Following on from our April newsletter, there are some significant changes coming to tax rates and rules.
Please do not hesitate to get in touch with the Team with your questions or if you think these changes are going to impact you in anyway.
– Grab a cuppa and happy reading.

GST CHANGES FOR AIRBNB & UBER.
From 1 April 2024, GST will need to be charged on accommodation and transport services provided through electronic marketplaces,
regardless of whether or not the owner of the property or the driver is registered for GST.

If you are GST registered:
You need to contact your marketplace intermediary with your GST number so they know this.

AirBnB or Uber will charge the 15% to the customer on your behalf and pay this directly to the IRD. They will then pay you net of GST amount
for which you will have to return in your GST return as zero-rated income. You will need to make sure that when coding this income through your accounting software you are selecting the Zero-rated GST option, not No GST.

Regarding expenses, you will just claim as usual. This will result in a temporary cashflow reduction with you no longer collecting the GST
and paying it onto the IRD when you file your GST return. You will now, more than likely, just receive GST refunds going forward.

Key thing here will be to check your first statement after 1 April to make sure that it is being treated correctly and reach out to us if you have
any questions.

If you are not GST registered:
If you receive under $60,000 in income and likely to continue to, then there is nothing for you to do.

Your marketplace intermediary (AirBnb or Uber) will split the GST portion of the sale and send some to the IRD (6.5%) and the remainder (8.5%) to you. This is an attempted apportionment if you were GST registered to account for costs etc. This is being referred to as the flat-rate credit scheme.

In action it looks like; you charge $100 GST exclusive for a night accommodation. AirBnb charges the customer 15% on this as GST being $15.
They pass on $6.50 (6.5%) to the IRD and the remaining $8.50 (8.5%) gets passed onto you along with the accommodation fee.

Again, please make sure you review your first statement after 1 April. The intermediary providers will be putting out extra information regarding this as they will be actioning this system.

TAX DEPRECIATION ON COMMERCIAL BUILDINGS.
From 1 April 2024, depreciation will be removed again from Commercial Buildings with a useful life of 50 years or more. This could mean potential tax increases for the 2025 income tax year for Commercial Landlords or even if you own your own premises so please be aware of this with your cashflow forecasting.

With most of our clients we have been able to split out between fit-out and the structural building to be able to claim as much depreciation as possible without any changes required. If you are buying a new commercial property, it is recommended to get a specialist valuer to split out the property as much as possible to maximise your depreciation claims.

RESIDENTIAL INVESTMENT TAX CHANGES.
The finalised updates to the rule changes regarding interest deductibility for residential rentals are:

The bright-line test on sale of residential rental will be decreasing from 10 years to 2 years. The date that this comes into effect is still unclear
and could be 1 July 2024. This would mean if any properties purchased sold up to that date could be caught by the old rules.
Please contact us before you sell your investment property to make sure you understand your position.

TRUST TAX RATE CHANGES.
From 1 April 2024, the income tax rate for Trust’s that have Net Profits of above $10,000 will increase from 33% to 39%.
This is not a stepped tax rate like individuals with the first $10,000 at 33% and everything above being at 39%. Once you exceed the $10,000 threshold, all your profits will be taxed at 39%. We will discuss this further with each of you on a case by case basis so nothing is required from you.

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