Last week, the Finance and Expenditure Committee (FEC) reported the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill (the Bill) back to Parliament. Shortly after, the Government tabled an Amendment Paper to the Bill which introduces a number of election promises (and other tax policy changes) to the Bill.
The Bill was introduced by the previous Labour Government before lapsing once Parliament was dissolved in advance of the general election in October 2023. The headline items contained in the Bill included:
Domestic adoption of the OECD’s “Pillar 2” multinational tax changes
Increasing the trustee tax rate to 39%
The new Government reinstated the Bill, subject to a number of tweaks following public consultation, as well as introducing several new items to the Bill (many of them being tax policy promises the Government made when campaigning in the general election).
In this Tax Tips, we look at some of these changes to the Bill in further detail, including:
Introducing a de minimis threshold to the trustee tax rate
Updates to the Pillar 2 proposals
Various changes to the land taxing rules, including:
Restoring the ability the claim interest deductions for residential investment properties
Returning the bright-line test period to two years
Removing the ability to claim depreciation deductions for commercial buildings
Proposals to tax non-resident online casinos
Tax changes for donated trading stock
Remedial changes to the new GST rules for platform operators that provide short stay accommodation, ride sharing, or food/beverage delivery services
Trustee tax rate
The Bill includes the increase in the trustee tax rate from 33% to 39%. This is intended to come into effect in the 2024/2025 income tax year, meaning for trusts with a standard balance date, this 39% rate will come into effect from 1 April 2024.
Submitters raised concerns that the proposed increase to the trustee tax rate could give rise to significant overtaxation of trustee income. In response to this, the Bill proposes a de minimis rule where trusts with net income not exceeding $10,000 would continue to be taxed at 33%. Only trusts with net income exceeding $10,000 would be taxed at 39%.
It is important to note that this rule does not create a progressive tax - i.e. if a trustee’s net income exceeds the threshold, the flat 39% rate will apply to all income.
The Bill also includes an updated concession for deceased estates where the estate’s income will be taxed at 33% in the income year of a death, and the subsequent three years. The option to elect to apply the deceased individual’s personal tax rate has been removed. The 33% rate will now also apply to disabled beneficiary trusts which differs from the original proposal to tax disabled beneficiary trusts at the beneficiaries’ personal tax rates. The criteria to be considered a disabled beneficiary trust has been broadened.
PwC view
We welcome the introduction of a de minimis rule to address the overtaxation of trustee income under the original proposals. Inland Revenue data suggests that a significant majority of trusts earn less than $180,000 of trustee income. Requiring trustees to make regular distributions of beneficiary income solely for the purpose of mitigating overtaxation could drive behaviour that is contrary to the fundamental legal and economic nature of the trust.
The proposed de minimis is not a perfect solution - however, it should result in far fewer trusts being impacted by the 39% trustee tax rate (c. 49,000 of the 400,000 trusts in New Zealand). As the original proposal to increase the trustee tax rate was introduced as part of the 2023 Budget, there was no prior consultation on the detailed design and implementation of the increase to the trustee tax rate. It was unlikely that a perfect solution would be found in the limited amount of time in which the FEC had to consider submissions. Other options to mitigate against overtaxation were likely to be complex. Given this context, in our view, a de minimis threshold strikes an appropriate balance between accuracy and simplicity. As with any threshold, it will be important to revisit in the future (particularly as Inland Revenue receives more regular reporting from trusts) to ensure that it remains fit for purpose.
Pillar 2
New Zealand’s Pillar Two rules seem set to progress through the parliamentary process largely as previously proposed, subject to a few updates to the draft legislation. A key point of clarity coming out of the updated draft legislation is the recommended effective date of 1 January 2025.
To provide context, included below is a high level recap of the Pillar Two rules followed by an overview of the updates to the draft legislation and notable points that are not expected to change.
- What is Pillar Two?
- What's changed in the draft legislation
- Key items that remain unchanged
- Key takeaways
What is Pillar Two?
Pillar Two (or Global Anti-Base Erosion (GloBE rules)) is an OECD-led initiative that aims to limit jurisdictions’ ‘race to the bottom’ with respect to their corporate income tax rates. In this regard, the GloBE rules have been designed such that multinational enterprises (MNEs) with annual global revenues of €750m (approximately NZ$1.3 billion) should pay a minimum 15% effective tax rate on mobile income in every jurisdiction in which they operate.
The GloBE rules are a set of two interlocking measures that are intended to result in a parent entity paying a ‘top up’ amount of tax for a low tax subsidiary under the Income Inclusion Rules (IIR) or vice versa under the Undertaxed Profit Rule (UTPR). In response, many jurisdictions have or are looking to introduce domestic minimum taxes (such that the ‘top up’ tax is effectively paid in the appropriate country).
Enactment of the draft legislation would see New Zealand adopt the Pillar Two rules by reference to the OECD Model Rules. Our earlier Tax Tips includes further detail on the rules and expected New Zealand impact.
What's changed in the draft legislation
The most significant update to the draft legislation is the recommended effective date. It was previously unclear when the Pillar Two rules would take effect in New Zealand. However, the draft legislation now reflects that, if enacted, the IIR and UTPR would take effect for income years beginning on or after 1 January 2025, with a Domestic Income Inclusion Rule (DIIR) for New Zealand headquartered groups (only) taking effect for income years beginning on or after 1 January 2026.
In addition, the updated legislation:
allows companies to claim foreign tax credits for Pillar Two top-up tax paid overseas under a ‘qualifying domestic minimum top-up tax’ (QDMTT);
includes provision to allow for the release of a New Zealand entity from joint and several liability when it leaves a particular MNE group;
provides that the latter OECD Commentary and Agreed Administrative Guidance would prevail over the Model Rules in the event there is inconsistency, and that New Zealand will adopt an automatic update approach—i.e. guidance subsequently released by the OECD will automatically apply in New Zealand unless it is specifically made non-applicable; and
gives the Commissioner the power to make binding rulings on the application of the Pillar Two rules.
Key items that remain unchanged
As outlined in our earlier Tax Tips, the draft legislation proposes additional compliance and filing requirements for those within the scope of the rules (including New Zealand subsidiaries of foreign owned MNEs). These have not changed and it will be critical to ensure the requirements are met as the potential penalties for non-compliance (up to $100,000) also remain unchanged.
Separately, the draft legislation also includes a domestic minimum tax (referred to as the DIIR) which will apply to New Zealand headquartered MNEs that are within the scope of the rules and that have ‘undertaxed’ income in New Zealand. Unlike other jurisdictions, New Zealand’s DIIR is not proposed to apply to foreign owned New Zealand subsidiaries and therefore does not qualify as a QDMTT.
Key takeaways
The Pillar Two rules are extremely complex and will have a significant impact on large MNEs. Although the compliance and filing obligations may seem some time down the track, impacted groups need to prepare for increased Pillar Two financial reporting obligations now. Disclosures will likely be required in the current year financial accounts given the updates to IAS 12 discussed in our earlier Tax Tips and that a number of other jurisdictions have already enacted the rules for financial years beginning on or after 1 January 2024.
The New Zealand rules are likely to directly impact both large New Zealand headquartered groups and New Zealand subsidiaries of offshore MNE groups. It is critical that impacted groups start planning now (if they have not already) to ensure that they are prepared for the significant compliance requirements and allow sufficient time to put processes in place to comply with this complex and unprecedented set of rules.
Government hits reverse: Property tax settings rewind
As signalled in its pre-election commitments and coalition agreements, the Government has reversed course on several property tax changes introduced by the previous Labour-led Government. These changes will impact businesses, property investors and anyone owning residential property.
An Amendment Paper to the Bill was introduced last week that includes the following property tax-related changes:
Restoring interest deductibility for residential investment property.
Returning the bright-line test to two years.
Removing depreciation deductions for buildings.
All of these changes are expected to be enacted as part of the Bill prior to the end of March, however the date each change applies differs.
- Interest deductibility on residential investment properties phased back in
- Bright-line test back to two years
- Don’t get caught short
- Main home test - return to a predominant use test
- Rollover relief simplified
- Building tax depreciation switched off
- Building depreciation - what do you need to know?
- Implications for building owners
Interest deductibility on residential investment properties phased back in
The previous Labour Government introduced rules in March 2021 that restricted interest deductions for borrowing on residential investment property (i.e. properties that were not a person’s main residence). The Government has now introduced draft legislation to again allow landlords to deduct mortgage interest.
Under these changes, interest deductibility will be phased in over the next two years, with all owners of residential investment properties entitled to deduct 80% of interest incurred in the year 1 April 2024 - 1 April 2025, with full interest deductibility restored from 1 April 2025. There is no change to interest deductibility for the current year 1 April 2023 - 31 March 2024 with 50% of interest deductions allowed, despite the Act-National coalition agreement previously signalling that this would be increased to 60%. The changes are summarised in the table below:
Importantly, for residential properties on which there are currently no interest deductions allowed (i.e. where funds were drawn down after 27 March 2021 and the property was not a ‘new build’), these properties will be entitled to interest deductibility from 1 April 2024. For example, an investment property purchased in May 2022 that currently has 0% of interest deductions allowed, will be restored to 80% of interest deductions from 1 April 2024.
The Amendment Paper includes a provision that will completely repeal the interest limitations rules from 1 April 2025, in effect, restoring interest deductions on investment properties to 100%. This provides a welcome simplification to the tax rules as the interest limitation rules were particularly cumbersome to apply.
However, some investors should not forget about these rules completely once repealed. A savings provision is included to preserve the ability for taxpayers to claim previously denied interest deductions on disposal of an investment property, where that disposal is taxable. For example, an investor who sells a property that is taxable under the land sale provisions and was denied $50,000 of interest deductions during the period the interest limitation rules were in force, should be able to deduct the previously denied interest deductions on sale of the property (subject to application of the residential ring-fencing rules). Therefore, taxpayers who were denied interest deductions during the period the interest limitation rules were in force, will need to keep a record of these if the eventual sale of the property is likely to be taxable.
Bright-line test back to two years
John Key’s National-led Government originally introduced the bright-line test in 2015, under which residential properties that were not a person’s main home, were taxable if sold within a bright-line period. The bright-line period was originally set at two years and later increased to five and then ten years by previous Labour-led Governments.
The Amendment Paper confirms that the bright-line period will be reduced back to two years with several related policy settings also changed. This means only residential property disposed of within two years of acquisition will be taxable. This restores the bright-line test back to its original intent which was to capture speculative property transactions. In our view, extending the brightline period to ten years arguably took it beyond the initial policy intent of capturing speculative property transactions and captured investors that had acquired the property on capital account - e.g. not with an intention to sell.
This change is applicable to all disposals of residential land where the land is disposed on or after 1 July 2024. In addition, the reduction of the bright-line test to two years has provided an opportunity for further simplification to the main home exemption and rollover relief rules.
Don’t get caught short
It is critical to understand the boundary between the application of the new two year bright-line test and old rules. Importantly, the new two year bright-line test will apply to all disposals of residential land where the bright-line disposal date is 1 July 2024 or later, even if the property was acquired when a five or ten year bright-line test was in effect.
The bright-line end date is the date of disposal of property and this date must occur after two years from the date the property was acquired for the transaction to be outside the scope of the amended bright-line rules. The date of disposal for tax purposes is in most cases, the date the vendor and purchaser enter into a binding agreement, notwithstanding some conditions that may have not been met; it is not the settlement date.
As the crucial date is the date the agreement is signed, vendors may wish to delay entering into agreements for sale and purchase until 1 July 2024, otherwise they could inadvertently trigger the bright-line test.
Main home test - return to a predominant use test
The bright-line test does not apply to the sale of a person’s main home. However, this exemption had become increasingly complex as a period of absence from the main home could trigger a partial tax liability if the home was otherwise subject to the bright-line test.
The Amendment Paper unwinds previous changes to the ‘main home test’. The exclusion will again apply on an ‘all or nothing’ basis and the previous apportionment test based on time and land area will be removed.
Under the proposed changes, for the main home exclusion to apply, the home must be used predominantly, for most of the time the person owned the land as their main home. This is a two-fold test:
More than 50% of the land area must have actually been used as their home and;
Their home must have been used predominantly as a ‘main home’, i.e. used for more than 50% of the time while the property was owned.
In an important change, the period that a home is under construction is now excluded when determining whether residential land was used as the main home for the brightline period.
Below is an example from the commentary to the Bill, highlighting the tax treatment under the new main home exemption rule.
Sarah bought residential land on 1 April 2023. After waiting 2 months from acquisition to finalise construction plans, construction of a residential property began on 1 June 2023. After 8 months, construction finished and a code compliance certificate was issued on 1 February 2024. Sarah then lived in the property for 9 months before selling it on 1 November 2024.
The 8 month period during which the home was being constructed is ignored for the purpose of determining whether the property is Sarah’s main home. Therefore, as the home was occupied by Sarah as a main home for 9 months, out of a total 11 months, the property has been predominantly used as Sarah’s main home, and the sale of the property will not be subject to the bright-line test.
Rollover relief simplified
Rollover relief under the bright-line test ensures that certain transfers of residential land between related persons are not taxed at the time of the transfer. Rollover relief also allows the recipient to take on the original owner’s acquisition date and acquisition cost when applying the bright-line test.
Historically, rollover relief applied on a more restricted basis and the rules were complex. Changes included in the amendment paper drastically simplify these rules. Rollover relief has now been extended to:
Transactions between associated persons who have been associated for more than two years. Association is defined per the associated persons rules in the Income Tax Act 2007. For example, a transaction between relatives (e.g. parents and child) would be subject to rollover relief, deeming the land to be transferred at cost and there would be no tax arising on the transfer;
A transfer to a trustee of a trust in which all beneficiaries are persons that have been associated with the transferor for at least two years (other than infants that are less than two years old and persons that are associated due to a recent marriage or adoption), or charities.
This simplification of the rollover relief rules recognises that transfers between associated persons are not the type of speculative property transactions that the bright-line test was originally targeted at. However, to prevent potential abuse of the rollover relief rules, rollover relief can only be claimed once for a property in a two year period.
Building tax depreciation switched off
As part of its “Mini Budget” in December 2023, the Government confirmed its intention to remove depreciation deductions for commercial and industrial buildings. Depreciation deductions for commercial buildings have had a chequered past. Tax depreciation was previously switched off in 2010, effective from the 2011-12 income year and reintroduced again for the 2020-21 income year by the Labour-led Government as part of a Covid stimulus package for business (and following the recommendation of the 2018 Tax Working Group).
Despite Inland Revenue tax policy officials’ pointed statement in the Regulatory Impact Statement that “we do not consider the removal of building depreciation to be a fair and efficient way of raising revenue”, the Government has decided that the removal is required in response to tight fiscal conditions and it has continued with its pre-election commitment to remove building depreciation.
The changes in the Amendment Paper, in essence, restore the building depreciation settings back to the previous 2011-2020 settings. Key details are summarised below.
Building depreciation - what do you need to know?
Under this change, tax depreciation can no longer be claimed on commercial buildings with an expected useful life of 50 years or more, i.e. the depreciation rate for these buildings is 0% regardless of when it was acquired.
The changes will be effective from the 2024-25 and later income year. Businesses with an early balance date will already be impacted by the change. For example, a 31 December 2023 balance date will apply these changes from 1 January 2024.
The rules for grandparented structures are being reintroduced with retrospective effect from 1 April 2020, restoring the previous position. These are particular types of structures acquired before 30 July 2009, such as carpark buildings and barns.
Owners of a building acquired in or before the 2010–11 income year will be able to deem a proportion of the building’s adjusted tax value as the cost of commercial fit-out and continue to depreciate the fit-out separately under new section DB 65B, where they have not previously recorded commercial fit-out assets separately for the building. The proposed annual deduction is 1.5% of the ‘starting pool’ (the starting pool being 15% of the building’s adjusted tax value).
Implications for building owners
Any structural work on a building such as seismic strengthening may be disincentivised due to the removal of building depreciation.
Commercial building fit-out remains depreciable as an asset separate to the building. Building owners should ensure that fit-out is split out as a separate asset in the tax fixed asset register, or when purchasing a building.
If you have not split out the fit-out as a separate asset, and the building was acquired in the 2010-11 or earlier year, building owners can apply new section DB 65B to claim a depreciation deduction for the cost of fit-out embedded within the cost of the building asset. Be warned that this rule is particularly complex to apply.
As noted, the above rule only applies to pre 2010-11 buildings on the assumption that any taxpayers acquiring buildings since this time would have treated the building and fit-out as a separate asset. This may not be entirely true for owners of buildings acquired once depreciation was switched back on, i.e. between the 2020-21 to 2023-24 income years. The commentary to the Amendment Paper states that if taxpayers would like to depreciate commercial fit-out separately from the building asset, they can make an application under section 113 of the Tax Administration Act to request that the Commissioner of Inland Revenue amend prior year tax returns to treat the commercial fit-out acquired with the building as a separate depreciable asset.
Some building-like structures with a useful life of less than 50 years (e.g. portable huts, temporary buildings) and grandparented structures remain eligible for depreciation. Therefore, when making changes to the depreciation rates in the tax fixed asset register, taxpayers will need to ensure that they consider whether they own any building-like structures which remain eligible for depreciation.
Owners of buildings will need to consider the financial reporting impact of these changes, particularly deferred tax which can be complex. Refer to this article for further information.
Online casino taxes
The National Party’s pre-election tax policy announcement referred to a new tax on offshore online gambling operators. The policy was scarce in detail, but suggested that offshore gambling operators benefited from a tax “loophole”. It was unclear at the time what this was referring to, as offshore online gambling operators are already subject to remote services GST rules, and offshore sports and racing betting operators are subject to various charges and turnover taxes paid to the Department of Internal Affairs (DIA).
The Government is now proposing a new “offshore gambling duty” of 12% of an offshore gambling operator’s profits. Profits for the purposes of these rules exclude amounts which are subject to the point of consumption charge (POCC) - a turnover tax for sports betting paid to DIA.
The offshore gambling duty applies to GST registered persons who are located outside NZ and conduct offshore gambling (defined as any gambling or prize competition subject to the remote services GST rules). For this purpose, "registered person" means a person who either is registered or is liable to be registered under the GST Act. This means that the duty should also apply to operators who are currently non-compliant with GST.
12% duty applies to the offshore gambling operator’s gambling profits, which is determined by the following formula:
A - B - C
A: amounts received from NZ residents
B: prizes paid to NZ residents
C: offshore betting amounts (i.e. total amount on which consumption charges are payable under s 113 of the Racing Industry Act 2020).
The changes are proposed to come in from 1 July 2024.
As the proposed changes were included as an Amendment Paper to the Bill, there are no further opportunities to make submissions before the new rules are enacted.
PwC view
To the extent that offshore online gambling operators without any physical presence in New Zealand do not pay New Zealand income tax, this is no different to any other non-resident business with no physical presence here. The Government has suggested that it is “unfair” that online casinos pay less New Zealand tax than casinos that are physically present in New Zealand and pay New Zealand income tax. However, this is by design and, as noted, no different to any other non-resident business that does not have a presence (permanent establishment) in New Zealand. From a tax policy perspective, it’s difficult to understand the principled basis for targeting and imposing a tax liability on one specific sector or group of taxpayers.
There is of course precedent for certain kinds of “corrective taxes” (e.g. alcohol and tobacco excises) which are targeted at certain behaviours. However, although “harm minimisation” is mentioned by Inland Revenue officials as one of the policy design considerations, it is not clear that there are any features of the proposed rules that specifically support this objective. Whereas tobacco and alcohol excises are intended to have a direct impact on the price of those goods, an additional 12% duty on online gambling would only have an indirect (if any) impact on bettors’ behaviour.
Finally, unlike casino duties (4%) and problem gambling levies (0.87%) which are paid by licenced domestic casino operators, there is no suggestion that the revenue collected from this new offshore gambling levy would be ring-fenced specifically for spending on public health and harm minimisation programmes. Rather, the revenue would be used to fund general government spending.
The problem with imposing an additional tax liability on non-resident operators with no presence in New Zealand is the difficulty of enforcement. For example, based on the DIA’s briefing to the incoming Minister of Racing, there are only 12 offshore betting operators who are currently paying the POCC, which DIA acknowledges is “reflective of the challenge in enforcing the charge on organisations outside New Zealand’s jurisdiction.” This means that this new charge is likely to be borne again by responsible operators who voluntarily comply with their New Zealand regulatory obligations, while many non-compliant operators will simply ignore the new charge.
Donated trading stock
The tax rules for donations generally only allow a tax credit or deduction in relation to gifts of money provided to an approved donee organisation. Gifts in kind are not eligible for a tax concession - this is primarily due to the fiscal cost and to prevent abuse through overvaluation of goods (for example). As such, most businesses that donate their trading stock do not receive a deduction for the cost of the goods. In addition, prior to a temporary law change (set to expire on 31 March 2024), a specific anti-avoidance rule deemed disposals of trading stock at below market value as having been disposed of at market value. So not only did the business not receive a tax concession for donating trading stock, they were deemed to have received income and effectively taxed on the “profit” made on the disposal.
The Government introduced the temporary measure during the Covid-19 pandemic, which switched off the deeming rule in certain circumstances. This was to facilitate businesses donating masks, hand sanitizer, and other goods or equipment, without the deeming rule acting as a barrier or disincentive to donating these goods. The temporary change is now proposed to be permanent.
The deemed market value rule will now only apply in the following circumstances:
Where trading stock is disposed of to an associated person.
Where a person disposes of trading stock to themselves for their own use or consumption.
Where trading stock is not disposed of in the course of carrying on a business for the purpose of deriving assessable income or excluded income, or a combination of both.
PwC view
This is a welcome and long overdue change. The deemed market value rule as previously drafted resulted in significant overreach, and captured transactions which did not appear to give rise to any significant integrity risks. The rules are now more appropriately targeted to the situations where there is potential for abuse or manipulation.
New GST rules for platform operators
The Bill introduces a number of key remedials to the GST rules coming into force on 1 April 2024 for taxable accommodation, ride-sharing, and food and beverage delivery services that are provided through electronic marketplaces.
Details of the key features of the rules were covered in our September 2022 Tax Tips and further publication “Important GST changes for short stay/visitor accommodation providers”.
We have summarised the key changes and possible implications below.
Listing intermediaries rule
The new GST rules, as originally enacted, did not specifically deal with circumstances where multiple parties or intermediaries in a chain are involved in the supply of listed services. As the operator of the electronic marketplace, which interacted with the customer, did not necessarily have any contractual relationship with the underlying supplier, it was practically difficult for the operator to calculate, administer and pass on the flat rate credit. The Bill proposes that the marketplace operator is treated as supplying the services to the consumer, but the listing intermediary will be responsible for administering the flat-rate credit passed on to unregistered underlying suppliers.
The listing intermediary could alternatively be liable for the output GST on the listed services, instead of the end marketplace, if it meets certain conditions (including that it is a NZ resident).
- Transitional rule
The Amendment Paper also proposes a transitional rule to allow electronic marketplace operators to treat these new GST rules as not applying to contracts for listed services (e.g. short-stay or visitor accommodation) entered into before 1 April 2024.
This is to address the situation where an accommodation booking was received before 1 April 2024 without GST being factored into the price. Without the proposed transitional rule, marketplace operators could have unfunded and unanticipated GST liabilities on some bookings taken before the application date of the new rules but for which a payment is not made, or an invoice issued, until after that date.
In addition to the above, the Bill proposes several technical changes to the flat-rate credit rules; the ability to opt-out of the rule (i.e. more flexibility to opt-out), ensuring that recovery of the marketplace operator’s GST liability from the underlying supplier is not treated as consideration for a supply (i.e. mitigating against double tax), and introducing resident agent rules.
PwC view
Overall, the changes proposed to the new platform GST rules for platform operators are positive and reflect ongoing discussions between platforms, tax advisors, and tax policy officials to make the rules workable before the 1 April 2024 start date.
However, with such significant changes to the rules still being made in the Bill (just before the new rules come into force), platforms and underlying suppliers will need to invest significant time and resources to work through and implement the changes.
The late introduction of the remedials was somewhat predictable. The current Government had announced as part of its election tax policy that it would repeal the GST rules for platform operators, and only announced that it would not repeal the rules at the end of November before the summer break. In the interim, platform operators and tax policy officials were not in a position to advance the implementation of the platform rules or engage in any advancement of remedial matters. This is extremely unfortunate as it created prolonged uncertainty for impacted platforms where system builds were put on hold. Without any subsequent compromise on lead time, it seems likely that many may not be in a position to comply on 1 April 2024.
Given experience shows that platform operators usually need at least a year to build and bed in the necessary changes to their systems, platform operators may be able to agree compliance positions with Inland Revenue in the interim. However, this is far from an ideal solution. The rules and the commercial arrangements in the affected industries (particularly accommodation) are inherently complex and as platform operators, listing intermediaries and underlying suppliers continue to adopt and work through these rules, further remedial amendments may be required.
