Revenue Minister Stuart Nash has confirmed Parliament will extend tax relief for Canterbury businesses affected by issues relating to depreciation following the earthquakes.
Mr Nash today introduced a Supplementary Order Paper (SOP) to the Taxation (Annual Rates, Modernising Tax Administration, and Remedial Matters) Bill currently making its way through Parliament.
“The SOP extends tax relief for Canterbury businesses affected by earthquakes. It extends depreciation roll-over relief for a further five years to the end of the 2023-24 income year. I have been advised that at least 40 Canterbury businesses will be adversely affected if current depreciation provisions are not extended.
“The tax issue arises because an insurance payout on a depreciable asset can attract a tax liability which may cause consequent cash flow problems. We do not want to hinder the city’s recovery or unfairly burden these taxpayers.
“Many Canterbury businesses are experiencing problems outside their control, such as delays with insurance pay-outs or finding tenants for properties or making progress on building projects. This measure will provide relief to affected businesses and further assist with the Canterbury rebuild.”
Mr Nash says the SOP will also close a loophole which allows non-profit entities to potentially avoid GST on income from asset sales. The change was signalled in an issues paper released on 15 May and will apply from that date.
“The GST treatment of non-profit organisations differs from other entities,” says Mr Nash. “Non-profits can register for GST and claim GST refunds on most of their expenses, even if their turnover is below the $60,000 threshold for GST registration. In many cases non-profit bodies do not pay much GST on their activities.
“In turn, when a GST-registered body sells an asset for which it has claimed GST expenses, it must pay GST on the income from the sale. Inland Revenue has applied this rule since GST was first introduced in 1986.
“Revenue officials have recently been advised of a new legal interpretation of this rule which exposes the tax system to potential losses. For the avoidance of doubt, the SOP introduced today will clarify the GST rules.
“The new interpretation is not consistent with the way the GST rules have been applied and understood in the past. If GST expenses have been claimed by a non-profit body in relation to an asset, GST should apply to the asset when it is sold or there is an equivalent event, such as an insurance pay-out.
“The tax system is based on fairness, and being simple and efficient to operate. The new interpretation threatens those principles and the law change restores certainty.
Revenue Minister Stuart Nash says New Zealand’s ability to detect and prevent tax evasion is enhanced by an update to our double tax agreement with Hong Kong which is now in force.
The update to the 2010 double tax agreement (DTA) removes an impediment to the automatic exchange of information (AEOI) between the two tax jurisdictions.
“The double tax agreement with Hong Kong is one of 40 such tax treaties with our main trading and investment partners,” says Mr Nash. “They encourage growth in economic ties by reducing tax impediments to cross-border trade and investment.”
“Double tax agreements provide greater certainty of tax treatment, eliminate double taxation, reduce withholding taxes on cross-border investment returns, and exempt certain short-term activities from income tax.
“But they also enable New Zealand and Hong Kong tax officials to help each other to detect and prevent tax avoidance and evasion. DTAs do this by establishing a mechanism for exchanging information.
“New Zealand residents are taxed on their worldwide income and so the exchange of information is critical to effective tax enforcement. It makes it possible to obtain off-shore information to verify that residents are correctly reporting their foreign income. Before these updates took effect, information was only exchanged on request between Hong Kong and New Zealand. The update allows for automatic information exchanges under a global standard supported by the OECD and G20.
“Under this AEOI initiative, New Zealand financial institutions must review their accounts and compile information which is then reported to Inland Revenue. The updated double tax agreement will allow New Zealand’s first automatic exchange of information with Hong Kong to occur by 30 September 2018.
“The AEOI initiative is an international response to mounting concerns with the problem of off-shore tax evasion, that is, the ability of individuals and entities to evade tax by hiding their wealth in off-shore accounts.
“Hong Kong is an important international financial centre and if it was not included as an AEOI exchange partner it would leave a significant gap in our tax compliance network. We are progressively expanding and updating our network of double tax agreements to clamp down on tax evasion,” Mr Nash says.
A new online tool to help small business owners quickly and easily choose their business structure has been launched by Small Business Minister Stuart Nash.
“Most businesses in New Zealand are either sole traders, companies, or partnerships. It can sometimes be daunting or confusing to decide which structure works best for your business,” Mr Nash says.
“New Zealand business structures have different legal and financial obligations which can affect the ability of a business to evolve or grow. It’s important for businesses get it right the first time.
“We are committed to helping New Zealand small businesses succeed, and that means ensuring they know where to get support from the very beginning.
“The online tool, developed by business.govt.nz, asks small business owners three quick questions. The questions help determine whether a sole trader, partnership or company structure is likely to be more suited to their business.
“The new tool, Choose Business Structure, takes an all-inclusive view of the various obligations and considerations businesses will face, such as tax, ACC, financial statements, and indemnity insurance. It was developed in collaboration with the Companies Office, New Zealand Business Number (NZBN), Inland Revenue, ACC and the private sector.
“It also offers practical tips, comparison tables and suggests when a business owner should talk with experts. It gathers information in one place so that small business owners can quickly and easily make decisions with confidence. If you’re already in business, it’s also a good way to check that you’re operating under the right structure.
“There are of course other structures such as trusts, unlimited liability companies, and co-operatives. I encourage business owners to check the new tool and explore other resources available from MBIE,” Mr Nash says.
Choose Business Structure is part of the new suite of tools on business.govt.nz designed to help businesses, with guidance personalised to their individual needs. The tool follows the launch of a re-vamped ONECheck in May, which is now being searched almost 2,000 times a day.
Two new policing initiatives are being launched in Auckland with the objective of preventing crime, improving community safety, and reducing reoffending.
Police Minister Stuart Nash will today launch an iwi community justice panel, Te Pae Oranga, at Hoani Waititi Marae in west Auckland, before travelling 50 kilometres to the east of the city to open a new Police base in Beachlands on the Pohutukawa Coast.
“The trustees of Hoani Waititi Marae in Glen Eden have a long history of leading innovative restorative justice programmes,” Stuart Nash says.
“Hoani Waititi was one of the first marae to deliver Family Group Conferences and the late Judge Mick Brown held the first Youth Court sittings there. That approach has been maintained by current leaders including Sir Pita Sharples and Dame June Mariu.
“Hoani Waititi trustees have worked in partnership with Police to establish the country’s eleventh iwi community justice panel, Te Pae Oranga. It is the first iwi panel in the Waitematā Police District and means all three Auckland policing districts now have access to the restorative justice initiative.
“The panel has real potential to reduce reoffending and victimisation in Waitematā, as well as keeping young people off the pathway of crime that leads to prison. At around $100,000 per year per inmate, we can’t keep building American-style mega prisons every few years as the main feature of our justice policy.
“The panels are not a soft option. Police must agree to refer an offender for a hearing. The offences are at the lower end of the scale, often involving careless driving or shoplifting, wilful damage or public disorder. The offender must admit guilt and be held to account for what they have done. They are open to Maori and non-Maori.
“Members of the panel, respected community figures, encourage the offender to deal with the issues that led to the crime and work on a plan to stop it happening again. The offender has to make good for the harm they have caused. That might involve an apology to the victim, financial reparation, or some form of community service.
“Early research shows reoffending by those who have gone through a panel hearing is around 12% lower than other justice processes. They are particularly effective in reducing offending by young Maori between 17 and 24. We know they aren’t the whole answer, and that they won’t work for everybody. But we are bringing a fresh set of eyes to the challenges of our justice system,” Mr Nash says.
“On the other side of town the new Beachlands community policing base is in a fast-growing suburb in the largest policing district in the country. Despite the modern residential subdivisions it retains some of its original rural characteristics such as isolated road access, and is 20 kilometres from the nearest Police station.
“The new community base will bring a valuable Police presence to Beachlands. As well as the growing residential population its beachfront location is a magnet for visitors. In the summer months Police have recorded an increase in seasonal crime such as property damage, theft and antisocial crimes linked to alcohol.
“Beachlands has a strong volunteer network of neighbourhood watch and community patrols. Local businesses are also investing in crime fighting tools like number plate recognition cameras. The new Police base will offer greater assurance to locals who want to see more resources for crime prevention and community safety.
“The Beachlands community policing base has a public counter staffed from 9.00am to 4.00pm, five days a week. Volunteers help with office duties while three constables use the site as a base for getting out into the community. More constables may be deployed there as resources start to become available from the government’s increased commitment to policing in Budget 2018.
“My priority as Police Minister is to ensure Police are fully resourced to help keep our communities safe. That is why our first Budget devoted an extra $300 million to policing. It is a first step. There will be more in future budgets. We are well on the way to meeting our plan for 1800 extra Police officers and 485 Police support staff.
“These two initiatives show the value of Police working in partnership with local communities to enhance safety, focus resources on crime prevention and look at new ways to reduce offending,” Mr Nash says.
Police recruitment is taking another significant step forward with the arrival of eighty new recruits who begin training today at the Royal New Zealand Police College.
Police Minister Stuart Nash has extended a welcome to the recruits of Wing 319 who arrived over the weekend and begin their formal training today.
“I am delighted to see the diverse demographics of Wing 319,” Mr Nash says.
“There are 37 women, representing 46 per cent of the new recruits in this wing. Police have a goal of women making up 50 percent of new recruits as part of the longer-term plan to have more women entering senior ranks.
“Fifteen percent of the new recruits identify as Maori, just under eight percent as Pasifika, and nine percent as Asian. The youngest recruit is 18 years old and the eldest is 46.
“There is a tough 16-week training course ahead of these 80 recruits and I wish them all the best. They have shown a great deal of dedication and hard work to even make it into formal training and I acknowledge their commitment and the support of their families.
“Before they arrive at Police College every applicant sits a series of tests. They have to demonstrate their fitness levels, reasoning abilities and character, undergo reference checks and a medical examination. They must prove their skills at communication, building relationships, solving problems and delivering a high standard of service.
“We are building a stronger policing presence in our neighbourhoods to increase community safety and prevent crime. We set aside $300 million in new operating funding in this year’s Budget as a first step towards our goal of 1800 new Police officers and 485 new support staff over three years.
“I offer my thanks also to the Chief Executive of MBIE, Carolyn Tremain, who has agreed to be the Patron of Wing 319. Ms Tremain will offer valuable guidance and act as a mentor to the recruits, sharing her extensive knowledge of leadership and service in the public and private sectors,” Mr Nash says.
New measures to ensure multinational companies pay their fair share of tax will come into force next week.
The Taxation (Neutralising Base Erosion and Profit Shifting) Bill tonight passed its third reading in Parliament. Revenue Minister Stuart Nash says it takes effect from 1 July and will considerably improve the integrity of the tax system.
“Companies should ideally pay tax in the right country,” says Mr Nash. “This legislation will ensure that multinationals pay tax based on the actual economic activity they carry out in New Zealand.
“It is not in the interest of New Zealand taxpayers if multinational companies avoid paying taxes here. The changes address the problem of companies operating cross-border and using aggressive tax structuring to reduce the tax they pay.
“Estimates from Inland Revenue are that these measures could result in an extra $200 million of tax revenue each year, once fully phased in. This will contribute to other Government priority areas like health, housing, education and policing.
“Ultimately however this is a matter of fairness – multinationals paying their fair share. Most multinationals operating here pay the tax they should and are compliant. But some adopt base erosion or profit shifting [BEPS] strategies to minimise their tax obligations.
“The BEPS strategies distort investment and threaten the integrity of tax systems all over the world. It also means Governments lose out on tax revenue. Unlike smaller domestic companies and individuals, large companies with cross-border structures can exploit opportunities to get around tax rules.
Mr Nash says the BEPS legislation is a first step, and he has asked Inland Revenue officials to work closely with international agencies like the OECD and G20 to consider whether further measures are required.
“These changes enjoy the unanimous support of Parliament and are possible thanks to the work of MPs from all political parties, as well as valuable advice from tax professionals and useful submissions from members of the public.
“We will have a better, fairer tax system as a result of these changes,” Mr Nash said.
The changes will prevent multinationals from using BEPS strategies, including:
artificially high interest rates on loans from related parties to shift profits out of New Zealand
related-party transactions which are intended to shift profits to offshore group members in a manner that does not reflect the actual economic activities undertaken in New Zealand and offshore
hybrid mismatch arrangements that exploit differences between countries' tax rules to achieve an advantageous tax position
artificial arrangements to avoid having a taxable presence or a permanent establishment in New Zealand
tactics to stymie an Inland Revenue investigation, such as withholding relevant information that is held by an offshore group member.
New Zealand’s export earnings from seafood are on the rise, with aquaculture leading the way, says Fisheries Minister Stuart Nash.
The Ministry for Primary Industries’ Situation and Outlook report for June 2018 predicts New Zealand’s seafood export earnings will grow from $1.8 billion to $2.1 billion by June 2022.
“Aquaculture is set to be the main driver for the forecast growth, thanks largely to increased mussel harvests, and higher prices as demand continues to grow in key markets,” says Mr Nash.
“We expect hatchery-bred spat to be a boon for mussel production. We are already seeing better mussels as a result of hatchery spat produced through the SPATnz Primary Growth Partnership programme.
“We are also seeing salmon production increasing with three new farms operating in the Marlborough Sounds.
“Aquaculture export earnings are forecast to reach $430 million this year and reach nearly $600 million in 2022. Export earnings for New Zealand’s wild capture fish products are expected to reach $1.4 billion this year and climb to $1.5 billion in 2022.
“We expect to see higher prices as a result of more people wanting to eat fish and reduced global supply due to China’s plans to reduce its catch,” says Mr Nash.
“It is clear the environmental credibility of our seafood products will be a vital factor in our export success. The Marine Stewardship Council has certified many of our fisheries as sustainable. Further certification of this kind will support export prices.
“Innovative approaches to harvesting will also play their role. This Government’s recent regulation changes have allowed the use of innovative trawl technology to allow more precise fishing and to produce high quality products such as those under the new Tiaki brand.”
Police recruitment has stepped up a gear with the largest intake of recruits in more than a decade beginning training at the Royal New Zealand Police College near Porirua.
“I offer congratulations and welcome to the 100 new recruits who begin the intensive 16 weeks training course as part of Wing 318,” says Police Minister Stuart Nash. It is the largest single intake since 2006.
“The 100 recruits arrived at the weekend and begin formal training today. They have demonstrated commitment and dedication to get this far, and I acknowledge their families and friends for the support offered behind the scenes.
“Before they arrive at Police College every applicant goes through assessments and tests and a distance learning course. They are expected to demonstrate their fitness levels, reasoning abilities and character, and to undergo reference checks and a medical examination. They must prove their skills at communication, building relationships, solving problems and delivering a high standard of service. They even sit a typing assessment to test their computer and technology skills.
“Our new Police recruits are professional and talented before they even begin training. We ask a lot of them and their families and the training course is a demanding time for everyone involved.
“Budget 2018 set aside almost $300 million in new operating funding for this unprecedented recruitment drive as a result of the Coalition Agreement with New Zealand First. We are striving to recruit 1800 new Police officers over three years, backed up by 485 support staff. Since the government was formed in October 2017, 455 new Police officers have graduated from the Royal New Zealand Police College.
“The youngest recruit in Wing 318 is 19 years old and the eldest is 50. There are 38 women and 62 men, and a number of new Kiwis from Europe, Africa, Asia, Australia, and Latin America. I offer my thanks to Wing Patron Laulu Mac Leauanae, the Chief Executive of the Ministry for Pacific Peoples, for accepting the important role as mentor for the new recruits.
“Our neighbourhoods want a greater uniformed presence for community policing and they also expect an increased focus on organised crime. We are building a stronger Police service and giving them tools to prevent offending, enforce the law and keep communities safe,” says Mr Nash.
Police Minister Stuart Nash is congratulating the 78 new recruits who graduate today from the Royal New Zealand Police college near Porirua.
“The graduation of Wing 314 takes the total number of new recruits since this government was formed to 455 frontline officers,” says Mr Nash.
“Budget 2018 set aside $298.8 million in new operating funding as a first step towards the Coalition government’s commitment to strive for 1800 new officers over three years. On top of this, we are funding 485 support staff.
“Budget 2018 has provided the foundation for our recruitment drive and the ability to meet our objectives of greater crime prevention and going hard against organised crime.
“Our communities want to know that the growing threat from organised crime is being targeted by specialist Police officers. Twenty-first century Policing requires greater resources and tools to investigate and disrupt transnational drug smuggling, child sex exploitation, cyber-crime and money laundering.
“Our neighbourhoods want a greater uniformed presence for road policing, family harm and child protection, burglaries and aggravated robberies, and the ability to respond to natural disasters and search and rescue incidents. That is what we will deliver.
“The graduation of Wing 314 is the seventh since this government took office. There will be another seven by the end of January 2019. We are building a stronger Police service and giving them tools to prevent offending, enforce the law and keep communities safe.
“The new recruits in Wing 314 bring diverse and talented qualities to Police. The Wing includes 18 migrants who can speak at least eleven foreign languages, 23 officers who have tertiary degrees, 25 who have post-secondary qualifications, and many with sporting and cultural achievements and family connections to Police,” says Mr Nash.
Long-serving Police Assistant Commissioner Wally Haumaha has been appointed to a new role as Deputy Commissioner.
“The Deputy Commissioner of Police is a statutory appointment, made by the Governor-General on the recommendation of the Prime Minister,” says Police Minister Stuart Nash.
Wallace (Wally) Patrick Haumaha, QSM and ONZM, has been appointed for five years from 3 June 2018. The term of the current Deputy Commissioner Vivian (Viv) Rickard ends on 2 June. Mr Rickard was appointed in 2010 and has served two terms.
Wally Haumaha is currently Deputy Chief Executive Maori, at Assistant Commissioner rank. The Deputy Chief Executive Maori position leads the Maori, Pacific and Ethnic services communities group. He first joined New Zealand Police in 1984.
“Wally Haumaha is a highly respected leader across our communities,” says Mr Nash.
“He has led work to build the cultural capability of Police across all Districts, and is a key advisor on diversity strategies for Police recruitment. He is committed to enhancing Police leadership and responsiveness to Maori, Pacific and ethnic communities.
“Mr Haumaha has driven the development and implementation of the restorative justice initiative Te Pae Oranga, formerly known as Iwi Community Panels. The panels provide alternative resolutions for low-level offending and require an offender to plead guilty, work on a plan to identify the harm they have caused, and identify ways to avoid offending again.
“He has been responsible for the Iwi Community Panels since they were established by the previous government as a pilot scheme in 2014. We have now made them a permanent part of the Prevention First operating model. Nine panels are in place and a further four will be established in June. Planning is also underway for another six by early 2019. This work is a crucial component of plans to reform the criminal justice system by reducing reoffending and victimisation and breaking the cycle that leads to imprisonment.
“Wally Haumaha has the clear vision and leadership skills required to deliver on the Government’s priorities for Police. I expect him to play a key role to strengthen Maori leadership within Police and enhance the relationship between Police and Maori communities, in order to reduce both victimisation and offending. He is also superbly placed to work with other justice sector agencies to reduce the prison population.
“I’m very pleased to appoint Mr Haumaha to this role. I also wish to acknowledge and thank Viv Rickard for his commitment and service to Police, especially as a member of the Police Executive for most of the past decade,” says Mr Nash.
Mr Haumaha was awarded the Queen’s Service Medal in 1998 for service to the community, and was made an Officer of the New Zealand Order of Merit in 2017 for services to NZ Police and Maori, Pacific and ethnic communities.