1 April 2017 Tax changes

Under the 2016 budget there were various tax changes that came into effect on 1 April 2017, and a summary of these changes are below;

  • If you have contractors working for you who receive schedular payments they will need to complete a new IR330C Tax rate notification for contractors form when they start or if they want to change their deduction rate.
  • The IR330 form will now only be used for employees who are receiving salaries or wages.
  • Contractors subject to the schedular payments rules can now elect their own deduction rate in the new IR330C form, subject to IRD imposed minimums.
  • Who is included under the schedular payment rules has been extended to now include labour hire businesses
  • The Use of Money Interest (UOMI) rate rules have now changed for the March 2018 year on. Some of the changes include;
    • The threshold for imposing (UOMI) has increased from $50,000 Residual Income Tax (RIT) to $60,000
    • The $60,000 RIT threshold will now apply to non individuals, so Trusts and Companies etc
    • UOMI will still apply if you miss a payment, or make a late payment, with the interest being applied from the due date.
    • If you use the standard provisional tax option then any UOMI will be charged based on the difference between the RIT and provisional tax paid, with the UOMI start date depending on the last instalment date or terminal tax due date depending on your circumstances.
  • The monthly 1% incremental late payment penalty will not be imposed on the following;
    • GST debts for the 31 March 2017 periods and later
    • Income tax (including provisional tax) 2017-2018 years and later
    • Working For Families Tax Credit overpayments for the 2017-2018 and later income years
  • IRD has new information sharing arrangements from 1 April;
    • With approved credit reporting agencies so that a companies reported unpaid tax is shared and reported under your credit rating under section 85N of the Tax Administration Act 1994
    • With the Companies Office to help prevent, detect, investigate or provide certain evidence of offences under the Companies Act 1993 as per section 85M of the Tax Administration Act 1994

We will advise on the application of the above rule changes to your personal circumstances as we work on your 2017 accounts and tax returns.