Inland Revenue

Te wiki o te tāke; Will the IRD be able to deliver the cost-of-living payment? Potentially unwelcome GST surprise for farmers selling up.

The OECD was asked to prepare was a report that would focus on the further strengthening of international tax co-operation and what recommendations it has in this field. The development of international cooperation is one of the biggest themes in international taxation in the 21st Century and is also probably one of the least understood. That doesn't surprise me, given the scale of the project, because there's a lot of legislation that needs to be put in place by the middle of next year at the latest. The impact of going digital is emphasised and that it needs to speed up to improve engagement with taxpayers. But that would still mean that 20% of the current value of the farmhouse at the time of sale would be subject to GST, which would be an increased tax burden for many farmers and undoubtedly a surprise for some. Coming back to that 20% example I mentioned a moment ago, if 20% of the homestead was used for farming business and 80% for private purposes, there would be an adjustment for the output tax of 80% of the private portion. And finally this week, a couple of updates from the OECD. Firstly, it released its annual report on the taxation of wages. Basically, the tax wedge is the sum of the personal tax income tax payable by the employee plus any employee and employer social security contributions plus any payroll taxes less any benefits received by an employee. It also seems the Inland Revenue poured a bit of cold water on how the payments would be structured. According to these documents, this report was finalised on 4th of May, barely two weeks before the Budget was delivered on last week, which is very late in budget terms. In the wake of the Budget, a Cost of Living Payments bill was introduced and has now been enacted. Inland Revenue correctly identified that as soon as the announcement was made, they would get contacted about it which would put strains on their systems.