Legislation designed to simplify interactions with the tax system has passed its third reading in Parliament and now awaits Royal Assent.
Revenue Minister Stuart Nash says the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill sets the annual rates of tax for the 2017-18 tax year and implements four broad policy changes. It will:
- Reform the administration of PAYE (wage and salary deductions) to require employers to provide more timely information to IRD
- Reform the way banks and other institutions provide information to IRD about investment income
- Modernise the taxation of employee share schemes
- Extend the bright line test on residential investment properties from two years to five years.
“This is a bill which benefits ordinary New Zealanders. In designing these measures, we were careful to take into account people’s unique circumstances,” Revenue Minister Stuart Nash says.
“The bill provides better income information to give more accurate Working for Families entitlements and it will also reduce the number of people getting into debt. The bill achieves this by providing Inland Revenue with accurate and more timely information from the payers of employment and investment income.
“The other major aspect of this bill is to modernise and strengthen the tax rules relating to employee share schemes. We want to make sure that the tax treatment of employee share schemes is broadly similar to the tax treatment of other forms of remuneration.
The extension of the previous government’s bright-line test from two years to five years will help dampen property speculation and make homes more affordable. The extension means that profits from residential investment properties which are bought and sold within five years will generally be taxable.
“This proposal will ensure that residential property speculators pay income tax on their gains and makes property speculation less attractive. We need investment which grows the economy and creates jobs, not the sort of investment which distorts the residential housing market. This measure will bring fairness back into the tax system,” Mr Nash said.