KEY POINTS:
Business will start to see tax in a more positive light as the Government's new initiatives kick in, say tax experts.
KPMG tax partner Paul McPadden said KiwiSaver and the introduction of tax credits for research and development (R&D) meant that instead of being a problem businesses wanted to avoid, tax provided them with positive opportunities.
"We've had this approach in tax legislation of battening down the hatches and making things as tight as possible, now you're starting to see [what] might be called incentives. That's an important shift. Now businesses [can see] there are some incentives and opportunities to take advantage of, instead of approaching [tax] as just another problem."
In its April Budget, the Government announced it would offer businesses 15 per cent tax credits on R&D.
To claim, businesses would have to incur at least $20,000 of eligible expenditure in the year the claim was made, unless the R&D was outsourced to a listed research provider. McPadden, who will be speaking at the New Zealand Institute of Chartered Accountants annual tax conference in Auckland today, said the IRD had indicated its documentation requirements would be "reasonably extensive", so it was important that businesses understood what was needed.
"It's obviously going to be a big change for the IRD to be giving money away rather than collecting money. It's not going to be a situation where [businesses] can just rock up, file a tax return and claim it and away they go. If they take shortcuts they'll come a cropper."
In other countries where R&D tax credits were given, each project required a plan and evidence of the R&D, McPadden said.
NZIC tax director Craig Macalister said there was a discernable change in the Government's taxation policy, although it was a bit "back to the future", a return to the days when exporters had export market development expenditure tax credits and incentives to invest in superannuation and life insurance.
While KiwiSaver was not necessarily a tax incentive, he said, it was heavily tax subsidised because KiwiSaver members must have a portfolio investment entity (PIE), and one tax benefit of that was not paying tax on Australasian share gains.
Questions still remained about the future of some key elements of KiwiSaver, said Catherine Evans, senior manager financial services tax for PricewaterhouseCoopers.
"The [question] is, will KiwiSaver become compulsory?"
Another was whether tax credits for KiwiSaver members and employers would continue, something which depended on which Government was in power.
Tax talkfest
What: the New Zealand Institute of Chartered Accountants tax conference
Where: SkyCity Conference Centre, Auckland
When: Today and tomorrow
