There have been a raft of tax changes affecting businesses and investors over the last year, many effective from 1 April. Here are the main ones for this year:
- Ring-fencing of residential tax losses - from 1 April tax losses generated from residential properties will no longer be deductible against other income sources. They may be deducted from profits of other rentals in the same portfolio, but where they are a sole investment the losses are retained to be deducted from future profits. They will be deductible from taxable profits arising from sale of the property under the Brightline Test. It will become increasingly important for rental investments to be cash flow positive, when investors no longer have the benefit of tax deductible losses.
- Goods & Services Tax on Imported Goods - from 1 October 2019 goods imported by NZ resident consumers (below the current $1000 threshold) will be subject to GST at the border. In most cases this will be collected and remitted by the overseas supplier. For business owners that are regular importers of goods the existing rules will apply. This is expected to make local vendors more competitive against imports.
- Payday Filing for Employers - businesses are required to file the PAYE returns for each payrun from 1 April. Rather than filing returns at the same time as paying them on the 20th of the month following for small employers, or 5th and 20th for large employers, returns are required to be filed with each payrun. Payment dates remain the same. Updates to payroll systems need to be implemented before the first payrun to ensure the ability to file returns. Cloud-based payroll systems will be updated automatically. Manual filing of returns are now done through MyIR.
If you need any information on how you may be impacted by these changes, give the team at Engine Room a call.