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New Zealand Payroll News
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Draft guidance on tax avoidance issues
The Inland Revenue has published an exposure draft for external consultation that examines the words of the legislation and the leading cases on tax avoidance to isolate key interpretative principles relevant to the application of sections BG 1 and GB 1 of the Income Tax Act 2004. Responses are requested by 17 December 2004.
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...back to 30 September 2004
Further information:
Inland Revenue website
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Shortfall penalty for taking an abusive tax position
The Inland Revenue has published a statement setting out an interpretative explanation of the shortfall penalty imposed by the Commissioner under section 141D of the Tax Administration Act 1994 on taxpayers who take an abusive tax position. It is a draft for comment and discussion. Responses are requested by 31 October 2004.
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...back to 16 September 2004
Further information:
Inland Revenue website
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Holidays Amendment Bill
A Bill to correct the unintended consequences of the Holidays Act 2003 was published on 1 September 2004. It is intended to ensure that fairness to both the employer an employee is maintained when paying an employee time and a half for a public holiday and requesting proof of sickness or injury in relation to sick leave.
The text of the Bill and explanatory comments are available to download from The Knowledge Basket.
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...back to 9 September 2004
Full Story:
The Knowledge Basket website
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Double tax agreements
Recently negotiated double tax agreements (DTAs) with South Africa and the United Arab Emirates (UAE) entered into force on 23 July 2004 and 29 July 2004 respectively, increasing New Zealand's network of such agreements to 29. A Protocol amending our existing DTA with the United Kingdom (UK) also entered into force on 23 July 2004.
The provisions of the new DTAs with South Africa and the UAE will apply in New Zealand to all income years beginning on or after 1 April 2005. Provisions dealing with withholding taxes, however, take effect from 1 September 2004. The provisions of the UK Protocol apply from various dates from 4 November 2003, when the agreement was signed.
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...back to 2 September 2004
Full Story:
Inland Revenue website
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Fringe benefit tax
The September issue of FBTnews includes:
- a correction to guidance given in the June issue that stated that Christmas parties (not held on work premises) for employees are subject to FBT. Christmas parties provided to employees and/or clients are subject to the entertainment rules rather than FBT.
- how to file FTB returns online and make electronic payments
- the FTB consequences of benefits provided by third parties where there is an arrangement between the employer and the third party, and the benefits would be subject to FBT if the employer had provided them.
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...back to 2 September 2004
Full Story:
Inland Revenue website
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Inland Revenue help for flood victims
The Inland Revenue has stressed that it will do all it can to help people hit by recent flooding in the Bay of Plenty. Child support customers and taxpayers with GST, income tax or PAYE tax due are urged to contact their accountant, tax agent, or Inland Revenue as soon as possible if they are going to have difficulty making payments.
Two one-stop-shops have also been established in Edgecumbe and Whakatane to provide affected residents with advice and information on government services. Inland Revenue staff are helping answer the help line's phones and providing assistance to callers with tax or child support questions. The government helpline phone number is 0800 779 997 and the Inland Revenue helpline is 0800 473 566.
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...back to 22 July 2004
Full Story:
Inland Revenue website
Inland Revenue website
Inland Revenue website
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Working Group to look at the Holidays Act 2003
The Minister of Labour has asked the Department of Labour to convene a working group of union and business sector representatives to discuss any unintended consequences arising from the implementation of the Holidays Act 2003.
The meeting will focus on the unintended consequences arising from the implementation of the Act rather than any issues with the underlying policy.
The Working Group's terms of reference describe the policy principles of the Act as
- an employee is entitled to three weeks annual holiday (rising to four weeks from 1 April 2007) paid at the greater of average weekly earnings or ordinary weekly pay and which does not expire
- Pay as you go annual holiday pay is only available where the employee works so irregularly that it is impossible to provide them with three weeks leave or where they are on a fixed term agreement of less than 12 months.
- an employer is entitled to one closedown period per year in which they can direct their employees to take their annual holidays
- an employee is entitled to 11 public holidays as a paid day off if they would normally work on the day
- an employee is entitled to time and a half for hours worked on a public holiday
- an employee is entitled to an alternative holiday if they would normally work on the day the public holiday falls and they actually do work.
- an employee should not be left out of pocket for a day taken as a public holiday, sick leave, alternative holiday or bereavement leave (i.e. the employee should not earn less than they would normally have expected to earn).
- an employee is entitled to five days sick leave per year which can be accumulated to a maximum of 20 days
- an employer should be able to request proof of entitlement to sick leave after a reasonable period of time
- an employee is entitled to three days bereavement leave on the death of a close relative and one day on the death of any other person where the employer accepts that the employee has suffered a bereavement.
The following specific questions have been set for the Working Group's consideration:
- What are the consequences of applying time and a half to any contractual rates that are designed to compensate an employee for working on a public holiday?
- What are the consequences of having to pay time and a half to an employee who is sick on a public holiday?
- Have you experienced direct and identifiable consequences for your business by being restricted in asking for a medical certificate for an employee's sick leave?
- Are there any other consequences arising from the implementation or drafting of the Act that you believe are confusing or unintended?
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...back to 8 July 2004
Full Story:
Employment Relations Service website
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Tax Information Bulletin
The June 2004 issue of Tax Information Bulletin has been published and, among other matters, provides a detailed look at the Income Tax Act 2004, the latest stage of the rewrite of the income tax legislation. The new Act received Royal Assent on 7 May 2004 and applies from the start of the 2005/06 tax year.
The rewrite is not intended to change tax policy, although a number of minor changes, as listed in Schedule 22A of the Act, are explained in some detail in the Bulletin.
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...back to 8 July 2004
Full Story:
Inland Revenue website
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Payment for sick leave taken on a public holiday
There have been recent articles in New Zealand newspapers suggesting an employee is entitled to be paid time and a half if they take sick leave on a Public Holiday.
That is not correct. In this article
- We first look at the criteria for payment of time and a half for working on a Public Holiday.
- We then look at the way in which payment for sick leave is calculated.
- Using the above information, we then examine the various conclusions that can be drawn when paying for sick leave that is taken on a public holiday.
- Finally we republish the relevant news articles.
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...back to 10 June 2004
Full Story:
Ace Payroll
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