This year has been interesting in many ways, more punctuated by case law and hardening of IRD positions than significant legislative change to the tax framework, although the significant delay of long-ago announced legislation will mean there are some law changes for us to manage.
One of the challenges in an environment of parliamentary delays is that one of the key pillars of a successful tax system - taxpayer certainty - becomes undermined as taxpayers, and their advisers, have to take tax positions based not on enacted legislation but rather ''press release'' or draft legislation subject to change through the normal process. This is entirely unsatisfactory.
We certainly see 2013 as bringing more of the same, with pressure on the IRD to generate more Government revenue through the closing of what they would portray as ''loopholes'', but in our view are well established tax practices.
Some of this will be via policy U-turns, like the accommodation allowance debacle of recent times where (in our view) the IRD has changed its collective mind on what was a reasonably settled piece of tax law (a net benefit approach to accommodation provided by employers), and then effectively backdated this by suggesting they were never bound by their previously espoused view, so taxpayers should voluntarily disclose shortfalls for the past two years.
We, along with our many colleagues in the tax world, are horrified by this approach, and are concerned this could become a precedent for the future. Furthermore, we see more ''policy'' changes becoming reality via back-door legislative ''remedial'' changes slipped through below the radar, clarifying what was apparently always ''Parliament's intention''.
In every tax Bill there are a number of remedial amendments. As a tax advisory industry, we consider there are any number of legislative fixes that should be enacted where the legislation as drafted just does not work. However, the emphasis of remedial changes appears less around creating taxpayer certainty on certain matters than delivering new ways to collect revenue in the guise of ''clarification''.
We have always found this concept of ''Parliament's intention'' an interesting one as, like anyone who has sat in the House as legislation is passed, we observe that often there is a dearth of understanding of what is being voted on as whips funnel MPs to their respective slots during the vote. So perhaps more correctly this concept should be seen as ''official's intentions'' which seem to evolve over time and particularly in hindsight.
Either way, we can only see the compliance costs for the average business becoming even greater, as the proverbial sledgehammer is used to crack minor nuts. The proposed changes to the taxation of mixed-use assets are a good example. It is a relatively minor issue being addressed by horrendously complex and unwieldy rules in an attempt to dot every possible ''i'' and cross every conceivable ''t''.
But credit where it is due, we have found the IRD's approach in respect of personal services income (following the 2001 Penny and Hooper case) refreshing and positive in many ways, although there are instances at a ground level of some heavy-handedness by some IRD investigators.
None of this is a particularly happy way to finish the year for Sharp As Tax, so perhaps we should conclude on a more positive note. We are absolutely positive 2013 will be another year of change for taxpayers and advisers as many signalled issues are reviewed and legislated for. Until next year, the WHK team wishes you a very Merry Christmas and a safe New Year.
- Scott Mason is Managing Principal of WHK Tax Consulting.