Tax in 2012: The Year So Far
Grange Associates Ltd - 3 August 2012
Now that we are over halfway through the year, it’s a convenient
time to briefly recap the tax changes we’ve seen in 2012 so far.
2012 has been a fairly static year in terms of tax changes thus far,
and that looks set to continue into the future, with the Minister of Finance signaling in a pre-Budget press
conference that there would be no new taxes in the short term.
April 1 Payroll
- Introduction of Employer Superannuation Contribution Tax (ESCT) on
compulsory KiwiSaver Employer Contributions
- ACC Levy rate reduction
- Compulsory Student Loan tax code for all student loan
Use of Money Interest
Applicable from 8 May 2012, the new rates
- 8.40% on debit balances (down from
- 1.75% on credit balanes (down from
From a tax perspective, the Budget was fairly
- Repeal of tax credits
- Mixed use asset proposals confirmed – for more on that see our new
- Livestock amendments
- Inland Revenue provided with $78 million in funding for more compliance and
There will be comparatively small revenue gains from projected Budget
tax changes. Expected revenue from livestock, tax credit and mixed use assets
changes totals $410 million over four years. In comparison, increases in tobacco excise will net $532 million,
while petrol excise & RUC increases will net $421 million over the same
KiwiSaver Turns Five
It has been five years since KiwiSaver began on 1 July 2007, which
means some KiwiSaver members are now eligible to access their funds.
From 1 July 2012, KiwiSaver members who qualify for NZ Super, or who
joined KiwiSaver between the ages of 60 and 65 and have been a member for five years are eligible to withdraw
If you meet the above criteria and wish to access your KiwiSaver funds, contact your KiwiSaver scheme provider for
If you are an employer, be aware that if you have employees that are
eligible to withdraw their savings, you are no longer liable to pay compulsory employer contributions for
those employees. You can continue to pay voluntary contributions if you
Salary Trade-Offs Issues
April 2012 saw the introduction of an issues paper on recognising
salary trade-offs as income.
The aim of the proposed legislation is to ensure non-cash employee
benefits currently outside FBT & PAYE rules will become taxable, with the main focus being on-premises
car parks and childcare available to employees and also benefits given to employees of
It has not yet been decided whether the benefits will fall under the
umbrella of the FBT or PAYE rules, but legislation is expected to pass later this year, and will come into
effect from the start of the 2015 income year (starting 1 April 2014).
Four Year Filing Requirement for Individual
This would require taxpayers who chose to file a tax return to also
file returns for the previous four years. This is to avoid the current practice of “cherry picking”
where taxpayers file returns only for years where they are due a tax refund.
Any credits and debits arising from the four years would be offset
against each other in calculating any refund due or tax payable.
Any late payment penalties & interest due on tax payable would
only be incurred from a new due date, not backdated to the applicable income
The legislation has not yet been passed, and is likely to be deferred
until the start of the 2017 income year (starting 1 April 2016).
Increase in KiwiSaver Contribution
Under proposed legislation, employer and employee compulsory KiwiSaver
contributions will increase from 2% to 3%. This is likely to come into effect from 1 April
Currently bonus shares issued under profit distribution plans are
non-taxable. However, there is legislation in progress which aims to tax bonus shares issued under
profit distribution plans in the same way as taxable bonus issues are currently
For example, if you currently hold shares with Contact Energy &
receive tax free bonus shares under their profit distribution plan, note that future shares issues are likely
to be taxed.
All information is correct at the date of article
publication. Please note we provide the information as a service only. Accordingly, the contents are
not intended as a substitute for specific professional advice and should not be relied upon for that
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