Tax Policy Bulletin

Investment Boost commentary release

Inland Revenue has recently released Act commentary on the Taxation (Budget Measures) Act 2025 providing further clarity on Investment Boost, alongside the changes to KiwiSaver, Working For Families and Best Start following the previously released Act commentary from Budget night.  

Two new notable details to Investment Boost are as follows:

• Explicit confirmation that Investment Boost applies to capital improvements to depreciable property in their own right, even if the asset it was improving is not eligible for Investment Boost (for example, because the asset being improved was used prior to 22 May 2025). 
• Two new examples added to the commentary: Example 4 on capital improvements and Example 9 on interaction with R&D tax incentive regime.

Other than the above, there are only minor terminology changes from the initial Bill commentary released on Budget night. 

An update on Investment Boost has also been provided via Inland Revenue’s Tax Agent Newsletter which explains how Investment Boost should be recorded when filing an IR10 form.

Annual Rates Bill Information Release

Inland Revenue has released a second information release for items included in the Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Bill, introduced to Parliament on 26 August 2024. The release contains a number of documents, including Inland Revenue reports on remedials, matters raised in the departmental report, a post-implementation review of the trust disclosures, and the taxation of transfers from overseas pension schemes among others.

US impose 15% tariff on New Zealand imports

On 31 July 2025, the Trump administration issued an Executive Order titled “Further Modifying the Reciprocal Tariff Rates”. Under this regime, New Zealand faces a higher U.S. tariff rate of 15% (increasing from 10%) on exports, effective August 7 2025.  

New Zealand’s chief trade negotiator, Vangelis Vitalis, along with Trade Minister, Todd McClay, are travelling to Washington to meet with Trump’s administration to make a case against increasing these tariffs. However, it is unclear whether the US will consider reducing the tariff rate for New Zealand. 

This executive order ultimately shifts the U.S. to a tiered, targeted system, while also introducing harsher penalties and has a clear focus on enforcement and compliance visibility. 

Taxpayers should keep in mind that not all goods exported by New Zealand will be considered to be of New Zealand origin, and having to identify the value, tariff code and origin to determine the impact on their supply chain may be difficult. Please reach out to our customs team if you have any questions.

Recent Inland Revenue publications

• IS 25/18 Income tax – Whether money or property received by New Zealand tax residents from overseas is income from a foreign trust. This interpretation statement considers the income tax treatment of amounts of money or property that New Zealand tax residents receive from a person overseas, including through inheritance. It addresses how to determine whether the person who transfers the money or property is a trustee of a trust and when the resident taxpayer has derived beneficiary income or a taxable distribution from a foreign trust. Issued 7 August 2025.

  • IS 25/18 FS Income tax – Whether money or property received by New Zealand tax residents from overseas is income from a foreign trust fact sheet. This fact sheet accompanies IS 25/18: Income tax – Whether money or property received by New Zealand tax residents from overseas is income from a foreign trust. It will be of interest to New Zealand tax residents who receive money or property from overseas that may possibly be taxable in New Zealand and to their tax advisors.

• TDS 25/20 Transfer of property between charitable trusts. This item summarises a private ruling about whether the market value of properties and chattels transferred between charitable trusts is taxable when the transferors deregister as charitable entities. Issued 7 August 2025.

• TDS 25/19 Company restructure for commercial and estate planning. This item summarises a private ruling that considered whether a company restructure for commercial and estate planning is tax avoidance. Issued 4 August 2025.

• QB 25/20 GST listed services rules: How do the rules apply when there is a supply of listed services and other goods or services? This QWBA discusses some issues with identifying the relevant supplies for the GST listed services rules. It explains what listed services are and how to apply the GST listed services rules if a supply includes listed services with other goods or services. Issued 28 July 2025.

• QB 25/19 GST listed services rules: When is a supply of listed services made through an electronic marketplace? This QWBA discusses one of the key requirements for when the GST listed services rules apply. That is, the supply must be made by an underlying supplier to a recipient through an electronic marketplace operator. It explains that this requirement is satisfied when the marketplace is involved in, and facilitates, supplies between underlying suppliers and recipients. Issued 28 July 2025.

• TDS 25/18 Sale of intellectual property, shares and ongoing provision of services. This item summarises a private ruling concerning a cross-border arrangement involving the sale of intellectual property, other assets, shares, and the provision of services between a New Zealand company and its offshore parent. Issued 25 July 2025.

• QB 25/18 Does GST apply to a deposit the seller retains in a cancelled land sale agreement? This question we’ve been asked explains the GST consequences when a land sale agreement is cancelled and the seller retains the deposit. Issued 15 July 2025.

• TDS 25/17 Application of schedular payment rules. This technical decision summary summarises a private ruling about directorship services payments to non-residents and whether they are schedular payments. Issued 11 July 2025.

• QB 25/17 Income tax: Can I claim a deduction for expenses I incur on repairing a recently acquired capital asset? This QWBA is about whether a taxpayer can deduct for income tax purposes the amount of expenditure they have incurred to repair a capital asset that they have recently acquired.  The repairs in question are those that essential so that the taxpayer can use it in their business or income-earning activity. Issued 11 July 2025.

• Submissions received on Taxation and the not-for-profit sector This information release provides submissions received on the officials’ issues paper that considered whether certain tax concessions available to the not-for-profit sector continue to be effective. It also explored whether tax obligations could be simplified, and compliance costs minimised. Issued 7 July 2025.

Open consultations

• Draft of Inland Revenue's long-term insights briefing 2025 Inland Revenue is seeking feedback on a draft of its next long-term insights briefing (LTIB). The LTIB provides information on long-term trends, risks and opportunities as well as possible policy responses. It explores the implications of rising fiscal pressures for New Zealand’s tax system and what changes could be made to our tax system to enhance fiscal resilience. Consultation closes 1 September 2025.

• PUB00478 Income tax – business activity. This interpretation statement gives guidance on whether and when a taxpayer is carrying on a “business” for income tax purposes.  This is relevant to whether a person has income from a business under s CB 1 and to other provisions in the Income Tax Act 2007 where carrying on a business is a requirement. Consultation closes 5 September 2025.

• PUB00476 GST – taxable activity. This is a re-consultation of PUB00476, following on from the external consultation from 24 February 2025 to 18 April 2025. As a result of the number of submissions received on that earlier exposure draft, the additions made to the statement as a result, and particularly the increase in the number of examples, it has been decided to re-consult the item to seek further feedback/comment. Consultation closes 8 September 2025.

• PUB00520 GST – Meaning of payment. This interpretation statement discusses the meaning of “payment” for GST purposes. The meaning of payment is relevant for determining the time of supply, the tax period for which you return output tax or for which you claim an input tax deduction, and eligibility for a secondhand goods input tax deduction. Consultation closes 10 September 2025.

• PUB00514 GST – Secondhand goods input tax deduction. This draft interpretation statement discusses the requirements that must be met for a registered person to claim a secondhand goods input tax deduction.  This includes, among other things, a discussion of the requirement that the goods be secondhand and the meaning of secondhand.  This interpretation statement also discusses exceptions and restrictions on the amount of secondhand goods input tax deduction that can be claimed, including where the supplier and the recipient are associated persons. Consultation closes 10 September 2025.

• PUB00521 Income tax – Public private partnership projects and business continuity test for losses. This question we’ve been asked considers whether a major change in the nature of a contractor’s business activities occurs under the business continuity test for losses when a public private partnership project moves from a design and construction phase to an operating and maintenance phase. Consultation closes 19 September 2025.

For more information about upcoming consultations please see here for Tax Technical and here for Tax Policy.

Recently closed

• PUB00497 Student Loans – Overseas borrowers and their obligations: This interpretation statement discusses when a student loan borrower will be a New Zealand-based borrower and when they will be an overseas-based borrower. A borrower’s status as New Zealand-based or overseas-based will determine whether interest accrues on their loan and will impact their repayment obligations. Consultation closed 18 July 2025.