A look back at the biggest tax stories of 2020

    • The response to Covid-19
    • The ongoing debate about taxing capital
    • Inland Revenue’s response and how well is its Business Transformation programme going?


This is the last podcast for the year so we will be taking a look back over the main tax stories for 2020.  It’s no surprise that the response to COVID-19 will feature very heavily but looking back, the thing that stands out is how rapidly events developed and then the sheer scale of what we were dealing with.

In the podcast on Friday 16th March, I suggested some actions Inland Revenue could take in response to coronavirus following a week in which first Italy then the UK and finally Australia announced special measures throwing around huge sums of money.  By the following Friday we had the first COVID-19 support package including the first iteration of the wage and subsidy scheme.

From then on it was a frantic blur until late May with barely a week passing without one new measure after another.  Most of those did what they were intended to do: get money into the economy and keep people employed.  Some were more successful than others. The Business Finance Guarantee Scheme for example did not work as anticipated with only $176 million lent to 834 businesses by the end of August.

The Small Business Cashflow Scheme on the other hand was a huge success in getting money out to small businesses very quickly. Currently over $1.6 billion has been lent to close to 100,000 businesses and the Government is now working on making the scheme permanent.

Some of the tax measures that have been announced – such as increasing the provisional tax threshold to $5,000 or increasing the low value asset write off temporarily to $5,000 – are measures that probably would have happened sometime soon, possibly even this year it being an election year.  What COVID-19 did was make the Government bring forward those measures and put them into effect much sooner than otherwise might have happened.

It’s also worth pointing out just how well the Ministry of Social Development and Inland Revenue handled the distribution of funds under the various wage subsidies. The Small Business Cashflow Scheme meant that the billions of dollars got very quickly to where it was needed and both organisations deserve credit for making that happen. However, it undoubtedly put Inland Revenue under considerable strain and we’ll talk about that a little later on.

The immediate legacy of the response to COVID-19 is of course the Government’s books being shot to bits.  Interestingly the latest figures show the tax take has not fallen significantly and the deficit is more down to expenses increasing sharply such as the wage subsidies.

The impression is that the economy has come through the crisis in better shape than was anticipated way back in March.

For all that, the Government faces deficits for the foreseeable future so we had the somewhat unusual situation of it running an election campaign with a promise to increase the income tax rate to 39% for income over $180,000. The increase in the income tax rate to 39% is expected to yield about $550 million a year but I suspect we may find it yields more than that because the economy has been in better shape than expected so far.

Aside from the Opposition, Labour’s proposal also got criticised from various sectors saying that the response was inadequate given the scale of the problem. There was also criticism, and this is going to be a continuing theme, that the income tax increase primarily on labour and earnings was not really where tax changes were needed.

Notwithstanding those issues, there are a number of complicated flow-on effects from increasing the top income tax rate to 39% – such as resident withholding tax and fringe benefit tax. Then of course there are the significantly increased powers for Inland Revenue in respect to requesting information from trustees.

This is something which is going to give trustees and beneficiaries pause for thought before they get involved in aggressive tax planning.  The Government has made it clear that if it sees such activity it will increase the trust tax rate to 39%, something which Inland Revenue recommended should be done.

So the immediate impact of COVID-19 and the Government’s response has been the major tax story of the year.

The second big tax story has been the ongoing capital taxation debate which is something I suspected might happen.  Writing at the start of the year I suggested that although the Government had said in April last year it would not introduce a capital gains tax, that would not mean the end of the story.

And so it proved.

Throughout the year, particularly in the wake of COVID-19 and an unexpected housing price boom, there has been a string of stories looking at the question of taxing capital either in the form of a wealth tax as proposed by the Greens or more recently an extended bright line test.

In one recent article I suggested if the bright-line test is to be extended, a ten year timeline would be consistent with the other land taxing provisions in the Income Tax Act.  (Unsurprisingly how that ten year timeline is measured can differ between the various provisions).

What Geof Nightingale from the Tax Working Group pointed out in the same article , was that it would be fairer to have a comprehensive capital gains tax at a rate of 33% rather than the muddled approach to capital taxation we have presently and the previously mentioned complexities of increasing the top rate to 39%.

But they are in a position to make quite some noise about it, so the Government will find this story isn’t going to go away.  So, throughout 2021 and beyond there will be a steady stream of stories about what are we going to do about house prices and what role will tax have to play.

The final tax story of the year is the role of Inland Revenue; how it managed its response to COVID-19 and then going forward, how well is its Business Transformation programme really going?

As I mentioned previously Inland Revenue’s immediate response to COVID-19 deserves praise.  It took action to help clients running into difficulties with payments of tax, including a number of measures which effectively wrote off interest on overdue tax where the taxpayer had been adversely affected by COVID-19. It administered the Small Business Cashflow Scheme very efficiently and it worked very closely with the Ministry of Social Development on the wage subsidy schemes.  At its peak Inland Revenue was handling over 15,000 requests for verification from MSD each day in relation to the wage subsidy scheme.

At a tax conference during the year, I asked Inland Revenue representatives there whether they would have been able to manage all the additional demands that came on them because of COVID-19 without Business Transformation, and their response was that it had given them the additional capacity and flexibility to manage the demands put on them.  In particular the upgrade of the computer systems meant they could actually physically cope with what was coming at them

So far so good, but as listeners will know, in recent weeks I’ve raised questions around what exactly has been going on with Inland Revenue in relation to its audit and investigation performance in view of the fact that hours spent on investigation had fallen by two thirds over the past five years from over 680,000 annually to just over 240,000. That led to an interesting response from Inland Revenue Deputy Commissioner Sharon Thompson on the matter.

That exchange caught the eye of Auckland barrister and ex Inland Revenue investigator Riaan Geldenhuys.  What he pointed out was that Inland Revenue was actually under some strain in delivering Business Transformation even before COVID-19 hit.

Riaan noted that in the Minister of Revenue’s regular reports to Cabinet on the progress of Business Transformation in July 2019 then Minister of Revenue Stuart Nash had noted that there were strains emerging because of the unprecedented response to Inland Revenue’s rollout of automatic assessments for all people on PAYE.

Now as you might expect, COVID-19 has exacerbated those strains and in his July briefing to Cabinet this year the Minister of Revenue noted that because Inland Revenue had had to divert staff from audit and collection to maintain services “no new audit or debt collection cases will be opened and existing disputes will be managed as judiciously as possible.” The report then went on to note that “Inland Revenue’s ability to support customers is currently stretched to capacity.”

Now of course an unexpected event like COVID-19 will have some flow-on effects, but what has also emerged from these reports to the Cabinet is that the projected administrative savings that Inland Revenue promised the Government as part of the business plan for the Business Transformation programme have been completely wiped out.

The projection was that Inland Revenue would realise administrative savings for the period ending 30th June 2024 amounting to a total of $495 million. According to the latest report provided to Cabinet in July, none of those administrative savings are now expected to be realised[1] so that’s a $495 million dollar hit to Inland Revenue’s bottom line and effectively the Government’s by extension.

Earlier this year an academic article in the New Zealand Journal of Taxation Law and Policy[2] was critical of Inland Revenue’s Business Transformation programme.  The author thought that Inland Revenue had prioritised staff reductions rather than strengthening its ability to improve collection of taxes, particularly in the area of the cash economy.

On top of these issues of cost overruns and poor audit performance, there’s a growing problem of strains in the relationship between Inland Revenue and tax agents.   Tax agents are increasingly exasperated by Inland Revenue’s actions in directly contacting clients about various tax issues ostensibly in the name of better communication.  More often than not these calls result in confusion and duplicated costs which are often not recoverable.

So, this combination of cost overruns, lower audit and investigation work and a strained relationship with a very significant group of stakeholders, is something which is going to need careful monitoring by the new Minister of Revenue David Parker.  We will be watching with interest.

Well, that’s it for this year.  Thank you to all my guests and to all my listeners and readers. I really appreciate your feedback and your patience in sticking with me throughout a tumultuous 2020.  I suspect it will be well into 2021 before things settle back into what we might call normal.

Until then I’m Terry Baucher and you can find this podcast on my website www.baucher.tax or wherever you get your podcasts.  Thank you for listening and please send me your feedback and tell your friends and clients. Until next year have a safe and enjoyable Christmas.  Ka kite āno.

[1] “The re-planning of organisation design changes may have implications for Inland Revenue’s ability to realise the administrative savings. The savings have already been removed from outyear baseline funding so the challenge for Inland Revenue is to manage within a reduced funding level. These savings are part of the funding available for transformation. It is too early yet for Inland Revenue to say what the implications will be.” (Para 59)

[2] Not available online publicly

How audit insurance can help when Inland Revenue come calling

Terry Baucher talks to Rod Spicer about insurance cover for tax audits and assessments for filed returns – what they do cover and what they don’t.


This week, I’m joined by Rod Spicer, the associate director of claims and underwriting at Accountancy Insurance, which is the leading tax audit solution in Australia and New Zealand. Rod is a chartered accountant with more than 30 years’ experience and has worked at Accountancy Insurance since 2013. He is responsible for the operations of the claims department, policy wording development and the management of large and complex claims.

Kia ora, Rod, welcome to the podcast. Thank you for joining us. Now tell us a bit more about Accountancy Insurance. How did it start and what’s its role for tax agents like myself and my colleagues?

Rod Spicer
So Accountancy Insurance was born in Australia, which is where I’m currently residing, by our founder a man called Pat Driscoll who saw a niche, or a spot in the market for a tax audit insurance. There’s obviously been some of the products there in the past, however, we developed the product initially for Australia and got that up and running and then took it over to New Zealand a number of years ago now, and in more recent years into Canada.

We’re currently operating in three different countries, all within the Commonwealth. The reason for that being that all Commonwealth countries, or certainly those three, have reasonable or reasonably compliant tax systems, as well as reasonable similarities in terms of income tax, GST and the like. So we’ve been able to adapt our policy to each of the three countries and onwards and upwards, hopefully.

So in New Zealand, we have an office with about 10 staff based in Auckland and it’s been there for a number of years now. We handle the claims side of things online out of Australia from an administration point of view.

But we’ve sort of been for the ride, if you like, with Inland Revenue over recent years, which has certainly been interesting. Going way back to the Penny and Hooper days. It was probably just about when we first started up that it hit the road, so to speak, and we went along for the ride. And I think there was a herd scheme and a couple of big things way back in the day.

But I think in recent years, Inland Revenue, as a result of their whole transformation programme – I think you might know a bit more about that than me – seemed to sort of go off the rails a little bit. And they probably pulled back from an audit perspective in some respects, but certainly in recent times we’ve seen activity there again, albeit that this year we all know that with Covid and what happened etc. I think Inland Revenue certainly took their foot off the pedal for a while, but we’re currently seeing them come back with a few new initiatives and we’re seeing a lot of GST verifications, GST refund reviews and audits, amongst other things at the moment.

Oh right. Yes, the audit hours have dropped away since 2015 – from about 680,000 in the year to June 2015 to about 240,000 in the year to June 2020. So there has been a falloff in activity. But you’re saying right now we’ve got a spike going on in GST verification. That’s interesting to hear that’s picked up because I would have thought that would have been there all the time, regardless of what’s happening.

Rod Spicer
I probably should qualify that to say during the Covid months, that was all they were doing, they had to keep something ticking over, I think. Just to keep people on their toes, I think is a way to put it. But yes, and I probably should say that’s been consistent, certainly last financial year to 31 March 2020. And then given that Covid was sort of hitting exactly around the new financial year start time, that has been the one constant. And the majority of our claims, certainly in the four or five months after March, were GST reviews in the main.

But now that has been supplemented in recent times, in recent weeks by what you’re probably going to talk about as well – a campaign for want of a better word on the bright-line property rules, which is sort of playing itself out at the moment in various different realms. And we’ve also seen – and this happened last year back in November, because Inland Revenue and the New Zealand Government (same as Australia) signed up to all sorts of international data sharing arrangements. And they’re all being flooded with offshore bank account information.

And what we saw with Inland Revenue in November 2019, there was a first wave, and a lot of them weren’t even audits, they were just an opportunity to self-review and voluntary disclose if you hadn’t disclosed offshore bank accounts that you were supposed to. Some had a questionnaire, or some went straight into more detailed information, but it certainly just stopped then. So, there was a whole bunch of activity in November and then effectively nothing happened.

But in November 2020 we saw the exact same thing happening again. Slightly different letters. Some of them even delved into overseas life insurance policies that obviously, you know, the data dump Inland Revenue got – Rod Spicer has a life insurance policy in England or Switzerland or wherever – and we want to know about it as well as the bank account. So we’ve just now seen another spike in claims being lodged for these type of letters.

Look, some aren’t covered because they’re just a warning, an alert, information. You don’t have to do anything if you think your return is correct. But it certainly gives taxpayers an opportunity to voluntarily disclose if they think they’ve made an error or haven’t disclosed. But it doesn’t take too much to work out that Inland Revenue already know what the answer is. They’ve already got the information, so they’re just giving taxpayers a chance to voluntarily disclose. And if they don’t, I would expect audits or some sort of risk review or something to come as a result of that, because they’ve obviously already got the data sitting in the system from whoever gave it to them.

Excellent. That’s really handy what you’ve done there because you just described the complete gamut of types of letters or enquiries we would see from Inland Revenue covering risk reviews, GST reviews to enquiry letters to full blown audits. Now delving in a little bit more about the detail of how a policy might work, basically, the policy covers most enquiries from Inland Revenue, doesn’t it? That’s the idea if you take out one of these policies, whether through a tax agent, it covers just about all enquiries from Inland Revenue?

Rod Spicer
Pretty much, our policy’s structured as a master policy.

It’s held nominally in the name of the accounting practice. So our client is effectively the accounting practice and the accounting practice then offers their clients an opportunity to participate in that group master policy held by the accountant. The client chooses to participate. They pay the premium and then they’re effectively endorsed as an insurable interest on the accountant’s policy for the policy period. So each accountant has a common expiry date. It’s not like a client pays today, and one pays next week, and the week after that. They’ll all still have the same expiry date, whatever that might be, month on month, every accountant has got a different date.

We deliberately have a very wide definition of what a tax audit is, but it has to be from a government revenue authority. And other than Inland Revenue, the only other real revenue raising authority in New Zealand that I’ve come across is the Customs Department, where they’re obviously claiming customs duty. And we’ve got a couple of claims on duty, on tobacco imports and stuff like that. But there are no province-based tax collecting authorities or states or whatever, it’s just Inland Revenue.

But the definition is very wide of what a tax audit is. And in its most pure and simple form, it’s any enquiry, review, examination, investigation or audit where there is a compulsion to respond. And it is about a lodged return with Inland Revenue linked to the tax collecting function of the New Zealand government. So that could be a phone call, an email, a letter. It could just start with an official enquiry via a telephone call and it could end up in a risk review that expands into an audit. It’s all the one matter from an Audit Shield perspective.

You can’t get a risk review and then take out Audit Shield in case it becomes an audit if IR don’t like what they find in the risk review. So every risk review letter says this is not an audit, but from an Audit Shield perspective, it is an audit. And that’s to the advantage of the accountants and their clients, because that definition is very wide and basically covers all enquiries from Inland Revenue where you are compulsorily required to respond.

So we don’t deal with warning, alert, fishing expedition type letters and the recent bright-line property mail out, which I know got a fair bit of press, and we’re probably going to see some more detailed information. Inland Revenue just sent out a mass list of clients saying we think you have bright-line property rule exposure. There’s nothing in your tax return. You haven’t lodged your return yet. The form’s overdue. No detail, no nothing there. Where they’re going wrong there – well, if you haven’t lodged the return yet and you’re going to lodge it and it’s going to include a bright line, that’s not a claim under Audit Shield because you haven’t even lodged the returns yet. Versus yeah, this is from a return from a year or two ago. We don’t believe bright-line applies and we’re going to tell IR why. That would be a claim on face value – once you work out what the property address was. They didn’t tell you in the first place this week, as we’ve seen.

So that’s broadly how we assess things from a client perspective. The amount that a client or the accountant can be covered under the policy depends on their turnover and business groups. We cover entities up to $100 million in turnover. We don’t cover listed entities or subsidiaries of global groups turning over more than $100 million as a global group. So it’s a small, medium enterprise type policy. It’s under $100 million turnover around, and we only cover New Zealand returns. So if your client is a New Zealand client who operates in Australia, and lodges Australian tax returns, Audit Shield in New Zealand doesn’t cover the Australian tax returns. But they could take out cover through their accountant in Australia.

Fantastic. A great summary. So just as you alluded to there, it covers anyone who is a client of an accountant. So it can range from the individuals who’ve got tax returns, including rental income from overseas, all the way up to a large corporation as long as the turnover was under $100 million. So it’s very broad. How many clients, how many accountancy firms have you got in New Zealand now? Has business been expanding?

Initially we had zero and we currently have – because I checked before today’s session – 550 active participants, active accountants in New Zealand at the moment.

That’s about 10% of all tax agents in New Zealand. I think there’s about 5,000 odd tax agents in New Zealand. So you’ve got plenty of scope for market expansion.

Rod Spicer
It’s like anything Terry, not every accountant is interested. I often chuckle when our business development manager says “I spoke to this accountant and they reckon they never get tax audits”. So I said, well, it’s not about what you’ve had in the past, it’s about what you’re going to have in the future. It’s irrelevant. And anyone who thinks in today’s electronic world of data matching, you might have got away with a lot of things in the past, or your clients did, or you weren’t on the IR radar.

But as we saw by the International Exchange of Information and the bright-line tests, they’re getting their data from other sources that everyone feeds into Inland Revenue. Banks, EFTPOS machines, point of sale, credit card, they’re all linked. I don’t know how many claims I’ve seen where the business under audit is perceived to be in the cash economy, if you like. Where do I get the data from? Well, all sorts of different sources, lifestyle, assets of the proprietors versus the amount of income that they’re declaring, banking records, all sorts of different things.

So IR’s tentacles extend a lot further than they used to in the past, so to say “I never get audited, my clients don’t need it”. Well, who knows what the future’s going to hold?  But I don’t expect the Inland Revenue and the New Zealand Government to be looking for less of a take from audit activity versus more in the next few years would be just my common man observation of most governments as a result of Covid-19.

Do you think any particular group sees a lot of activity relative to others, or is that just across the board?

Rod Spicer
It’s a hard one for us because we try to keep the process as simple as possible with our accountants. We don’t want to bog them down in data so we don’t capture what industry each of their clients is in. Otherwise it would just be another layer of work that they’d have to do for what real benefit to them? Be great for us. I get that. You can look at ABC Builders Proprietary Limited or ABC Cafe Propriety Limited, it doesn’t take much to work it out. But we’ve seen the campaigns, if you like. So the property and construction campaigns, the IR letters will head that up.

They’re doing a compliance programme in property and construction, in fruit picking, in cafes and restaurants, cash economy type attention businesses.

So we see those campaigns, they come and go. But that’s sort of the flavour. Over the years, you can see the target areas where the Inland Revenue focus is on, and they are in your traditional industries where there’s a perception that maybe the cash economy is more rife than it is in other industries. It doesn’t take too much to work out those type of businesses.

Just on the cash economy, is there a difference in what claims you might see in Australia and those from New Zealand? Because here I get the sense that because our GST is so comprehensive, the powers that be are a little, I wouldn’t say relaxed, but they don’t seem to be as concerned as I’ve seen the ATO reports are, about the extent of the cash economy.

Rod Spicer
I definitely I agree with you. I read all reports, in Australia and New Zealand, obviously, and I agree. The Australian Government Tax Office is far more belligerent on the cash economy in Australia, and Phoenix activity where, you know, companies disappear, and Mr Smith starts up the next day with the same looking company doing the same thing, and things like that. There’s definitely audit activity in that space. But I agree it’s not as much as Australia, but again, population relevant to the size, I suppose again would come into it. But, you know, the ATO have stringent active campaigns dedicated today to the black economy, they have a black economy taskforce in Australia. So there’s no Inland Revenue task force on the cash economy that I’m aware of.

You know, the numbers in Australia are quite astonishing, even allowing for the scale of the Australian economy, basically five to six times bigger than New Zealand. The amount of money that’s said to be circulating through the black economy is AU$22 to AU$23 billion, is one number I’ve seen. That is way, way in excess of any estimate here. It’s thought the best estimates here are about a billion dollars per year, by the way. So that is quite a difference, even allowing for scale. And I do wonder if Inland Revenue here are perhaps underestimating what’s going on. But who knows?

Rod Spicer
If they ramp up their campaigns again, then we’re here to support the accountants. Obviously, you can’t take out Audit Shield after an audit or a review or enquiries have already happened. The client must be on cover under the accountant’s policy, at least one business day before any first form of notification comes to why the taxpayer client or the accountant in whatever form that may be. Now, obviously, at times there can be some allowance for postal delay. But if we see clients taking out Audit Shield very close to the date of notification, then we do have to ask some questions on occasion around the circumstances, just to make sure that there’s no prior knowledge or anything like that involved. But it’s pretty rare that it pops up. I won’t say if it never does, but it can.

I’m sure. So how do you see things playing out from here? Do you think Inland Revenue has now got through its blip with Covid and Business Transformation, or is it still sort of shaking itself down?

Rod Spicer
I think come 2021 I expect to see increased audit activity. So maybe I turn the question around to you, Terry, because you’re probably more knowledgeable on New Zealand ongoing government and what their projected tax take and new tax rules are going to be. But if there’s going to be new tax rules introduced, they’re not going to come into play for some time. And then people are going to lodge a return and there’s going to be audit activity. But I would have thought how’s the New Zealand budget looking Terry? Good, bad, indifferent?

Interestingly, the tax take, according to the financials for the June 20 year was only down about a billion dollars on expectation. And it’s difficult to make comparisons because of the change in accounting brought about by Business Transformation. So the tax take has held up pretty well, but they’ve spent a lot of money is the key thing on the other side. You know, billions went out –  $12 billion –  on the wage subsidy. By the way, the wage subsidy enquiries are not covered by the policy, are they?

Rod Spicer
I’m glad you mentioned that Terry. Audit Shield, at the risk of stating the obvious, is a tax audit insurance policy, it’s about revenue collecting by the New Zealand Government through Inland Revenue. So Covid brought about new things that no one had ever seen before, in Australia, Canada, New Zealand.  Tax audit insurance policies have traditionally never covered government benefit audits, grants, welfare payments and things like that. Then all of a sudden government started handing out money left, right and centre as subsidies to try and prop up business and the economy. So it wasn’t about the tax take. It was about money flowing out of the businesses. Our policy doesn’t cover government benefits, grants, subsidies. Initially Inland Revenue wasn’t even in charge of it. But it seems that they took over from whatever department was initially doing it. And then the other one of interest that’s popped up a few times is the government loan scheme that businesses can get.

Now that was first offered via banks and then that didn’t work, so it got moved to Inland Revenue. So I’ll admit we have seen audits of the wage subsidy and the loans and the loan scheme. But I’ve only seen them and had to tell the accountant, look, that’s not covered for the reasons that we said. So we put out a company announcement in April to say these things weren’t covered. But we’re now in November, so we don’t expect the accountants to remember a bulletin right at the start of Covid that Accountancy Insurance put out.

But we’re certainly still telling them about it when it pops up. No, that type of matter isn’t covered. However, sometimes where there’s smoke, there’s fire, Terry. And if those subsidy or wage scheme matters escalate, expand, move in scope into things like GST or income tax, for example, or PAYE matters or something, then on face value, it’ll be covered from that point in time onwards, not the wage subsidy or the lone scheme maters.

You actually took the words right out of my mouth because I was going to ask if you had seen any instances where an enquiry about a wage subsidy claim or a loan under the small business cash flow scheme had led to, or appears to have led to a further claim in relation to another tax.

Rod Spicer
We’ve just been talking about whether we’ve seen any wage subsidies or the government loans scheme as a result of Covid result in further audit activity on income tax or GST or PAYE lodged return. I’d have to say so far, no, but I’d be surprised if we didn’t see something in the future in the New Year along those lines, would be my expectation at this point in time.

I suspect you are probably right there. I also suspect that the sort of people that may get picked up on that probably were people who’ve never had an audit before and may rue that point. I think that’s a really good place to leave it Rod. Thank you so much for your time today. We here at Baucher Consulting have used Accountancy Insurance for a number of years now. I think it’s an excellent product which has saved our clients a lot of heartache. So, I can recommend you talk to the guys there. Thank you very much again. Rod, you have a great day.

Well, that’s it for this week. I’m Terry Baucher. You can find this podcast on our website www.baucher.tax or wherever you get your podcasts. Thank you for listening. And please send me your feedback and tell your friends and clients until next week, ka kite āno.

The new Minister of Revenue’s first speech set out the Government’s tax objectives including a possible digital services tax

  • The new Minister of Revenue’s first speech set out the Government’s tax objectives including a possible digital services tax
  • Could the bright-line test be extended? And watch out for existing tax provisions
  • A reminder about back-dating GST registration


The new Minister of Revenue, David Parker, made his first public speech in his role last week at the Chartered Accountants Australia and New Zealand Tax Conference. The speech introduced himself, gave a bit of his background in business and in government. He then outlined the Government’s expectations over what is to happen over the next three years.

And in talking about the Government’s priorities over the short term he mentioned that one of the first items of business for the Cabinet, was making improvements to the Small Business Cashflow Scheme so it continues to provide ongoing support.

Now, the latest is that close to 100,000 businesses have taken out loans with total lending of $1.6 billion. So, it’s been a huge success. I’m a big fan of the scheme which fills a hole we identified on the Small Business Council.

The new measures approved by Cabinet: extending the scheme for three years, increasing the interest free period from one year to two, and broadening how the loans may be applied, such as for capital items are estimated to result in additional lending of about $130 million for small businesses.

What the Minister has also asked for is further advice on changes to the scheme that will allow more businesses to benefit from it, including adjusting the eligibility criteria for the loan

On the tax side of matters the Minister confirmed that the Government will progress the promised new top personal tax rate of 39% on income over $180,000. And that new top personal rate will apply from 1st April 2021. The plan is to have it legislated and in place before the end of this year.

Minister Parker then said “the new 39% rate will need to be supported with integrity measures to address issues like people sheltering income in trusts to avoid the top tax rate. I’m receiving advice from officials on the necessary integrity measures.” So that’s a coded warning that although they haven’t increased the trust tax rate from 33% to 39%, it’s clearly something they may well consider.

And there’ll be other matters in hand to support the new rate which obviously, we’ll have to wait and see. These potential measures are something I would like the Government and Inland Revenue be very transparent about because the situation that developed the last time the tax rate was at 39% was only finally resolved by the Penny Hooper case. I think this is unsatisfactory because it creates uncertainty about the boundaries of acceptable tax planning.

Parker then went on to talk about improving our tax system and the taxation of multinationals stating

Our preference continues to be an OECD led multilateral solution rather than a proliferation of digital services taxes. However, success at the OECD is not guaranteed and has been blocked for some time. We are seriously considering implementing a DST in the event the OECD project fails to reach agreement within a reasonable timeframe.

And in talking about this, he referenced the fact that local New Zealand companies “deserve a level playing field when doing business. We don’t want to force New Zealand competitors into dodgier tax minimisation strategies to compete”. So the Minister is pointing the finger very firmly at the digital giants and their ability under present rules to order their affairs where they pay little or no tax in New Zealand which, as he put it,  “This is a legal fiction that is divorced from modern reality and needs to be fixed”. So I think we can expect to see more action in this regard from the Minister of Revenue and Inland Revenue.

The Minister finished his speech with a line which I’m pretty certain was written by the Honourable Deborah Russell MP, who’s a big Star Trek fan:  “Let’s all crack on with it so our people can live long and prosper even in the midst of a global pandemic.” Indeed.

Capital gains

Moving on, one of the matters that wasn’t mentioned by the Minister in his speech directly, but has been boiling over this week has been the question of taxing capital gains and the role of tax in dealing with the housing crisis and house prices.

The Minister of Finance has said that he has already requested Treasury to explore the options about extending the bright-line test. In the exchange of letters between the Minister of Finance and the Reserve Bank Governor, Adrian Orr, the Reserve Bank Governor, pointed out he would be happy to talk about fiscal measures, which would include tax changes.

This, of course, has prompted a lot of speculation about what’s happening. And the ACT party then went straight out and said, is the Government looking to bring in a capital gains tax by stealth?

Of course, the Prime Minister last year ruled out a capital gains tax on her watch. The thing is, though, the bright-line test is already in existence, so it’s hardly it would be a new tax to extend its scope. That happens with taxes all the time. And yes, it would also be bending the position a little bit.

Now, under Section CB14, where a person sells land within 10 years of acquisition, any gains from that sale that are not taxed under other provisions and this would include the bright-line test will be taxable if at least 20% of the gain results from one or more factors that occurred after the land was acquired. Those factors include a change or a likelihood of change in the operative district plan.

Section CB14 almost certainly applies to properties which are rezoned for higher density or may have been brought into the special housing areas if you remember those.  It’s a little applied provision. And in fact, the Tax Working Group recommended that it be repealed but it’s still on the books.

It has a couple of stings in its tail. It applies, as I mentioned, for land sold within 10 years of acquisition. But if you occupied it as a residential home, normally under the Income Tax Act, you will be fine. However, in this particular provision, the sale is not exempt unless the purchaser acquires it for residential purposes. So that means if someone whose house may have gained value because of a zoning change, such as the Auckland Unitary Plan, sells it to a developer or, and this is the tricky part, you actually decide to move on and sell it to a trust or another entity, such as a look through company, for example, to rent out the property, that sale/ transfer will be taxed under this provision. There’s a deduction of 10% of the gain allowed for each year of ownership.

Now, what this provision points out and what the ongoing debate around, what do we do about taxing wealth (you may recall the Deutsche Bank report I mentioned last week), is that our current rules are all over the place. We have very specific rules, such as the Foreign Investment Fund regime, which apply. But then in relation to land transactions, we have a series of rules that apply, mostly for disposals within 10 years, but in other cases indefinitely if there is an intent to purchase for a purpose of disposal.

And so, one of the arguments in favour of a capital gains tax is actually Simplification, believe it or not, because of these overlapping rules. Picking your way through these is a minefield with plenty of traps where I and other accountants get plenty of work when people misunderstood the implications of the bright-line test and other land taxing provisions.

So, I’ve never bought the argument that capital gains taxes are too complex.  All taxes have a certain level of detail. But capital gains tax basic principle, you buy something which you sell and you’re taxed on the difference is fundamentally easier for people to grasp than, say, trying to explain the operation of the Foreign Investment Fund rules. But the politics are what they are. So a capital gains tax is probably not going to happen.

But I think we will see Inland Revenue making extensive use of provisions such as CB 14 to pick up transactions that have not previously been taxed. And we know they’re going through all transactions where a transfer has happened within five years, the bright-line period, where there is no obvious answer that it’s been a residential property sale to a new home-owner.

So watch this space there’s going to be plenty of activity from Inland Revenue in that area and the debate will continue to rage. I think the Government will find it has to make a movement on this space. It’s also worth remembering that the bright-line test was introduced in response to housing pressures and was introduced by a National government. So there is, in theory, a possibility of cross party support for a measure. It probably won’t happen, politics being politics.

But as I said, I think the dam is under increasing pressure and will break unless something is done to relieve the pressure of expectations of younger generations who are presently locked out of the housing market.

Backdating GST registration

And finally, a quick reminder from Inland Revenue about GST registrations. Generally speaking, the date of GST registration is the date an application is made. But in exceptional circumstances, those registrations can be backdated.

And Inland Revenue have issued a Standard Practice Statement on the effective date of GST registrations and what you can do about backdating a GST registration.

The key thing is, you got to have the supporting relevant documents, bank statements, tax issues, tax invoices issued and copies of contracts, and you’ll need to explain what was going on with your taxable activity and why your registration wasn’t filed sooner.

The fact Inland Revenue has drawn attention to this issue means that obviously it’s been receiving a few such applications or they’re looking at situations where people probably should have been registered for GST sooner.

Well, that’s it for this week. Next week, I’m going to be joined by Rod Spicer from Accountancy Insurance. We’ll be talking about the role of insurance in handling Inland Revenue audits and what Inland Revenue activity they are now seeing.

Until then, I’m Terry Baucher, and you can find this podcast on my website www.baucher.tax  or wherever you get your podcasts. Thank you for listening and please send me your feedback and tell your friends and clients.  Until next week, ka kite āno.

This week Inland Revenue reminds tax agents about the bright-line test

  • This week Inland Revenue reminds tax agents about the bright-line test
  • It responds to comments in a previous podcast about Business Transformation
  • The wealth tax debate continues


About 11 o’clock on Tuesday morning, myself and what appears to be just about every other tax agent in the country received an email from Inland Revenue with the subject line “Clients meeting the bright-line test”.

The email began: “Our records show the following clients have sold or transferred residential properties that meet the bright-line rule. This means these clients will be required to pay income tax on any profit they have made on the sale of the property.

The email then set out the clients it believed were caught by the bright-line test rules. That is, they either sold property within two years of it being bought between 1st October 2015, and 28th March 2018 inclusive or within five years of it being bought on or after 29th March 2018.

Now readers and listeners will know that I have previously stated that we are aware that Inland Revenue has been gathering data in relation to the bright-line test. But this is the first time it’s really flexed its muscles and its capability to show exactly what it knows about what’s going on. And an insight into why Inland Revenue did that came the following Wednesday morning, when Stuff published a story under the banner headline “One in four property speculators dodging housing tax”.

Based on Inland Revenue data the story outlined that of 1701 property sales subject to bright-line test in the 2019 income year, 1285 have paid up and complied, but Inland Revenue is looking at the other 416 taxpayers who appear not to have complied with the law. It’s also looking at a further 3,758 sales for that year, where the bright-line test might apply.

This email initiative, as you might imagine, caused quite a bit of a stir amongst the tax agent community, and we know that all accountants from small companies like ourselves to major Big Four firms received these letters for their clients. Although the emails set out the client Inland Revenue believed was caught by the rules, they weren’t any more specific than that.

This upset a few accountants because it means digging around to find out what’s going on here. It also transpires that Inland Revenue may have been a little premature in its information release. Apparently, there is a follow up email coming next week, which will actually set out the address of the property in question so that we can then more accurately work out what’s going on.

But there was a fairly lively debate about the matter on the Facebook page of the Accountants and Tax Agents Institute of New Zealand of which I’m a member.  And quite a few interesting snippets emerged about who had received emails and why.

Inland Revenue’s systems appear to have picked up any change in the registration of title. So that would include obviously sales where the title to the property passed to a new owner. But it also appears to have included changes in trustees because contrary to what a common misconception, trusts don’t actually exist in law although they have a separate existence for tax purposes. But in law, the property is held by the trustees. So if you have individual trustees holding property and one retires, there has to be a change of registration on the title. And Inland Revenue systems have picked up a few of these and issued a “Please explain.” Overall, though, the majority of tax agents were reasonably happy that this was the sort of initiative that Inland Revenue should be doing.

I’ve said before that Inland Revenue has access to a lot of data but doesn’t really make people aware of just what it knows. And these bright-line test emails are an example of it using the information it holds and making people aware of their obligations.  One or two accountants noted it was interesting to see a sale by that client because they never mentioned it to us. There was one particular case, I recall, where the client went ahead and did something which they thought would be outside of the bright-line test, but in fact the transaction was caught.  He was most crestfallen when he eventually spoke to me about the matter and I explained how the rules operated.

So this email initiative is the sort of thing that we can expect to see Inland Revenue doing more of and we can expect it to be fine tuning how it does these information releases. Yes, in some cases, such as those where there’s just merely been a change of trustee, Inland Revenue has jumped the gun. Perhaps a little bit more thought around whether that particular transaction was caught would have saved some headaches and frantic calls between clients and accountants on the matter.

But when you consider the heat in the housing market and concerns everywhere amongst those locked out of the housing market and the desire for the government to raise revenue to fill the hole blown in its balance sheet by the Covid-19, it’s not surprising Inland Revenue will be taking this initiative.  It reminds people, “Hey, these are the rules. We think you’re caught. If not, please explain”. So, in summary, I think we’ll see more of these initiatives further down the track

By the way, as a PR exercise, it does no harm. Firstly, it tells the new minister that it’s on top of things and secondly, reminds those who think that Inland Revenue is big and dumb, that in fact, it has got access to a lot of information. And to borrow a line from Liam Neeson, it will find you and will, if not kill you, certainly tax you.

Communicating in public

Moving on, a couple of weeks back, myself and Andrea Black took a look at Inland Revenue Business Transformation programme, and we weren’t terribly happy about some of what we found.

Well, on Tuesday, Sharon Thompson, Deputy Commissioner for Community Compliance Services, published a piece responding to our podcast.

And in particular, she addressed our suggestion the transformation hasn’t been successful because cost savings haven’t been reinvested into audit and investigation work. This was, “a narrow view of how Inland Revenue ensures tax revenue in New Zealand is as close as possible to what is required under our laws”. And our view that Inland Revenue’s current approach was incorrect is not supported by international research.

I think the phrase is “Shots fired!”, but it’s certainly intriguing to hear the Deputy Commissioner’s response. One of the points she made in responding to the specific questions we raised about the level of spending on investigations and debt management, was “Our new system has dramatically increased and improved the data we have access to. And we can watch, often in real time, as taxpayers file returns. So, if they’re getting it wrong, accidentally or deliberately, we can see and intervene, reducing the need for post-return audit and investigation.

That is something I’ve heard from other Inland Revenue staff.  If you file a tax return through the Inland Revenue portal, the system tracks the keystrokes. And in one example given to me last year by an Inland Revenue officer, if there is a suspiciously large number of adjustments being made to get the just right amount, they will look into it.

Sharon goes on to comment that every return that can generate a refund is checked automatically and amended returns are checked and screened. For example, between 1st July 2019 and 30th June 2020, Inland Revenue identified approximately 23,000 returns across all tax types which had errors or it believed were fraudulent with a value of just under $200 million. Now, that’s a good initiative and Andrea and I would not dispute that was a good result and also a good use of Inland Revenue resources.

The initiative I talked about a few minutes ago is something we would welcome, and we should expect to see that.  Tax agents are actually Inland Revenue eyes and ears and so we do a lot of the pre-screening that Inland Revenue would otherwise have to do without us.

But we don’t always get access to Inland Revenue as easily as we should. The phone line for tax agents was abruptly turned off and then reinstated, but with limited hours, for example. So although Inland Revenue may feel that Andrea and I were unfair in some of our criticism, but equally, some of the criticism we raised still needs to be addressed.

The role of tax agents is one where tax agents have a great deal of concerns about what Inland Revenue expects and whether, in fact, it wants to work with tax agents going forward. My belief is Inland Revenue does, but it’s not communicating that very clearly to us at the moment.

I still feel that the dramatic fall in investigation hours of almost two thirds over the last five years is a matter for concern. But we will be able to see how Inland Revenue has worked through the Business Transformation process and see more of the numbers when its annual report is published shortly. It’s been delayed, apparently in part down to the Covid-19 outbreak.

Tax on wealth vs tax on work

And finally, the debate around taxation and housing and wealth taxes continues to rage all week. On Tuesday, Westpac published its Economic Overview for November,  in which it made the point that future governments will be forced to either reduce spending or increase taxes because of the fiscal pressures that are starting to build over superannuation and health care.

The Report goes on.

“The required adjustments to our fiscal position can’t be delayed forever. Sooner or later, some form of consolidation will be necessary, though the precise form this takes will depend on which party is leading the government at the time.  Our pick is that a future government will introduce some form of tax on assets such as a land tax, capital gains tax or a wealth tax. Societal concern about increasing wealth and inequality is only going to intensify, eventually creating a large constituency for such a tax. And tax experts agree that broadening the tax base would enhance economic efficiency.”

Later that afternoon, I spoke to Wallace Chapman on Radio New Zealand’s The Panel about this report and the ins and outs of a wealth tax. And in addressing the housing crisis, I made the suggestion that maybe a 10% stamp duty might be imposed on all investors or some measure like that.

Now, last week, I mentioned a Deutsche Bank report which suggested a working from home tax which unsurprisingly got pooh poohed. But the full report is actually quite interesting and actually has one of the more dramatic report openings to any bank report I’ve seen in a long time:

To save capitalism, we must help the young. Democratic capitalism is under threat as increasing numbers of young people view the system as rigged against them. The pandemic has only exacerbated their economic disadvantage.

Now, that’s quite an opening for any report, let alone something from a bank, but the report goes on to talk further about some tax changes and these proposals mirror what was suggested by Westpac. Deutsche Bank suggests that, for example, there is a need to have a tax on a primary residence, which if you think about the hoo-ha we had with the idea of a proposed capital gains tax taxing everything except the primary residence last year, you can imagine just how big a fight would happen if we said actually, “We’re taxing the main home as well.”

The Report also suggested that there may need to be additional taxes on financial assets such as stocks, bonds, due to their gains from loose monetary policy. As maybe people are well aware, stock markets have actually boomed quite substantially this year. New Zealand’s stock market has been hitting record highs recently. The Deutsche Bank report, notes that in the 30 years to 2019, the S&P 500, that’s the main index in the United States, gained over 800%, two thirds more than the return seen in three decades previously. The report suggests taxing such income on a basis similar to our foreign investment fund regime, and or remove exemptions and discounts and capital gains. Picking up my Stamp Duty proposal, the report suggests such duties are paid by the vendor and not, as is common, the purchaser.

Now, the point that the Report makes is the reason why it wants to increase the tax on capital is so as to avoid much higher income taxes, which are often cited as an argument against hard work. This is one of the criticisms of Labour’s proposed tax rate increase to 39%. It is very narrow and hits income earners, whereas there’s a growing consensus that it’s the taxation of capital which needs to be broadened.

So this debate is going on all around the world. When banks like Westpac here and Deutsche Bank in Germany are making comments about broadening the scope of capital taxation you know a fundamental shift is happening in taxation thinking. How that will play out, we’ll have to wait and see, and I’ll bring you developments as we go.

Well, that’s it for this week. Thank you for listening. I’m Terry Baucher and you can find this podcast on my website www.baucher.tax  or wherever you get your regular podcasts. Please continue to send me your feedback and tell your friends and clients.  Until next week, ka kite āno.

What will be in Inland Revenue’s Briefing to Incoming Minister? The challenges ahead for the new Minister of Revenue.

  • What will be in Inland Revenue’s Briefing to Incoming Minister? The challenges ahead for the new Minister of Revenue.
  • The small business cashflow scheme is extended
  • Should people working from home pay higher taxes?


Last week, David Parker was sworn in as the new Minister of Revenue. As part of his transition into his role, Inland Revenue will have prepared a Briefing to Incoming Minister, which introduces him to his portfolio, his role and the department. As the briefing to Stuart Nash in 2017 explained,

This document “sets the scene” to the work we do and how we can support you and outlines the strategic context of our work…As Minister of Revenue, you are accountable for the overall working of New Zealand’s tax system for Inland Revenue as a government department and for protecting the integrity of the tax system. You are also responsible for policy, direction and priorities and decisions on Inland Revenue overall budget.

We are here to help you support you, carry out your ministerial functions and servicing the aims and objects objectives you set. We do this by advising you on policy and strategy, implementing government policy and carrying out day to day functions of the department.

So that’s the top-level view setting out what the respective roles are. And then the document will run through what’s going on within the department and its key priorities. The 2017 briefing to Stuart Nash was rather internally focused, it talked extensively about Inland Revenue Business Transformation programme.

Three years on that’s now largely complete. Although those who listen to last week’s podcast will know that we there are some issues emerging there. So whether that is brought to the minister’s attention, we’ll know in due course when the briefing is released.

But certainly, I would expect other bodies, such as the Chartered Accountants of Australia and New Zealand who, as is traditional, are writing to the Minister of Revenue to say “Congratulations, here are a few things we think you need to look at”, I’m sure they will be raising that point with the new Minister.

Labour’s tax priorities

Now, the document will then talk about what is the immediate government’s priorities, as officials will have read Labour’s manifesto and seen what directions they need to take on tax. So the first cab off the rank will be raising the top tax rate from 33 to 39% on incomes over $180,000. Now, that will require a tax bill, but that’s a relatively straightforward matter and it’s planned to be pushed through before Christmas.

Now, the other policy objective outlined in Labour’s manifesto was work on a digital services tax. And so we can expect Inland Revenue to carry on doing more work on that. This is an interesting space around the world. It seems that governments are hoping that the OECD can come to a resolution on international taxation by mid-2021, but they’re enormously complicated tax issues to work through. And there’s politics involved. And although the United States gets singled out for its lack of cooperation on that matter, they’re not the only country which is raising objections to the OECD’s proposals

What is happening is that instead of waiting for the OECD, some countries such as the United Kingdom and India have jumped the gun and introduced a digital services tax. So that’s something that David Parker and Inland Revenue would consider. I don’t think, as I’ve said previously, they will move forward on it, but I suspect they will do a lot of policy work to have it ready.  They could then implement it if they feel that nothing significant is going to happen with the OECD.

Other pressing matters

But there will be other matters that Inland Revenue and David Parker will need to look at. There’s a tax bill that was going through Parliament before the election. This is the Taxation (Annual Rates for 2021, Feasibility Expenditure and Remedial Matters) Bill. Now that bill will be reactivated and reintroduced into Parliament. The intention would be that it will complete its select committee processes and be enacted some time in March or April next year.

The bill includes an item which has picked up some attention relating to something called purchase price allocation. This is where parties to the sale and purchase of assets can allocate the sale price between them for tax purposes. Now, Inland Revenue has estimated that at the moment, differing allocations of prices between buyers and sellers could mean that the government is going to lose out on over $150 million dollars of revenue between 2021 and 2024.

What’s been happening is some sellers and buyers have been picking differing values for individual parts of the businesses and taking the most advantageous tax position.  This means that the seller and the buyer can probably report very different values for the same items. Now, this has been going on for some time. Inland Revenue has been raising some concerns about it, and the bill is designed to try to tackle that.

There’s a report in Stuff written by Thomas Coughlan, which gives an example where the buyer and seller between them managed to reduce their tax bill by $7 million.

So that’s one of the matters on the agenda for the new minister. It’s worth pointing out that some of what goes on around that price purchase price allocation is driven by the fact we don’t have a capital gains tax.

And that’s going to be a growing issue for the government despite its declaration it’s not going to introduce a capital gains tax because having increased the top tax rate for individuals to 39%, there’s an 11 percentage point differential between the top rate for individuals and the company tax rate. That presents opportunities to try and convert income into capital. This is something Inland Revenue was already concerned about when the gap between the two rates was only five percentage points.

It’s a worldwide issue. I see that the UK Treasury’s Office of Tax Simplification has suggested to the UK government, that it should consider aligning capital gains tax rates more closely with income tax rates.

Currently, capital gains tax rates in the UK top out at 28%, but the top personal tax rate is 45% so you it’s quite a gap.  So the Office of Tax Simplification is suggesting change to discourage taxpayers from trying to disguise income as capital. That’s something that’s always going on in our tax system where if you don’t tax capital gains, the temptation is for people who can to shift assets into the non-taxed category. So those pressures will be there all the time.

And as we highlighted last week, the Department itself seems to have problems with its staff, with low morale. That, again, is something that needs to be addressed. So, David Parker and the new Parliamentary Under-secretary for Revenue, Dr Deborah Russell, will have plenty on their plates as they get into their role.

Doling out interest-free loans…

Moving on, this week, the Government announced changes to the Small Business Cash Flow scheme.

As promised, it has decided to extend the applications for the loan scheme from 31st of December this year, for a further three years, right through to 31 December 2023. The amounts that can be applied for will remain unchanged.

The other couple of changes are potentially a little bit more significant. Currently, no interest is charged if the loan is repaid within one year.  That interest free period will be increased to two years. At the moment the loan can only be used for core operating costs They’re going to broaden this so the loan can be used, for example, on capital expenditure.

Now, all this is really welcome stuff, and it’s a precursor to a more permanent regime, which I would hope has higher lending limits, because as we’ve talked previously, a lot of small businesses are undercapitalised. There was that Inland Revenue report that suggested $10,000 dollars was the point above which taxpayers basically gave up trying to pay tax debt, which suggests that there are some very undercapitalised businesses.

… and then expecting banks to lend more to SMEs

More broadly speaking, the government needs to be putting pressure on the banks to lend more to smaller businesses. I understand that in reports filed with the Australian Stock Exchange about customer engagement and support for banks, small businesses are highly unfavourable in their commentary about the banks’ lending practises. So there’s opportunities in that space.

And the Business Finance Guarantee Scheme, which was intended to help in this space, didn’t actually take off to the degree it could. It was quickly overtaken by the lending on the Small Business Cash Flow scheme. Small businesses are very, very important to the whole economy and enabling them to secure steady finance is a matter for the broader economy, which needs to be addressed.

Taxing working from home

And finally, from the “Maybe not quite such a good idea, but you know what they’re trying to do” ideas box, Deutsche Bank researchers have called for what they call a 5% ‘privilege tax’ on people choosing to work from home. The money would be recycled through to low-income staff.

This is actually come out of a major report Deutsche Bank prepared on rebuilding after Covid-19.  The idea behind the thinking is to compensate for the money that people working from home aren’t spending on lunch breaks. Therefore employees who choose to work from home should pay an extra tax.

The idea is that the tax that could be generated from this should be redistributed to low income workers who cannot carry out their jobs remotely, such as nurses, factory workers and in some cases, retail workers.

Now, the estimate is that a 5% tax could raise US$49 billion a year in the US, €20 billion Euros in Germany and £7 billion in the UK.  The idea won’t go very far, but it’s an example the lateral thinking is starting to happen around the tax base. I think everything is being shaken up and so a decision that may have been taken years ago  that these are the tax settings and we’re not going to change them has to be revisited in the wake of Covid-19 because that’s changed everything.

For example, I think the Government with the pressure of the housing market, might be reflecting on whether, in fact, it was such a good idea to say no capital gains tax for the future.

And on that note, that’s it for this week. Thank you for listening. I’m Terry Baucher and you can find this podcast on my Website www.baucher.tax or wherever you get your podcasts, please send me your feedback and tell your friends and clients until next week, Ka kite āno.