2016 tax return until 31 March 2017. Section RC 9(4)(c) of the Income Tax Act 2007 states that Kamekona does not need to pay provisional tax in three instalments. Section RC 9(10) then says that Kamekona can pay provisional tax in one instalment following the rules in section RC 14. Kamekona pays $200,000 in provisional tax on 7 May 2018 (the third instalment date) for the 2017 income year. For the 2017 income year Kemekona’s residual income tax actually works out to be $300,000. This amount should be apportioned over the three provisional tax instalment dates (Period 1 to Period 3) for the 2017 year and UOMI should be charged accordingly. At Period 1 and Period 2 UOMI should be calculated on $100,000 less the amount paid of zero from the respective payment dates through to Period 3 and then on $100,000 from Period 3 being the difference between the $300,000 residual income tax and the $200,000 paid. It is arguable the current wording of the legislation would only apportion the residual income tax to Kamekona at Period 3, although this was not the policy intent as UOMI is a use of money charge and the taxpayer had the use of those funds throughout the entire year. The amendment clarifies the policy intent. (Clauses 207–210) Summary of proposed amendment This amendment corrects some in the Income Tax Act 2007 which refer to repealed section 120K of the Tax Administration Act 1994. The amendment references those sections more generally to Part 7 of the Tax Administration Act 1994. Application date The proposed amendment will apply from 1 October 2007 the date section 120K was – repealed. There are no adverse implications that officials can see from this application date for taxpayers. Key features The following four sections in the Income Tax Act 2007 refer to section 120K of the Tax Administration Act 1994, which has been repealed: RM 16(3); RM 22(5); RM 25(3); and RM 31(3). The amendment references these sections to Part 7 of the Tax Administration Act 1994.
2016 tax return until 31 March 2017. Section RC 9(4)(c) of the Income Tax Act 2007 states that Kamekona does not need to pay provisional tax in three instalments. Section RC 9(10) then says that Kamekona can pay provisional tax in one instalment following the rules in section RC 14. Kamekona pays $200,000 in provisional tax on 7 May 2018 (the third instalment date) for the 2017 income year. For the 2017 income year Kemekona’s residual income tax actually works out to be $300,000. This amount should be apportioned over the three provisional tax instalment dates (Period 1 to Period 3) for the 2017 year and UOMI should be charged accordingly. At Period 1 and Period 2 UOMI should be calculated on $100,000 less the amount paid of zero from the respective payment dates through to Period 3 and then on $100,000 from Period 3 being the difference between the $300,000 residual income tax and the $200,000 paid. It is arguable the current wording of the legislation would only apportion the residual income tax to Kamekona at Period 3, although this was not the policy intent as UOMI is a use of money charge and the taxpayer had the use of those funds throughout the entire year. The amendment clarifies the policy intent. (Clauses 207–210) Summary of proposed amendment This amendment corrects some in the Income Tax Act 2007 which refer to repealed section 120K of the Tax Administration Act 1994. The amendment references those sections more generally to Part 7 of the Tax Administration Act 1994. Application date The proposed amendment will apply from 1 October 2007 – the date section 120K was repealed. There are no adverse implications that officials can see from this application date for taxpayers. Key features The following four sections in the Income Tax Act 2007 refer to section 120K of the Tax Administration Act 1994, which has been repealed: RM 16(3); RM 22(5); RM 25(3); and RM 31(3). The amendment references these sections to Part 7 of the Tax Administration Act 1994.
2018-commentary-armtarm-bill.docx