Snapshot of recent developments

Tax legislation and Policy Announcements

NZ-Slovenia DTA available

On 22 January 2025 the New Zealand - Slovenia: 2024 Income Tax Agreement and Final Protocol was published. This is the first income tax treaty between New Zealand and Slovenia. It will enter into force upon the exchange of ratification instruments, and its withholding tax provisions will apply in both jurisdictions from the first day of the third month following its entry into force. Its other tax provisions will apply in Slovenia from January 1 of the year following its entry into force and in NZ from April 1 of the year following its entry into force.

GST policy proposal for NZ racing industry

On 31 January 2025, Racing Minister Rt Hon. Winston Peters announced public consultation on GST policy proposals to make the New Zealand racing industry more competitive. The change relates the ability to claim GST deductions in a joint venture. Whilst the press release only references the racing industry the discussion document is not limited to the racing industry. The consultation document will be published in the next few months.

Donation Tax Credit regime regulatory stewardship review findings and response

On 10 February 2025, Inland Revenue issued the findings and its response to the Donation Tax Credit regime’s regulatory stewardship review.

Order in Council commentary: Taxation (Use of Money Interest Rates) Amendment Regulations 2024

On 12 February 2025, Inland Revenue published commentary attached to the Order in Council which changed use of money interest (UOMI) rates in January 2025.
 

Inland Revenue Statements and Guidance
 

Determination: the FDR method may not be used by investors in the Aggregate Bond ETF share class

On 28 January 2025, Inland Revenue issued FDR 2025/02. Any investment by a New Zealand resident investor in the NZD hedged (Accumulating) share class of the iShares Core Global Aggregate Bond UCITS ETF, a sub-fund of iShares III public limited company, to which none of the exemptions in s EX 29 to 43 of the Income Tax Act 2007 apply, is a type of attributing interest for which the investor may not use the Fair Dividend Rate method to calculate foreign investment fund income for the interest.

The determination applies for the 2024-2025 income year and subsequent income years.

Inland Revenue to call re myIR security update

On 29 January 2025, Inland Revenue announced it will be calling some customers to help them set up two-step verification (2SV) in myIR ahead of this becoming compulsory. If a taxpayer receives a call and is unsure whether it is from Inland Revenue, then they can either request that the person send them a web message to their secure myIR account to verify that it is Inland Revenue calling or call Inland Revenue back on 0800 775 247  

Determination: the FDR method cannot be used by investors in NZD Hedged Dividend Aggregate Bond Fund

On 29 January 2025, Inland Revenue issued FDR 2025/01. Any investment by a New Zealand resident investor in shares in the JPM Aggregate Bond Fund – NZD Hedged Dividend Class X shares, to which none of the exemptions in ss EX 29-43 of the Income Tax Act 2007 apply, is a type of attributing interest for which the investor may not use the Fair Dividend Rate method to calculate FIF income for the interest.

This determination applies for the 2024-25 income year and subsequent income years.

However, under s 91AAO(3B) of the Tax Administration Act 1994, this determination does not apply for a person and an income year beginning before the date of the determination unless the person chooses that the determination applies for the income year.

TIB: Volume 37, Number 1 (February 2025)

On 31 January 2025, Inland Revenue published TIB Vol 37, No 1 (February 2025), which covers:

Commissioner's statement

• Notice of withdrawal: Tax treatment of computer software

Determinations

• DET 24/04: Amortisation Rates for Listed Horticultural Plants

Rulings

• BR Prd 24/04: Kiwibank Limited
• BR Prd 24/05: Air New Zealand Limited

Interpretation statements

• IS 24/10: Income tax - Share investments
• IS 25/01: Income tax - deducting costing of travel by a motor vehicle between home and work
• IS 25/02: FBT - travel by motor vehicle between home and work

Case summaries

• CSUM 25/01: Goodricke v Commissioner of Inland Revenue [2024] NZHC 3639
• CSUM 25/02: Goodricke v Commissioner of Inland Revenue [2024] NZHC 3818 (Costs)
• CSUM 25/03: Commissioner of Police v Cheng [2024] NZHC 3242

Technical decision summaries

• TDS 24/21: Accommodation provided to an employee
• TDS 24/22: Transitional residency and cryptoassets
• TDS 24/23: Depreciation loss on asset no longer used
• TDS 24/24: Share scheme taxing date

Inland Revenue: Updated Public Guidance work programme

The Public Guidance work programme has been updated for February 2025.

Inland Revenue: e-notification myIR title changes

On 10 February 2025, Inland Revenue announced they have reviewed the titles of myIR letters and have made changes to improve clarity. The changes will be in stages from 12 February to early April 2025. The changes are:

• New titles for around 80% of letters.
• Updates to style and format.
• An updated mail type code reference list on website.

Please note, if you receive an email alert for a letter and are delayed logging in to view the letter, its title may not match the email alert. Your alert will still take you to the current version of the letter in myIR, even if the title is different.

Inland Revenue: Small Business Cashflow (Loan) Scheme

On 11 February 2025, Inland Revenue announced the Small Business Cashflow (Loan) Scheme will reach its 5-year anniversary and will expire for taxpayers who have a 5-year loan. Any unpaid loan balance (plus interest) at the end of the loan’s term will automatically default. Inland Revenue will treat this as overdue debt. Inland Revenue may also charge default interest on overdue loans.

Inland Revenue has started to contact these taxpayers to discuss loan balances, making payments, or, where the debt has defaulted, negotiating payment of debt.

If a taxpayer is linked to a tax agent, Inland Revenue will contact the tax agent first.

Inland Revenue: eInvoicing webinar

On 11 February 2025, Inland Revenue invited anyone interested to join a virtual presentation on eInvoicing on Tuesday 11 March from 11am to 11.45am. The Ministry of Business, Innovation, and Employment (MBIE) and Inland Revenue will be presenting. Register for the event here.

Inland Revenue changing its third-party card payment processor to Worldline

On 12 February 2025, Inland Revenue announced it is changing its third-party card payment processor from Windcave to Worldline. There will be minor look and feel changes for taxpayers making payments in myIR, including being redirected to a new Worldline hosted payment page to complete the payment. Taxpayers that have previously saved their card information will need to re-enter their full card details the first time they make a payment after the change to Worldline. They will have the option to save their card details for future payments.

Technical Decision Summary: Financing arrangement to fund the refurbishment of a capital asset

On 13 February 2025, Inland Revenue issued TDS 25/02: Financing arrangement to fund the refurbishment of a capital asset. It relates to a proposed financing arrangement to fund the refurbishment of a capital asset. The Tax Counsel Office ruled no deemed dividend arose under the arrangement, amongst other conclusions.

Inland Revenue: Tax agents survey results

On 17 February 2025, Inland Revenue shared some of the key findings from the July-September 2024 quarter of its ongoing tax agents voice of the customer (TAVOC) survey. 

Inland Revenue: Planning for system outage

On 17 February 2025, Inland Revenue announced it is planning to close some of its systems (myIR, SPK2IR, Gateway Services) from Friday 14 March 6pm. Systems are expected to be available again by Sunday 16 March 4pm. This will not affect any saved drafts or web requests in myIR.

Inland Revenue: Community detention for tax fraud

On 17 February 2025, an Auckland man was sentenced to community detention for tax fraud after falsely claiming COVID relief money. The man applied for a loan under another person’s name which was paid into a bank account listing that person as the account holder. Immigration records showed the named person had left New Zealand seven years earlier and had not returned.

Inland Revenue: Increasing focus on payday filing

On 18 February 2025, Inland Revenue said that in late February it will be writing to employers to check that they have filed the employment information (EI) needed for a month where nothing has been filed but Inland Revenue think’s something should have been. Inland Revenue will now do this regularly.

Late filed EIs can incur penalties and interest. Some employers may get a warning rather than a ‘check-in’ letter. If employers continue not to file EIs they may incur non-filing penalties and interest.

Draft Interpretation Statement: GST – taxable activity

On 24 February 2024, Inland Revenue issued PUB00476: GST – taxable activity. It sets out the Commissioners (CIR) view on the meaning of “taxable activity”. The CIR has discussed this concept in numerous public items, but generally in a specific context such as subdivisions of land, horse racing or horse breeding. This statement is of more general application.

Section 6 of the GSTA85 defines “taxable activity”. The key elements discussed in this interpretation statement are:

• what constitutes an “activity”;
• when an activity is being “carried on”;
• what “continuously or regularly” means;
• the significance of the words “whether or not for a pecuniary profit”;
• what is meant by the requirement that the activity “involves or is intended to involve, in whole or in part, the supply of goods and services … for a consideration”;
• the reference to the activity being “carried on in the form of a business, trade, manufacture, profession, vocation, association, or club”;
• the inclusion of public authorities, local authorities and public purpose Crown-controlled companies;
• the application of s 6(2) (“anything done in connection with the beginning or ending … of a taxable activity”); and
• the exclusions from the definition of “taxable activity” in s 6(3), particularly the exclusions for any activity carried on essentially as a private recreational pursuit or hobby (ss 6(3)(a) and 6(3)(aa)).

Submissions close 4 April 2025.

Deloitte Global Perspectives
 

Deloitte Global Report: Tax Transparency & Reporting: How Can We See More Clearly?

On 5 February 2025, Deloitte Global published its latest tax policy insight: Tax Transparency & Reporting: How Can We See More Clearly?

The article combines the thinking of our Deloitte subject matter experts from around the world and provides an assessment of the current requirements, highlights key findings from our 2024 Survey, and outlines three possible futures for tax transparency and reporting:

1. Simplifying and unifying existing frameworks
2. Focusing on modern tax administration
3. Moving beyond transparency

OECD Updates
 

OECD releases latest peer review results on preferential tax regimes under BEPS Action 5

On 5 February 2025, the latest results by the Forum on Harmful Tax Practices (FHTP) peer review of preferential tax regimes and no or only nominal tax jurisdictions were released, highlighting the progress made by jurisdictions in addressing harmful tax practices through the implementation of the international standard under BEPS Action 5.

Tax and Development Case Study: Strengthening the capacity to tackle tax avoidance in Kazakhstan

The OECD had published a case study illustrating how Kazakhstan has benefitted from support in international tax capacity building, particularly addressing tax avoidance in the mining sector and improvement it its legal transfer pricing framework.

OECD Tax and Development Days 2025

The OECD Tax and Development Days are being virtually held on 12-13 March 2025. Information and registration details can be found here.

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