Tax legislation and Policy Announcements

Trust disclosure post-implementation review

On 7 April 2025, Inland Revenue published a post-implementation review of the increased disclosure requirements introduced in December 2020 for trustees for the 2021-22 and later income years. Inland Revenue made several recommendations based on this review.

Also published was the disclosure data and an independent report on the review and disclosure requirements.

Government discussion document: GST and unincorporated joint ventures

On 7 April 2025, Inland Revenue published a government discussion document GST and unincorporated joint ventures. The document considers possible reforms to GST policy settings for joint ventures (JVs).

For GST purposes a JV is an unincorporated body, which is treated as a separate person similar to a company. A common practice in some industries that use JVs is for the members to individually account for GST on supplies made or received in the course of the venture in their own GST returns. However, draft Inland Revenue guidance concluded that these practices are not correct under the current rules for unincorporated bodies. This gives rise to a problem for certain types of JVs as they are unable (or would prefer not to for compliance cost reasons) to register for GST, so this treatment means that technically input tax deductions cannot be claimed.

The main policy proposals address these identified problems. If, following public consultation these proposals are progressed, they would require legislative changes and could be included in the August 2025 Tax Omnibus Bill. The deadline for submissions is 16 May 2025.

Use of money interest (UOMI) rates change

On 10 April 2025, Inland Revenue announced that from 8 May 2025 the UOMI rates on underpayment and overpayments of tax will change. The new rates are:

• underpayment 9.89% down from 10.88%
• overpayment 3.27% down from 4.30%.
  

FBT prescribed rate of interest reduced for employment-related loans

On 10 April 2025, the Income Tax (Fringe Benefit Tax, Interest on Loans) Amendment Regulations 2025 were notified in the NZ Gazette. The regulations, which come into force on 8 May 2025, reduce the rate of interest that applies for FBT purposes to employment-related loans from 8.41% to 7.38%. The new rate applies for the quarter beginning 1 April 2025 and for subsequent quarters.

Inland Revenue Statements and Guidance

Determination: FDR rate many not be used to calculate FIF income in share classes

On 26 March 2025, Inland Revenue issued the following determinations:

• FDR 2025/03: Determination the fair dividend rate may not be used to calculate FIF income by investors in Institutional Cash Series plc: BlackRock ICS US Dollar Liquidity Fund – Premier (Dis) Shares
• FDR 2025/04: Determination the fair dividend rate method may not be used to calculate FIF income by investors in Institutional Cash Series plc: BlackRock ICS US Treasury Fund – Premier (Dis) Shares
  

Both apply for the 2025 income year and subsequent income years.

Operating Statement: Valuation of livestock

On 31 March 2025, Inland Revenue issued OS 25/02: Valuation of livestock. The operating statement describes the options available to taxpayers who are in the business of farming to value their livestock on balance date. The statement also includes commentary on changes to section EC 1 as part of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025.

Determination: 2025 International tax disclosure exemption

On 31 March 2025, Inland Revenue issued ITR36: 2025 International tax disclosure exemption. The scope of the 2025 disclosure exemption is the same as the 2024 disclosure exemption. This exemption applies for the income year corresponding to the tax year ended 31 March 2025. The 2025 disclosure exemption removes several requirements.

Interpretation Statement: Employer obligations for employee share scheme benefits paid in cash

On 31 March 2025, Inland Revenue issued IS 25/06: Employer obligations for employee share scheme benefits paid in cash and accompanying fact sheet.

The statement explains an employer’s PAYE, student loan and KiwiSaver obligations when an employee receives a benefit under an ESS that is paid in cash. This replaces IS 24/05 and takes into account amendments in the Accident Compensation Act 2001 by the Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Act 2025.

The Annual Rates Act amendments means that ACC earners’ levy will not apply to cash-settled ESS benefits. This aligns the treatment of cash-settled and share-settled ESS benefits and simplifies the processing of employment income information returns for ESS benefits.

The change is retrospective from 1 November 2024.

Interpretation Statement: PAYE – How an employer funds the tax cost on an employee share scheme benefit

On 31 March 2025, Inland Revenue issued IS 25/07: PAYE – How an employee funds the tax cost on an employee share scheme benefit. The statement explains an employer’s withholding and reporting obligations related to PAYE, student loans and KiwiSaver if an employer wants to fund the cost of tax (and student loan, if applicable) on an ESS benefit provided in shares. This replaces IS 24/06 and takes into account amendments in the Accident Compensation Act 2001 by the Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Act 2025. The amendments relate to removing references to ESS benefits “provided shares” and section RD 78.

Inland Revenue: Return filing and record keeping

On 31 March 2025, Inland Revenue advised that the following changes have taken effect as part of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025:

• From 1 April 2025, organisations that only have exempt income, such as charities or other exempt entities, do not need to file an income tax return.
• From 29 March 2025, records may be kept in te reo Māori.
  

Product Ruling: Taxi Limited

On 31 March 2025, Inland Revenue issued BR Prd 25/01: Taxi Limited. This Arrangement is the lending of amounts by Taxi Limited to its clients secured by the client transferring by way of security their entitlement to amounts deposited in the tax pooling account operated by Tax Traders Limited. It relates to the imputation credit treatment of the transfer of tax credits under the Arrangement. It applies from 1 April 2025 to 31 March 2028.

Inland Revenue: Business Industry Classification updates for the vape and e-cigarette industry

From 1 April 2025, new Business Industry Classification codes apply to businesses in the vape and e-cigarette industry

Inland Revenue: Employer’s guide IR335 – updates

On 1 April 2025, the Employer’s guide IR335 was updated.

Inland Revenue: Tax agent Extension of Time agreement

On 1 April 2025, the Extension of Time agreement for the filing period April 2025 to 31 March 2026 was updated.

Inland Revenue: Individual income tax – IR3s for 31 March 2025

On 1 April 2025, Inland Revenue reminded tax agents to not file any clients' 2025 IR3 returns until all reportable income has been filed with Inland Revenue, including PIE income information. PIEs have until 15 May to provide income information to Inland Revenue.

IR3s should not be filed, unless you are certain the taxpayer does not have:

• salary and wages
• investment income, such as bank interest
• dividends
• PIE income (including KiwiSaver).
  

Tax Information Bulletin: Volume 37, Number 3 (April 2025)

On 1 April 2025, Inland Revenue published TIB Vol 3, No 1 (February 2025), which covers:

Determinations

• NSC 2025: National Standard Costs for Specified Livestock Determination 2025
• ITR36: 2025 International tax disclosure exemption
  

Interpretation statement

• IS 25/04: What an employee share scheme is, the taxing date and apportionment

Technical decision summary

• TDS 25/02: Financing arrangement to fund the refurbishment of a capital asset
• TDS 25/03: GST – Output tax deductions, shortfall penalties
• TDS 25/04: Deductions and shortfall penalties
• TDS 25/05: GST - input tax, taxable
• TDS 25/06: Receipt of funding
  

Public Guidance work programme (April 2025)

On 1 April 2025, the updated Public Guidance work programme was published.

Inland Revenue: Home detention for tax offences

On 3 April 2025, Inland Revenue published details of an Auckland woman sentenced to 12 months home detention for tax offences involving more than $500,000. She was charged with aiding or abetting a company she controlled to make PAYE deductions which it didn’t pay to Inland Revenue. More than $2m in “drawings” was transferred to her personal bank accounts, along with “wages” of nearly $500,000. The total core tax that remains unpaid is $558,884.58, with the court ordering reparations of $13,000 paid at $50 per week.

Questions We’ve Been Asked: tax implications of short-stay accommodation

On 3 April 2025, Inland Revenue published five updated Questions We’ve Been Asked. These replace six items published in 2019 to account for several legislative changes:

• QB 25/01: Income tax – Which rules apply if I rent out my home, part of my home, or a separate dwelling on my property as short-stay accommodation?
• QB 25/02: Income tax – Which rules apply if I have a dwelling I sometimes rent out as short-stay accommodation and also sometimes use privately?
• QB 25/03: Income tax – How do the mixed-use asset rules apply if I provide short-stay accommodation?
• QB 25/04: Income tax – How do the standard tax rules apply if I provide short-stay accommodation?
• QB 25/05: Income tax – If property held in a trust is rented out for short-stay accommodation, who declares the income and what deductions can be claimed?
  

The substantive changes to these items relate to:

• the GST online marketplace rules (income tax implications),
• the residential rental ring-fencing rules,
• the interest limitation rules,
• a change of view in relation to the depreciation for mixed-used chattels, changes to the thresholds for depreciation and provisional tax.
  

Product Ruling: Electric Bikes NZ Limited

On 3 April 2025, Inland Revenue published BR Prd 25/02: Electric Bikes NZ Limited. The Arrangement is Electric Bikes NZ Limited’s (trading as The Wheel Deal) provision of self-powered or low-powered commuting vehicles (Equipment) to the Employees of The Wheel Deal’s customers, where the Employees agree to a temporary reduction in salary in return for the provision of the Equipment. The Equipment can be a bicycle, electric bicycle, scooter or electric scooter. It applies from 17 February 2025 to 2 April 2028.

The Arrangement is an excluded fringe benefit and is a valid salary sacrifice so there is no PAYE income.

Interpretation Statement: Using the cost method to determine foreign investment fund (FIF) income

On 4 April 2025, Inland Revenue published IS 25/12: Income tax – Using the cost method to determine foreign investment fund (FIF) income. This Interpretation Statement explains when a NZ tax resident investor can choose to apply the cost method to calculate their FIF income on shares held in foreign companies. It includes some examples on when an independent valuation may be required to apply the cost method and how the cost method can be applied.

Interpretation Statement: Income tax – Partnerships (including limited partnerships) – general guidance

On 4 April 2025, Inland Revenue published: IS 25/11: Income tax – Partnerships (including limited partnerships) – general guidance. This Interpretation Statement provides general guidance on the income tax treatment of partnerships. Most of this statement is relevant to both general and limited partnerships. The rules are largely the same for both types of partnership, however the statement explains where the rules differ, in particular the deduction limitation rule. The statement also references existing guidance issued on specific partnership issues.

Publication had been delayed while changes to the taxation of partnerships and limited partnerships were implemented as part of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act.

Interpretation statement: Income tax and GST – Amalgamations

On 4 April 2025, Inland Revenue published 25/10: Income tax and GST – Amalgamations. It provides guidance on the tax treatment of company amalgamations, the rules of which are mostly found in subpart FO. It does not address the tax treatment of losses on amalgamation or how an amalgamated company calculates its available subscribed capital (refer to IS 25/09 and QB 25/06 – discussed below).

The amalgamation rules generally provide tax concessions when an amalgamation is a concessionary amalgamation. The amalgamation rules may also apply to amalgamations that do not fit the criteria for a concessionary amalgamation (non-concessionary amalgamation). The statement indicates where the tax treatment differs between concessionary amalgamations and non-concessionary amalgamations.

Table 1 (p. 5) summarises the provisions in subpart FO as well as identifying the starting paragraph in the statement where the provision is discussed.

Interpretation statement: Tax treatment of losses on amalgamation

On 4 April 2025, Inland Revenue published IS 25/09: Tax treatment of losses on amalgamation. The Interpretation Statement states that where losses are incurred before an amalgamation by an amalgamating company, an amalgamated company or another company that is within the group but not a party to the amalgamation, these losses can be used after the amalgamation.

The general tax loss rules apply to the tax losses of an amalgamated company that arise after amalgamation. However, subpart IE applies to tax losses of an amalgamated company, amalgamating company or a non-amalgamating group company, that arise before amalgamation.

The statement covers:

• Concessionary amalgamations
• Non-concessionary amalgamation
• The tax losses of an amalgamated company
• Tax losses of a non-amalgamating group company arising before amalgamation shared with an amalgamating company
• Ordering rules.
  

Questions We’ve Been Asked: How does an amalgamated company calculate its available subscribed capital following an amalgamation?

On 4 April 2025, Inland Revenue published QB 25/06: How does an amalgamated company calculate its available subscribed capital following an amalgamation? It replaces QB 13/02: Income tax – Determining the “subscriptions” amount for an amalgamated company under the available subscribed capital rules and QB 14/05: Income tax – ASC rules – Calculating the “subscriptions” amount for an amalgamated company when the shares of an amalgamating company are held by another amalgamating company.

An amalgamated company calculates its ASC using the formula:

1 July 1994 balance + subscriptions − returns − look-through company returns

The definitions of “subscriptions” and “returns” are modified for an amalgamated company.

Interpretation statement: Implications of a residential property moving between the standard tax rules and the mixed-use asset rules

On 4 April 2025, Inland Revenue published IS 25/08: Income tax – implications of a residential property moving between the standard tax rules and the mixed-use asset rules. This interpretation statement considers situations where a person’s use of their residential property has changed so the property moves from being under one set of income tax deduction rules to another. It explains how a person determines which income tax deduction rules apply and the consequences of moving between the standard tax rules and the mixed-use asset rules.

Two fact sheets have also been published:

• IS 25/08 FS 1: Income tax – residential property moving from mixed-use asset rules to standard tax rules
• IS 25/08 FS 2: Income tax – residential property moving from standard tax rules to mixed-use asset rules
  

Inland Revenue: GST on listed services – factsheet updates

On 4 April 2025, Inland Revenue advised that they have updated their factsheets:

• AD277 - GST on listed services - drivers, deliverers and accommodation owners
• AD278 - GST on listed services - online marketplaces
• AD282 – GST on listed services - property managers and agents.

Inland Revenue has also created a new factsheet:

• AD283 – Flat-rate credits and income tax
  
  

Inland Revenue has also updated the special report GST on accommodation and transportation services supplied through online marketplaces.

Interpretation Statement: Income tax and GST – forestry activities registered in the Emissions Trading Scheme

On 7 April 2025, Inland Revenue published IS 25/13: Income tax and GST – forestry activities registered in the Emissions Trading Scheme. The Interpretation Statement considers the tax consequences for forestry activities registered in the Emissions Trading Scheme, including the tax consequences of receiving, selling and surrendering emissions units (NZUs), as well as the tax treatment of specific transactions involving NZUs.

Inland Revenue: Tax Toolbox campaign to encourage tradies

On 7 April 2025, Inland Revenue confirmed it will be running the next round of the Tax Toolbox campaign between April and June.

Inland Revenue: Small Business Cashflow (SBC) loan scheme

On 8 April 2025, Inland Revenue reminded that the SBC Loan Scheme will reach its 5-year anniversary shortly 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. From mid-April, Inland Revenue will start to send reminder letters directly to some taxpayers in their myIR accounts to notify them that their loans are expiring. These reminder letters will not follow the mail redirect, but you can still view them in myIR.

Inland Revenue: FBT common errors campaign

On 9 April 2025, Inland Revenue began a digital advertising campaign on common FBT errors which runs to 30 May. Inland Revenue hopes to make taxpayers aware of the most common FBT errors, educate taxpayers on what to do if they find an error and encourage taxpayers to seek help from tax agents.

Draft Interpretation Statement: The Commissioner’s duty of care and management – section 6A of the Tax Administration Act 1994

On 10 April 2025, Inland Revenue issued PUB00484: The Commissioner’s duty of care and management – section 6A of the Tax Administration Act 1994 and a reading guide. It explains the Commissioner’s responsibilities under section 6A and the factors that must be taken into account under section when exercising his care and management discretion. The deadline for comment is 26 May 2025.

Inland Revenue: Pilot for new tax debt service

On 10 April 2025, Inland Revenue began trialling a new service to contact and help (individual) taxpayers manage debt. The pilot will see Baycorp contact about 3,000 taxpayers who have a tax debt of less than $5,000. The pilot starts today and runs for 5 months. Baycorp cannot “collect” the debt and can only contact taxpayers, confirm the debt and promote Inland Revenue’s self-service options for payment.

Inland Revenue: Participating advisor initiative

On 11 April 2025, Inland Revenue announced the participating advisor initiative. Further information on participating advisor reviews can be found on the Inland Revenue website.

Inland Revenue: Correction to the client list and filing statistics update

On 14 April 2025, Inland Revenue published a correction to the client list and fling statistics update.

Operating Statement: Authority to Act for Tax Agents, Representatives, and Nominated Persons: Access to a Client’s Inland Revenue information

On 17 April, Inland Revenue published OS 25:03: Authority to Act for Tax Agents, Representatives, and Nominated Persons: Access to a Client’s IR information. This statement prescribes how a tax agent, or a representative can obtain the authority to act from their clients and the process for a person to get another person to act for them in relation to their tax affairs and/or their social policy entitlements and obligations. It replaces OS 22/03.

Inland Revenue: New Provisional Tax issues for returns filed since 17 March 2025

On 23 April 2025, Inland Revenue announced they have identified issues with provisional tax returns filed since 17 March 2025 and provided advice about them. Inland Revenue is working on a fix.

Technical Decision Summary: GST – Zero-rating, input tax deductions, shortfall penalties (Adjudication)

On 26 March 2025, Inland Revenue published TDS 25/07: GST – Zero-rating, input tax deductions, shortfall penalties. It related to an individual who claimed input tax deductions, claiming they were acting as agent for overseas customers and involved in freight-forwarding. The Tax Counsel Office determined the Taxpayer was not carrying on a taxable activity so could not charge GST at 0% or claim input tax deductions. The Taxpayer was liable for shortfall penalties for gross carelessness.

Technical Decision Summary: Disposal of shares following amalgamation (private ruling)

On 14 April 2025, Inland Revenue published TDS 25/08: Disposal of shares following amalgamation. It related the amalgamation of several related companies that collectively held shares in E Ltd and the sale of these shares after amalgamation. The Tax Counsel Office concluded the amalgamation was a resident’s restricted amalgamation and amounts derived from the disposal of shares were not taxable income.

Deloitte Global Perspectives

2025 Global Tax Policy Survey: Shaping the path forward

On 29 April 2025, Deloitte published the 2025 Global Tax Policy Survey: Shaping the path forward. Deloitte gathered insights from over 1,100 tax executives, across 28 countries and a range of company sizes to understand how they are adapting to the dynamic global tax environment. Respondents ranked the impact of five tax themes as follows:

1. Transparency & Reporting
2. Digitisation of Tax
3. Sustainability
4. International Tax Reform
5. The Future of Work

While the top two themes remain consistent with last year’s survey, Sustainability has risen in importance to number three. Trade and Tariffs continue to be a fast-moving focus for all aspects of the tax function. While the survey was conducted prior to the announcements by the US administration in March 2025, respondents clearly indicated a high level of concern and anticipated impact going forward regarding reporting and supply chain implications.
 

Deloitte Trade Compass Webinar – Invitation

On 15 May 2025, Deloitte Tohmatsu (Japan) and DT GTA & Technologies Co Ltd will be hosting a free live webinar Optimising Global Trade Strategies in a Dynamic Tariff Environment: Technology-driven solutions for tariff cost visibility and risk management. This webinar will provide an update on current global tariff policies, outlining necessary steps businesses should take to navigate this complex landscape. It will also showcase Deloitte Tohmatsu's digital service, "Trade Compass", as a practical solution for tariff cost visualisation and risk analysis. The webinar will be held on Thursday 15 May 2025 4pm – 4:55pm (NZT) and you can register here.

OECD Updates

Inclusive Framework issue Pillar Two statement

On 11 April 2025, the Inclusive Framework completed its 7th Plenary meeting of the OECD/G20 Inclusive Framework on BEPS. The result is a public statement issued by the Inclusive Framework agreeing to continue discussions on the Two-Pillar Solution.

New research on Research & Development tax incentives

On 22 April 2025, the OECD released new statistics on Research & Development tax incentives. Thirty-four out of 38 OECD countries granted tax relief for R&D expenditures in 2024.

OECD Secretary-General Report on the work of the Inclusive Forum on Carbon Mitigation Approaches

On 23 April 2025, the OECD released the Secretary-General’s Report to G20 Finance Ministers and Central Bank Governors on the work of the Inclusive Forum on Carbon Mitigation Approaches

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