Tax Updates: 13 March 2023

Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion on any national or international tax issues, please contact Richard via email at richard@gilshep.co.nz.

Disputes process updated SPS

For those of you who are involved in tax disputes with the Revenue, previously, if you wanted to understand the process and how things should be managed by the Commissioner, depending on who had launched the first missile to commence all-out war, dictated which standard practice statement (SPS) you needed to refer to – SPS 16/05 for a pre-emptive attack by Inland Revenue (IR), versus SPS 16/06 if the taxpayer had hit the red button first.

One would certainly suggest something more sensible, therefore, the recent release of SPS 23/01, which has a commencement date of 24^th February 2023 and replaces both aforementioned SPS’s.

The new statement combines the commentary from the previous two editions, and once again sets out the rights and responsibilities of the Commissioner and taxpayers, when either party commences a dispute after an assessment, adjustment to an assessment, or other disputable decision.

What’s different about SPS 23/01 however, is that it contains additional discussion on the following topics:

• Certain qualifying taxpayers can have an assessment corrected without a Notice of Proposed Adjustment (NOPA). A qualifying individual is one whose income is made up solely of “reportable income”, such as income from employment.

• In cases where IR issues a deemed assessment of reportable income — how this income is assessed, and when a taxpayer can dispute such an assessment.

• How IR seeks to protect a taxpayer’s fair trial rights when prosecution action is being considered during the dispute process.

• What occurs when a taxpayer’s dispute document does not meet the required “standard” deficiencies in the contents of a taxpayer’s dispute documents.

• Where there is an existing dispute, how an additional adjustment (or an increase in a taxpayer’s tax liability) may be proposed.
  
• Some decisions made under Covid-19 response legislation are excluded from the definition of “disputable decision”.

You can locate SPS 23/01 on IR’s Tax Technical website.

FBT prescribed interest rate increases again

A bit like English prime ministers, clearly the new prescribed rate of 6.71% which applied to FBT quarters commencing 1^st January 2023 was not doing its job, and consequently it has already fallen on the sword, with a new rate of 7.89% to apply to quarters commencing 1^st April 2023.

Let’s see if this new rate does a better job, and lasts a little longer!