• Budget 2018

    The House that Grant Built

Other tax measures

GST on Low Value Imported Goods

With effect from 1 October 2019 GST will be collected on low-value goods which are imported by consumers from online purchases of less than $400. 

The intention is to collect GST from offshore suppliers of these goods by requiring them to register for GST where the value of their supplies exceeds the standard GST registration threshold of $60,000 per annum.

Budget 2018 estimates additional revenue of $218 M over 5 years.

Although policy details are still being finalised the success of the voluntary registration for digitally imported services (colloquially referred to as the “Netflix tax”) suggests overseas suppliers will embrace the change and put systems in place to comply.

Tax Compliance Activity

There is the usual focus on increased funding for Inland Revenue to collect additional revenue from targeting non-compliant taxpayers particularly in the area of outstanding tax returns and targeting “tax dodgers” both at the domestic level and at the Multi-National Company level arising from BEPS (Base Erosion Profit Shifting) and transfer pricing.

Bloodstock Tax Changes

A small change is proposed to allow an upfront deduction for an investment in a “standout yearling” if acquired by an investor with the intention of breeding for profit.  The investor does not need to be in an existing breeding business.

  • A standout yearling is a yearling that commands attention by virtue of its bloodlines, looks and racing potential.
  • The aim is to improve the breeding industry to make it more financially attractive and increase the quality of the stock.

The Budget allows for only $4.8m over four years so it is not a major tax break.  It could be fun debating with an Inland Revenue expert on whether a yearling is a standout or not. 

100 Day Plan

The lack of fundamental changes to the tax system was to be expected in this Budget.  The prior announcement in December 2017 known as the 100 Day Plan contained the majority of the changes arising from the change of Government.  As a reminder the 100 Day Plan included:

  • The reversal of the National Government's personal tax cuts to deal with bracket creep.
  • The introduction of a Families Package including the Best Start payment of $60 per week for every new born child; and the Winter Energy Payment of $450 per person or $700 per couple for superannuitants and those on benefits.
  • Increase in minimum wage to $16.50 from 1 April 2019.
  • Increase in paid parental leave to 18 weeks then to 22 and 26 weeks by 2020.
  • The KiwiBuild programme for housing.
  • The Heathy Homes Guarantees Act imposing conditions on rental properties.
  • First year of free tertiary education.
  • Restart of contributions to the NZ Superannuation Fund.