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IRD Revisits Rule That Backdates Tax Changes

Inland Revenue Revisits Rule That Backdates Tax Changes

04 June 2004


Inland Revenue today announced that a decision to backdate a change in the tax obligations for home-based childcare providers, will not apply to all providers.

In response to concerns raised by some childcare providers, Inland Revenue today announced that the change will apply retrospectively only to those who will benefit from that. For others, it will apply moving forward.

Commissioner of Inland Revenue David Butler said: "Backdating this is a positive measure for most childcare providers. Those who may have been expecting to file a return, now won't have to. However, there are some people who will be disadvantaged if this is backdated. That is not our intention, and we have agreed that where people will benefit, the new rules can apply to future income years, without going back to April 2003."

Mr Butler said: "These changes were designed to create a level playing field across the industry. Unfortunately, we didn't work out all the implications before deciding to backdate it. We expect that by moving quickly to solve the problem, we have given certainty and reassurance to all home-based carers affected."



1. The determination referred to, allows childcare providers to use standard costs when claiming deductible expenses, rather than having to keep detailed records of their own. It reduces their compliance costs, and so is a taxpayer-friendly measure.

2. Inland Revenue's intention to introduce such a measure was flagged back in 2002, and was enacted in legislation in November 2003. The legislation provided for the application date to be set by the Commissioner of Inland Revenue.

3. Throughout 2003, Inland Revenue consulted extensively across the childcare industry about the levels of these costs. These cost levels were agreed by the industry. The May Tax Information Bulletin restated those levels.

4. The standard costs set by Inland Revenue are generous and were agreed by the childcare industry. It is expected that the tax imposition for most of the providers affected, will be nil or minimal.


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