Tax and the Budget

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Further developments with digital services tax and collection of the International Visitor Levy were announced and the Government remains committed to modernising and simplifying the tax system.

Pre-Budget

The major announcement pre-Budget was that Capital Gains Tax is now off the table and that has pretty much overshadowed any tax announcement since. The Government also announced two specific pre-Budget tax measures:

  • GST on telecommunications, and
  • repeal of racing totaliser duty

GST on telecommunications

The Government has announced a proposal to change the GST of telecommunications so that these would be aligned with the treatment of other remote services and based on the residency of the supplier. The main implication of this new proposal concerns roaming services provided by telecommunications providers in that:

  • outbound mobile roaming services to New Zealand residents overseas are proposed to be subject to GST (currently they are zero-rated), and
  • inbound mobile roaming services provided to non-residents in New Zealand would no longer be technically subject to GST.

Repeal of racing totaliser duty

The racing totaliser duty or betting levy will be phased out. It represents 4% of betting profits, amounting to $13.9 million in 2018. This sum will be redistributed to the racing codes and Sport New Zealand, with a proportion set aside to reduce gambling harm.

Meanwhile, the tax policy work programme is still progressing and the next stages of Inland Revenue’s Business Transformation programme look at the administration of student loans, KiwiSaver and child support. We’ll keep you updated.