolutions and small and medium business tax. Contact us now for a free 30-minute consultation!

For more information, visit our website at https://nztaxprop.co.nz/.

DISCLAIMER No liability is assumed by NZ International Tax & Property Advisors for any losses suffered by any person relying directly or indirectly upon any article within this article. It is recommended that you seek written advice before acting on this information.