Tax Policy Bulletin is a regular round-up of recent tax headline news. If you'd like any further detail on the items reported in the update, please reach out to your usual PwC tax advisor.
11 April 2025
United States Tariffs Update
On April 2, 2025, United States President Donald Trump signed Executive Order 14257, titled "Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits."
This order imposes additional tariffs on international goods imported into the United States effective 5 April 2025. A tariff rate of 10% applies to New Zealand with rates up to 50% applying to goods originating in other countries. You can read more on this in our recent insights publication, on the effects of the US tariffs on New Zealand businesses. This announcement was followed by an update which reversed course, putting in place a 90-day tariff ‘pause’ under which a universal 10% tariff would apply to all countries except China, which would have an immediate 125% tariff applied.
For New Zealand exporters uncertain about the tariffs on their goods exported to the United States, the New Zealand Ministry of Foreign Affairs & Trade has a Tariff Finder tool. This tool should be helpful for New Zealand clients in navigating the uncertainties of international trade, especially with the introduction of this additional tariff.
PwC publications
Recently, the Inland Revenue Department (IRD) released the Issues Paper: Fringe Benefit Tax Options for Change, as well as a guidance on tax governance. In our latest edition of Tax Tips, we discuss both the proposed Fringe Benefit Tax changes and provide some initial observations on their impacts, and set out some key insights from the published guidance on tax governance.
Read more
Recent Inland Revenue publications
Trust disclosures post-implementation review Inland Revenue has completed a post-implementation review of the increased disclosure requirements that were introduced in December 2020 for trustees for the 2021–22 and later income years. Accompanying Inland Revenue’s report on the review is an annex of disclosure data from the 2023 tax year. To help provide another perspective on the disclosure rules, an independent report has also been prepared by John Cantin, Cantin Consulting. Issued 07 April 2025.
IS 25/13 Income Tax and GST – forestry activities registered in the Emissions Trading Scheme. This interpretation statement considers the tax consequences for forestry activities registered in the Emissions Trading Scheme (ETS). The statement considers the tax consequences of receiving, selling and surrendering emissions units (NZUs), as well as the tax treatment of specific transactions involving NZUs. For general information on the ETS, see Ministry for Primary Industries Forestry in the Emissions Trading Scheme. Issued 7 April 2025. This is accompanied by a fact sheet:
IS 25/13 FS Income Tax and GST- forestry activities registered in the Emissions Trading Scheme - fact sheet. This fact sheet summarises the tax treatment of acquiring, selling and surrendering NZUs in a forestry context.
IS 25/12 Income tax – Using the cost method to determine foreign investment fund (FIF) income. This interpretation statement explains when a New Zealand tax resident investor can choose to apply the cost method to calculate their foreign investment fund (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. Issued 4 April 2025.
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. Issued 4 April 2025.
QB 25/06 How does an amalgamated company calculate its available subscribed capital following an amalgamation? This question we’ve been asked explains how an amalgamated company calculates its available subscribed capital. Issued 4 April 2025.
IS 25/10 Income tax and GST – Amalgamations. This interpretation statement provides guidance on the tax treatment of company amalgamations. Issued 4 April 2025.
IS 25/09 Tax treatment of losses on amalgamation. This interpretation statement provides guidance on when losses 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, can be used after the amalgamation. Issued 4 April 2025.
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. Issued 4 April 2025. This is accompanied by two fact sheets:
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.
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. Issued 3 April 2025.
GST on accommodation and transportation services supplied through online marketplaces This special report provides information that explains the GST rules for marketplace operators involved in the supply of ride-sharing/ride-hailing and delivery services for food and beverages, as well as for marketplace operators and listing intermediaries involved in the supply of accommodation services. This version of the special report replaces earlier versions and takes into account legislative changes made to the rules by the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024, and Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025. Issued 2 April 2025.
ITR36 2025 International tax disclosure exemption. Determination setting out the 2025 international tax disclosure exemption. Issued 31 March 2025.
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. Issued 31 March 2025.
IS 25/06 Employer obligations for employee share scheme benefits paid in cash. This interpretation statement explains an employer’s PAYE, student loan and KiwiSaver obligations when an employee receives a benefit under an employee share scheme that is paid in cash. Issued 31 March 2025. This is accompanied by a fact sheet:
IS 25/06 FS Employer obligations for employee share scheme benefits paid in cash - fact sheet. This fact sheet updates and replaces IS 24/05 FS to reflect changes in the Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Act 2025 that mean ACC earners’ levy does not apply to cash-settled ESS benefits. This aligns the treatment of cash-settled and share-settled ESS benefits.
IS 25/07 PAYE – How an employer funds the tax cost on an employee share scheme benefit. This interpretation 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 employee share scheme benefit provided in shares. Issued 31 March 2025.
OP 25/01 Commissioner’s operational position on the GST treatment of fees paid in relation to managed funds. IS 25/05 sets out the Commissioner’s view on the GST treatment of fees received by a manager of a managed fund and fees received by third-party suppliers (including investment managers) for supplies made to the manager of a managed fund. This interpretation statement was issued on 31 March 2025. Issued 31 March 2025.
IS 25/05 GST treatment of fees paid in relation to managed funds. This interpretation statement considers the GST treatment of fees received by a manager of a managed fund and fees received by third-party suppliers (including investment managers) for supplies made to the manager of a managed fund. Issued 31 March 2025.
Open consultations
- PUB00469 Income Tax – Whether an off-market share cancellation is made in lieu of the payment of a dividend. This interpretation statement considers the application of s CD 22(6) and (7) of the Income Tax Act 2007 in relation to the factors to be taken into account in determining whether an off-market cancellation of shares is made in lieu of the payment of a dividend. This statement updates the August 1999 interpretation statement, IS2966: Exclusion From The Term “Dividends”—Whether Distribution Made In Lieu Of Dividends’ Payment. Consultation closes 3 June 2025.
- PUB00484 The Commissioner’s duty of care and management – section 6A of the Tax Administration Act 1994. This Interpretation Statement sets out the Commissioner’s view on his “care and management” duty in s 6A of the Tax Administration Act 1994. In doing so, it clarifies the relationship between s 6A and the other provisions of the Inland Revenue Acts, including s 6 of the Tax Administration Act 1994, which requires the Commissioner to use best endeavours to protect the integrity of the tax system. Consultation closes 26 May 2025.
GST and unincorporated joint ventures Public views are sought on proposals aimed at ensuring the GST rules applying to joint ventures are fit for purpose. Feedback will be used to inform final proposals. Consultation closes 16 May 2025.
Fringe benefit tax – options for change Public views are sought on options for simplifying fringe benefit tax obligations and minimising compliance costs. Feedback will be used to inform final proposals for Government to consider. Consultation closes 5 May 2025.
PUB00400 Income tax – How do the income tax rules apply when a close company provides short-stay accommodation? This QWBA explains how the income tax rules apply when a close company provides short-stay accommodation (eg, through Airbnb, Bookabach, Booking.com or Holiday Houses). It explains when and how the mixed-use asset rules and the standard tax rules apply, and when shareholders or employees will receive income from their use of the property. Consultation closes 2 May 2025.
PUB00485 GST - Deposits a seller retains from cancelled land sale agreements. This QWBA explains the GST consequences when a land sale agreement is cancelled and the seller retains the deposit. It updates previous guidance from 2005. The answer remains that GST does not apply to the deposit but the reasoning has been expanded to consider matters that have arisen since the last statement was published that may have affected the answer. Consultation closes 17 April 2025.
PUB00460: When is land acquired for a purpose or with an intention of disposal so that the amount derived from the sale is income? This draft QWBA provides guidance about the circumstances in which an amount derived from the disposal of land acquired with a purpose or intention of disposal is income under s CB 6. The QWBA explains how s CB 6 applies, and its relationship with the 2-year bright-line test. The proposed QWBA also discusses some common misconceptions about s CB 6 and includes examples illustrating when it will apply. This consultation is running in conjunction with PUB00488. Consultation closes 11 April 2025.
PUB00488: The bright-line test for selling residential land. The Commissioner is seeking public feedback on changes to six existing QWBAs. The changes relate to the bright-line test for selling residential land. These updates will align the QWBAs with the current 2-year bright-line test, improving clarity for customers. Although the Commissioner is consulting on these updates, the substantive change relates to changes in the law since the original QWBAs were published. Consultation closes 11 April 2025.
- PUB00476: GST - taxable activity: This draft interpretation statement sets out the Commissioner’s view on the meaning of “taxable activity” under the GST Act. The Commissioner 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. Consultation extended to 11 April 2025.
For more information about upcoming consultations please see here for Tax Technical and here for Tax Policy.
Recently closed
- Taxation and the not-for-profit sector: The consultation document considers whether certain tax concessions available to the sector continue to be effective. It also explores whether tax obligations can be simplified, and compliance costs minimised. The government will consider feedback and decide whether any changes should be made to current rules. Consultation closed on 31 March 2025.
