OPINION: Tax is a subject that everybody appears to have an opinion on, and when the topic comes up in a social setting it might probably result in some energetic discussions, but additionally some not fairly correct sharing of “details” about tax guidelines.
Beneath are a number of the generally shared tax misconceptions.
Utes aren’t topic to Fringe Profit Tax
There’s no exemption from FBT for utes, as an alternative there may be an exemption for “work-related automobiles”.
To qualify as a work-related car, a car should not be predominantly for carrying passengers (a ute might qualify, or a car which has had its rear seats eliminated or bolted down), the car will need to have distinguished signwriting with the enterprise identify or brand (magnetic indicators aren’t enough) and the one non-public use of the car may be dwelling to work journey with solely incidental stops on the best way (all different non-public use have to be prohibited).
A ute parked up on the sports activities discipline or the boat ramp means it’s not a work-related car and FBT needs to be paid.
If an worker pays some gasoline prices there isn’t a FBT on a car
Having an worker contribute to the prices of working a piece car can scale back the taxable worth of the car fringe profit, however it’s unlikely to remove it.
Typically, the taxable worth of a car that’s totally obtainable to an worker for personal use is calculated quarterly because the GST-inclusive value worth of the car multiplied by 5 per cent.
Any worker contributions are subtracted from this quantity earlier than the result’s multiplied by the related FBT fee (which could possibly be 49.25 per cent or 63.93 per cent)
Staff may be paid in reward vouchers with out tax
When workers obtain fee in money, then PAYE is to be deducted by the employer. When an worker is paid “in type”, then FBT is mostly the related tax to be contemplating.
Paying an worker in reward vouchers in any substantial means will end result within the employer needing to pay FBT (which is able to doubtless equate to across the identical quantity of tax, or extra, than what can be owing if the worker was paid in money).
There are two exceptions to this rule. The primary is the “de minimis rule” which offers that no FBT is payable if an employer has offered not more than $22,500 of unclassified fringe advantages to all workers within the final 12 months, and no worker is receiving greater than $300 of advantages in 1 / 4.
The second is the exemption from FBT for charities; nevertheless, this exemption doesn’t apply to “short-term cost services” (which might embrace the usage of a bank card or vouchers) the place the annual worth is greater than $1200 or 5 per cent of the worker’s wage and wages.
If land is owned for 10 years there gained’t be any tax when it’s bought
Whether or not the sale of land will likely be topic to tax can differ based mostly on a large set of circumstances, and it’s not true that any tax obligations robotically disappear as soon as land has been owned for 10 years.
The Revenue Tax Act 2007 accommodates a variety of circumstances the place land may be taxed, some are time-bound and expire 10 years after acquisition, some have variable tax timelines depending on when actions happen and a few don’t expire in any respect.
The intense-line take a look at doesn’t apply to the household vacation dwelling
The bright-line take a look at has the potential to use to any residential land which is bought throughout the related bright-line interval (which could possibly be both 5 years or 10 years) if the land isn’t going to be taxed underneath another land tax rule.
The one exception to the bright-line take a look at is that if the property has been the “major dwelling” of the proprietor (with a barely completely different rule for property owned by a belief).
An individual can solely have one major dwelling, and that is the residence with which the individual has the best connection (factoring in, for instance, the place rapid household stay, the place the individual’s employment relies, enterprise or financial ties, social connections).
On this case, a vacation house is unlikely to qualify for the primary dwelling exemption.
Solely revenue from New Zealand shares is topic to tax in New Zealand
That is false, any New Zealand tax resident is topic to tax in New Zealand on revenue earned anyplace on the planet. Whereas there are numerous methods to calculate tax on revenue from overseas shares, any funding revenue is taxable.
On a associated word, additionally it is a typical false impression that overseas alternate beneficial properties aren’t topic to tax. Any New Zealand tax resident with a overseas forex checking account is doubtlessly topic to tax on alternate fee actions (realised or unrealised).
Inland Income won’t ever discover out …
With its new pc system and knowledge sharing preparations, there may be little or no which might escape the eye of Inland Income.
Inland Income robotically receives particulars of property gross sales so will know the way lengthy a property was owned and if it was bought throughout the bright-line interval.
Inland Income receives all funding revenue information, so it is aware of what investments taxpayers have in New Zealand.
Inland Income routinely exchanges information with virtually 100 different international locations and due to this fact has lots of information about overseas revenue sources, together with financial institution accounts and investments.
Inland Income additionally routinely collects information to detect potential non-compliance with tax legal guidelines, this contains accumulating information from constructing provide companies to detect “money jobs” being accomplished by tradies; requesting buyer information from cryptocurrency companies; and requesting gross sales information from varied digital middleman platforms.
– Robyn Walker is a tax associate at Deloitte.