TAX TIDBITS
Issue Fourteen, November 2006
In this months issue:
Double Taxation Agreements
Costs of Relocating New Employees
Student Loan Changes
DOUBLE TAXATION AGREEMENTS
This month
Double tax agreements are very useful treaties which prevent cross-border business income being taxed twice and give greater certainty about how that income is to be taxed. If the country has a DTA with
Double taxation can arise if the tax rules of a foreign country mean that income earned overseas is subject to tax there, and as according to
COSTS OF RELOCATING NEW EMPLOYEES
The IRD has recently released a controversial exposure draft setting out its view that expenses incurred by employers in relocating
new
employees are subject to PAYE and taxable to the employee. Relocation costs could include furniture removal, solicitors fees on the sale and purchase of homes, travel costs and temporary accommodation. The IRD views this situation as expenditure in getting an employee to work and therefore of a personal nature.
This is in contrast to where employer-paid relocation costs for existing staff are generally exempt from income tax in the hands of the employee when they are incurred in deriving the employees assessable income providing they are not of a personal nature.
Submissions on this exposure draft close on 23 February 2007.
STUDENT LOAN CHANGES
A new bill was introduced into Parliament this month which introduces new rules for student loan borrowers who are overseas and simplifies the administration of the student loan scheme rules. Changes for overseas borrowers include: -
-
A repayment holiday of up to 3 years (interest still continues to accrue, however)
-
Extension of the amnesty for non-resident borrowers who are in arrears (remissions of late payment penalties etc)
-
Extension of “interest-free” loans to full-time undergraduates
Other changes include a reduction from 2% to 1.5% in the late payment penalty for all borrowers and the introduction of data matching between Inland Revenue and Customs to ensure the correct entitlement to interest-free loans.
NOTICEBOARD
This is the last tax tidbits until late January 2007. We hope you have enjoyed these informal newsletters and would welcome you forwarding them to any interested associates. If you have any queries, please contact Kane Laurence at klaurence@hwi.co.nz
Disclaimer Information contained within this document is of a general nature and does not constitute advice. Readers are cautioned not to act or reply on it without first seeking professional advice.
