The Insolvency Practitioners Bill is now unlikely to come into force until early 2013 due to the disruption caused by the election. The Finance and Expenditure Select Committee's report on the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill will also be delayed until next year.
Insolvency Practitioners Bill
The Ministry of Economic Development (MED) anticipates that the Insolvency Practitioners Bill will be passed before the middle of next year. This means that it will probably come into effect in early 2013, nine months after it receives Royal assent.
Chapman Tripp made a submission on the Bill to the Commerce Select Committee and also provided feedback to MED on the Committee's report. MED is now waiting for Cabinet to accept the Committee's recommended changes before the Bill is returned to Parliament.
Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill
This Bill proposes to amend section 19 of the Goods and Services Act 1985 to prevent liquidators, receivers and voluntary administrators from switching from the payments basis to the invoice basis when accounting for GST. The amending provision is clause 140.
The main objective of the proposed amendment is to prevent insolvency practitioners from generating GST refunds to the detriment of the tax base, by electing to account for GST on an invoice basis where the insolvent taxpayer previously accounted on a cash basis. Inland Revenue consulted with INSOL NZ before the Bill was introduced to the House in late September. It is now with the Finance and Expenditure Select Committee, which is expected to begin hearing submissions early next year. At this stage, we expect the Bill to come back from the Select Committee review largely intact.
Where to next?
Chapman Tripp will continue to monitor the progress of both Bills.
The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.