2022 tax compliance changes

• The new tax rate of 39% for individuals will be applied to any income over $180,000.

• The Student loan repayment threshold has increased to $20,280.

For residential rental properties, there's a restriction on how much interest can be claimed from 1 October 2021 depending on when the property was purchased or whether an exclusion or exemption applies.

For IR3, IR3NR, IR4, IR6 and IR7, there's a new section in the Compliance list > Tax return page, located after the residential rental income. Use this for disclosing the residential rental interest amount incurred and claimed. You need to select a reason for the amount claimed. You can select multiple options for the reason for claiming.

The interest fields are independent to the values used to determine net residential income.

Residential rental income schedule

• In addition to the new section in the the Compliance list > Tax return page, the Residential rental income schedule includes the interest and reasons, as this all relates to residential rental income.

• So that you can do all your data entry in one place, we’ve added the Residential income indicator and (for return types other than IR7) Excess deductions brought forward fields to the Residential rental income schedule. The Excess deductions brought forward field at the top of the schedule will be pre-populated, then populate back to the Compliance list > Tax return page, and will be filed with IR. This field's not updated from the total of the line items in the table.

• All fields in the Compliance list > Tax return page will be updated from the Residential rental income schedule, if the schedule's used.

Tax statement & schedules

• When residential rental income data exists, the tax statement will include a line for net residential income, even if it's 0.00.

• As all residential rental income fields are in the schedule, they will all be included on the printed schedule as well.

Distributing from an IR7

• The IR7 Attribution of income/(loss) section includes Total interest on residential property and Interest expense claimed fields for the interest portion that's distributed to each partner or owner. The reasons also display in the distribution section, but aren't included as part of the distribution when using the Distribute to partners or Distribute to shareholders option. Update any reasons manually in the Residential rental income schedule of the receiving return.

Rental income statement

• The Rental income schedule has been renamed to Rental income statement.

• The Rental income statement includes a new Interest expense section:

  • Enter an expense to calculate the interest claimed based on the selected reason.

  • The total claimable portion calculated is displayed in the Interest section's Interest claimable field, which is located above the Interest expense section. 

  • This subsesction replaces the default interest option in Other expenses.

IR6 trust returns have additional reporting requirements, which includes providing financial summaries and information about settlements, settlors, beneficiaries, distributions and persons with power of appointment for the trust.

• Any trust that makes income in a year must provide additional disclosures, unless it falls into an exemption category. If the trust is exempt, select the Exemption from compliance option Yes in the Additional reporting requirements section. After this, all fields related to additional reporting can be blank.

• A section for financial summaries includes fields for profit or loss, assets, liabilities and equity. Although some of the fields may be the same as those in IR10, the fields must be completed where applicable, regardless of whether an IR10 is also being completed. Learn more about the financial statement disclosure requirements on IR's website.

• Beneficiaries have new fields for:

  • date of birth or commencement date

  • jurisdiction of tax residency

  • IRD number

  • Tax identification number (TIN)

  • beneficiary account movements.

• There's a section for settlor details beneath the beneficiary section for settlor and settlement details. The fields include:

  • name

  • date of birth or commencement date

  • jurisdiction of tax residency

  • IRD number or TIN

  • details of settlements made during the year

  • no settlement this year—select for historic settlements that need to be disclosed but don't require the settlement details to be entered.

Learn more about the IR6 changes in IR's webinar.

If a company doesn't pass the shareholder continuity test, they may still be able to claim a loss under the business continuity test.

There's a new field in the losses section of the 2022 IR4 for identifying losses related to the business continuity test.

Learn more about the Business continuity test on the IR website.

There are three possible types of government subsidy payments for 2022:

• Leave support scheme

• Short term absence payment

• Wage subsidy scheme.

When received via data pre-population, the relevant description will be included when available

• Minimum family tax credit (MFTC) increased to $30,576 on 1 April 2021, and then to $31,096 on 1 July 2021. For 2022, the MFTC entitlement is calculated in two periods to cater for this mid-year change, using two groups of fields in two sections:

  • Number of weeks the minimum number of hours were worked from 1 April 2021 to 30 June 2021

  • Number of weeks the minimum number of hours were worked from 1 July 2021 to 31 March 2022.

• You can override the calculated values using a new Override total entitlement option and Total entitlement override field in the Underpayment or overpayment section. This lets you add your own total value to replace the calculated total of the FTC, IWTC, BSTC and MFTC entitlements. Learn more.

If an IRD number is invalid in the tax return, an error will be displayed. This validation applies to any IRD number field in the Compliance list > Tax return page.

Formatting improvements:

• Bolded the labels of the totals.

• Increased the font size of the amounts and labels.

• Increased the margin sizes.

• Decreased the size of the section headings to make the amounts and labels more prominent.

Layout improvements, including:

• Sorted due dates in the Payment summary section by chronological date order.

• Reordered the line items in the Payment summary section.

• Removed the provisional tax section. Added a sentence under the payment summary describing the provisional tax method used and a sentence describing the transfers amount received. You can't modify these sentences.

• Removed dollar symbols to make amounts less cramped.

• The Payment summary displays earlier in the statement, as we've moved the Balances to carry-forward section after the declaration and any additional text if used. 

• Removed the page break before the Balances to carry-forward section.

• The schedules print in alphabetical order.

• The Transfers received schedule only displays information for years that have activity.

• For the IR4 and IR7, the Schedular payments schedule no longer includes the related expenses column, which is only relevant for IR3. As a result, the net schedular payments have also been removed for these types.

• Loss carry-back has been removed from IR3, IR3NR, IR4 and IR6. It was a temporary measure that no longer applies.

• When adding a transfer, you can select the Account type option Small business cashflow loan (SBC).

• An error message will display in IR6 when the income allocated to the beneficiaries isn't equal to the sum of the income allocated to the beneficiaries in the distribution section.

• Corrected the tax statement report, which incorrectly displayed the provisional tax to pay when transfers had been received and the return was prepared before the final provisional tax was due.

• Removed a column in the Partnership income schedule, used to indicate whether the income was passive or active. This column wasn't relevant in the Partnership schedule. For IR3, IR3NR, IR6 and IR6, enter passive income in Other income. The passive or active column is still available in the Income from another partnership schedule, as it's required for distribution purposes in an IR7.

• Removed a tax paid column in the Other income schedule. This column isn't relevant to IR3, IR3NR, IR4, and IR7. The tax paid column only displays in the schedule for an IR6.

• Removed a redundant non-resident indicator field in the return information section of an IR3, IR6 and IR7.

• The Overseas income schedule prints the detail for an IR7.

• Working for families calculates correctly for non-standard balance dates.