Nick Stride | February 2023
This article was current at the time of publication.
As New Zealand heads towards a general election, question marks hang over a raft of major government policies, while others come into force with the new tax year on 1 April.
Under New Zealand’s three-year electoral cycle, the 53rd New Zealand Parliament must dissolve no later than 20 November, and an election called.
It appears as a result there was increased urgency in late 2022 to push a backlog of legislation through parliament.
Here are some things to look out for:
Let’s start on the tax front. The further changes aimed at modernising GST come into force on 1 April 2023. These changes will affect record keeping of taxable supply information.
To combat the shadow economy, payment services providers will be required to supply the Inland Revenue Department with bulk datasets.
Income Insurance Scheme
A major policy of the current government is the Income Insurance Scheme, which would provide redundant or laid-off workers with 80 per cent of their wages or salary for a maximum of six months.
This is to be funded by 1.3 per cent levies on employers and employees.
The Ministry of Business, Innovation and Employment (MBIE) estimates the cost of the scheme at $3.54 billion a year.
Whilst current Finance Minister Grant Robertson has indicated that the scheme will not be implemented until mid-2025, the National Party has vowed to drop it, describing it as a tax on small business.
The first batch of Climate Reporting Standards, intended to shift capital and activities towards a low-carbon economy, was released on 15 December 2022, and now applies to around 200 climate reporting entities.
The standards apply to almost all NZX-listed companies (those with a market capitalisation of more than $60 million), as well as larger insurers, banks, non-bank deposit takers, investment managers, the Accident Compensation Corporation and the NZ Superannuation Fund.
The External Reporting Board (XRB) has advised it will run workshops and webinars and issue guidance to help organisations get up to speed on their obligations.
The Business Payments Practices Bill, which aims to bring transparency to business payments practices, has received royal assent and is to be reported by 27 April 2023.
Submissions to MBIE on supporting regulations are due by 26 February.
Minister for Small Business Stuart Nash says late payments have been identified as among several challenges small and medium enterprises face.
It will require “large” entities (defined as those with assets exceeding $66 million or revenue over $33 million) to disclose the time it takes them to pay invoices and the percentage of invoices not paid within the period specified in their terms of trade.
Commerce and Consumer Affairs Minister David Clark says the government will start a legislative process to require banks to implement open banking.
Open banking currently operates in many jurisdictions across the world, including the UK, Hong Kong and Australia.
Open banking is the practice of sharing financial data between banks and other financial institutions in a secure way in real time.
According to Clark, an exposure draft of the legislation will be released as part of a process that could take up to two years.
Combating money laundering
The Ministry of Justice in November 2022 released a review of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act) which found “foundational issues that we consider prevent the regime from being the best it can for New Zealand”.
It noted that major changes are needed. Justice Minister Kiri Allen has listed some of the changes the government wants to progress.
They include relaxing the requirement on businesses to verify the address of most customers, extending the timeframe for businesses to submit Prescribed Transactions Reports, and exempting registered charities from AML/CFT obligations when providing small loans.
Regardless, the final details of the Act’s rewriting may be some time away, as many of the review’s recommendations are to carry out additional consultation and explore more options.
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