Snapshot of recent developments

Tax legislation and policy announcements

Inland Revenue: Information release Increase to the in-work tax credit

On 21 April 2026, Inland Revenue published an information release including documents related to the in-work tax credit increase.

Commentary: Taxation (Annual Rates for 2025−26, Compliance Simplification, and Remedial Measures) Act 2026

On 12 May 2026, Inland Revenue published detailed commentary on the changes introduced by the Taxation (Annual Rates for 2025−26, Compliance Simplification, and Remedial Measures) Act 2026 which received Royal assent on 30 March 2026.

Inland Revenue technical updates

Determination: Deemed Rate of Return on Attributing Interests in Foreign Investment Funds

On 29 April 2026, Inland Revenue published determination DET 26/04: Tax Administration (Deemed Rate of Return on Attributing Interests in Foreign Investment Funds, 2025–26 Income Year) Determination 2026. The determination provides that the deemed rate of return applying for the 2025–26 income year for the purposes of sections EX 55(4)(b) and EX 55(6)(c) of the Income Tax Act 2007 is 7.84%. The deemed rate of return set for the 2024-25 income year was 8.04%. This determination took effect from 30 April 2026.

Draft Public Ruling: GST – Directors’ fees and board members’ fees

On 30 April 2026, Inland Revenue published draft public ruling PUB00545: GST – Directors or board members who provide services through a personal services company. Inland Revenue has withdrawn public rulings BR Pub 23/01 – 23/03 and issued an updated public ruling and accompanying Question We’ve Been Asked and fact sheet to reflect the recent amendment to section 6(4) of the GST Act 1985, and for general clarity. No other interpretative changes have been made to the new guidance.

Inland Revenue: Tax Information Bulletin – May 2026 (Vol 38, No 4)

On 30 April 2026, Inland Revenue published the May 2026 Tax Information Bulletin. The TIB covers the following recent tax developments:

Ruling

• BR Prd 26/02: Industrial and Commercial Bank of China (New Zealand) Limited

Interpretation Statements

• IS 26/02: GST treatment of supplies of payment processing or facilitation services to merchants
• IS 26/03: Shortfall penalties – requirements for a “tax position” and a “tax shortfall”
• IS 26/04: Shortfall penalty for not taking reasonable care
• IS 26/05: Shortfall penalty for taking an unacceptable tax position
• IS 26/06: Shortfall penalty for gross carelessness
• IS 26/07: Shortfall penalty for taking an abusive tax position
• IS 26/08: Shortfall penalty for evasion or similar act
• IS 26/09: Shortfall penalties – reductions and other matters IS 26/10: Income tax implications of providing sponsorship
• IS 26/10: Income tax implications of providing sponsorship

Question we’ve been asked

• QB 26/10: GST - Registered members of unregistered unincorporated bodies

Case summaries

• CSUM 26/02: Disputant’s claim struck out due to failure to follow the disputes process
• CSUM 26/03: Taxpayers’ appeal against evasion shortfall penalties dismissed

Technical Decision Summary

• TDS 26/03: Sale and subdivision of land

Inland Revenue: New Tax Technical Overview pages

On 30 April 2026, Inland Revenue announced that new tax technical “Overviews” pages have been published for the following topics:

• Cryptoassets
• Kilometre rates
• Livestock values
• Square metre rates for dual use of premises

Draft Interpretation Guideline: GST - Types of unincorporated bodies

On 6 May 2026, Inland Revenue published their draft interpretation guideline PUB00530: GST - Types of unincorporated bodies. The draft explains when different GST rules apply to unincorporated bodies (specifically: partnerships, joint ventures, trustees, and other unincorporated bodies) and whether the body or its members must register for GST. In summary, the draft’s main practical significance is that Inland Revenue is softening the previously stated “significant degree of regulation” requirement for unincorporated bodies, while reinforcing that mere co-ownership or cost-sharing is still not enough. Submissions close 17 June 2026.

Interpretation Statement: GST – Court-awarded costs and disbursements

On 22 May 2026, Inland Revenue published interpretation statement IS 26/11: GST – Court-awarded costs and disbursements. This interpretation statement explains that court-awarded costs and disbursements and out-of-court settlement payments for costs and disbursements are generally not subject to GST. Unless a specific GST deeming rule applies, these payments do not involve the necessary connection between a supply and payment which is required for GST purposes. The statement does not consider the GST treatment of court awards and out-of-court settlement payments more generally (e.g., payments of damages). 

Draft Interpretation Statement: GST – Arranging and brokering financial products

On 21 May 2026, Inland Revenue published draft interpretation statement PUB00463: GST – Arranging and brokering financial products. This statement provides guidance about the circumstances in which intermediaries or brokers involved in the supply of financial products will make an exempt supply for GST purposes by arranging (rather than advising on) any financial services. Arranging occurs where the intermediary is directly involved in an essential part of bringing about a financial service that their customer has already decided to obtain, as opposed to general promotional or advisory work. This statement operates alongside IS0052 (Financial Planning Fees—GST Treatment) and does not replace that statement (or any statement that replaces it). Submissions close on 2 July 2026.

Commissioner’s Statement: GST treatment of low value pre-registration acquired goods and services

On 22 May 2026, Inland Revenue published Commissioner’s statement CS 26/02: GST treatment of low value pre-registration acquired goods and services. The statement sets out the Commissioner of Inland Revenue’s position and operational approach on the treatment of goods and services valued at $10,000 or less (excluding GST) that were acquired before GST registration and are used to make taxable supplies, on or following GST registration. The Commissioner’s position is that a registered person is not permitted to claim input tax deductions for goods or services acquired before registration where the GST-exclusive value of those goods or services is $10,000 or less. While s 21B of the GST Act 1985 allows registered persons to make an adjustment for pre-registration acquired goods and services, the threshold in s 21(2)(b) does not allow any adjustments to be made if the goods or services are valued at $10,000 or less (excluding GST).

Tax cases and Technical Decision Summaries

Technical Decision Summary: Off-market share cancellation (Private Ruling)

On 14 May 2026, Inland Revenue published technical decision summary TDS 26/04 Off-market share cancellation. The private ruling considered whether payments made by Company A to shareholders as part of an off-market share cancellation were taxable dividends.

Company A was a long-standing holding company that owned Company B. Company A had been formed through a share-for-share exchange and was winding up after its subsidiaries had ceased trading. The Tax Counsel Office concluded that (1) the cancellation payments made by Company A were genuine returns of capital, (2) the share-for-share exchange did not restrict Company A’s available subscribed capital (ASC), and (3) the arrangement was not tax avoidance. Importantly, the cancellation payments met the market value threshold and the amount paid per share did not exceed the Available Subscribed Capital per share under the ordering rules.

Technical Decision Summary: Off-market share cancellation (private ruling)

On 22 May 2026, Inland Revenue published TDS 26/05 Off-market share cancellation. The private ruling considered whether the proposed pro-rata cancellation of ordinary shares by the applicant company were taxable dividends or a non-taxable return of capital. The company had previously sold a major capital asset, and the proposed cancellation came as part of a broader capital management strategy. Inland Revenue confirmed that the proposal could proceed as a capital return, after considering whether the company had sufficient available subscribed capital, whether the cancellation met the requirements for a pro rata 15% deduction, and whether the payments were effectively made in lieu of dividends.

Inland Revenue media releases and other updates

Inland Revenue: support for severe weather conditions in Wellington

On 29 April 2026, Inland Revenue issued an invitation to taxpayers affected by the severe weather conditions in Wellington to contact Inland Revenue for support if needed. Taxpayers should include the word “weather” in the myIR correspondence.

Inland Revenue: Foreign investment fund Australian listed share exemption tool

On 4 May 2026, Inland Revenue published the Foreign Investment Fund Australian listed share exemption tool for the 2026 tax year. The tool can check whether a shareholding in an ASX listed Australian company is exempt from the FIF rules.

Inland Revenue: Correcting Key message contact

On 5 May 2026, Inland Revenue asked tax agents to add a key message contact for their clients in myIR, to ensure that their specific queries are being sent to the correct person.

Inland Revenue: Updated Tax Information Bulletin webpage

On 7 May 2026, Inland Revenue updated their Tax Information Bulletin (TIB) webpage, which now gives users a summary view of all Tax Technical items and Tax Policy legislation.

Inland Revenue: Watch out for scammers this tax season

On 15 May 2026, Inland Revenue published a media release warning taxpayers to watch out for scammers seeking their personal information. The warning comes as Inland Revenue begins sending Individual Income Tax Assessments to salary and wage earners, which typically accompanies an increase in scamming attempts each year. For more information on common scams please see this link.

International updates

New Zealand tax treaty updates

Recent updates to New Zealand’s tax treaties include:

• The Croatian Parliament approved a tax treaty with New Zealand, which was then ratified in Croatian law.
• The Netherlands announced a plan to commence the second round of negotiations for an income tax treaty with New Zealand.

OECD updates

The Global Minimum Tax Implementation Toolkit

On 30 April 2026, the OECD published guidance on their Global Minimum Tax (GMT) framework, the Global Minimum Tax Implementation Toolkit. The toolkit clarifies key administrative aspects of the GMT. It provides guidance on timelines and milestones, supports jurisdictions in addressing common operational challenges and promotes co-ordination through shared best practices, reducing administrative and compliance burdens for both tax administrations and taxpayers.

Economic Survey of New Zealand

On 7 May 2026, the OECD published their Economic Survey of New Zealand. The OECD considers New Zealand’s economic outlook to be improving, with lower interest rates and strong export performance expected to support a gradual recovery in growth over the next two years. However, domestic demand remains weak, and the OECD warns that inflationary pressures and fiscal challenges persist, particularly given uncertainty arising from the Middle East conflict and long-term ageing pressures. The report projects GDP growth of 1.4% in 2026 and 2.3% in 2027, while recommending continued fiscal consolidation and careful monetary policy settings to keep inflation expectations anchored.

New documents relating to Pillar Two rules

On 18 May 2026, the OECD published a collection of documents relating to the Pillar Two global minimum tax rules. The documents together introduce a common understanding among jurisdictions to waive penalties for late GIR filing in their respective jurisdictions, clarify that certain businesses with 52-53 week fiscal years are eligible for the transitional UTPR safe harbour, and adds four new countries to the official list of jurisdictions that comply with QDMTT safe harbour requirements.

Note: The items covered here include only those items not covered in other articles in this issue of Tax Alert.