As an Accounting firm that provides accounting, tax, and bookkeeping services to young business owners, we understand the importance of staying informed about recent changes in tax laws that could impact your businesses. This blog post delves into the key updates introduced by the Public Act 2023 No 5 and how they might affect your operations.
Platform Services and GST Rules
If you are involved in platform services such as ride-sharing, ride-hailing, delivery services for food and drink, or taxable accommodation, it's essential to be aware of the recent GST rules introduced by Public Act 2023 No 5. These rules came into effect on the 31st of March 2023.
Notably, certain large entities, like hotels, have the option to opt out of these rules. However, small Airbnb operations do not have this opt-out privilege. For businesses affected by these changes, the effective date is set for the 1st of April 2024, unless otherwise stated in the report.
Tax Relief for North Island Flooding
The Public Act 2023 No 5 also includes provisions for tax relief related to certain payments and benefits provided by employers. This measure aims to offer assistance to those impacted by the North Island flooding. If your business is in the affected regions, it's vital to explore the available relief options under this Act.
Changes to GST Apportionment and Adjustment Rules
The big one - the Act brings significant updates to the GST apportionment and adjustment rules, which could impact businesses that deal with assets costing less than $10,000 exclusive of GST. Here are the main points to consider:
If the principal purpose of acquiring an asset is for business and it costs less than $10,000 exclusive of GST, you can make a full GST claim and pay GST output tax in the usual manner.
However, if the goods are used mainly for non-taxable supplies, no GST claim is available.
There is an option to opt out of these rules and continue with the old apportionment rules based on use, but remember that cherry-picking assets isn't allowed; it must be applied to all assets under $10,000.
For goods (excluding land) costing between $10,000 and $20,000 exclusive of GST, you only need to monitor personal use for the first two years. For land, monitoring is required for ten years.
It's possible to treat goods with mainly private or exempt use as entirely private or exempt for tax purposes. For example, this applies to individual-owned Airbnb properties even if they are registered for GST or generate income exceeding $60,000.
Bright Line Rollover Relief for Various Legal Structures
Under Public Act 2023 No 5, rollover relief has been extended to several legal structures, effective from 1st April 2022. The eligible legal structures include:
Family trusts, standard trusts, and Maori authority trusts
Look-through Companies
Treaty of Waitangi settlements
Transfers within wholly-owned groups of companies
This extension aims to facilitate seamless transfers between these structures and ensure any paper profit is not subject to immediate taxation.
In conclusion, staying informed about recent tax law changes is crucial for your business's success. We hope this blog post has shed light on the key updates introduced by Public Act 2023 No 5 and how they might impact your operations. As your dedicated accounting firm in Auckland, we're here to assist you in navigating these changes and ensuring compliance with the latest tax regulations. Should you have any questions or need further assistance, please don't hesitate to reach out to us.