Tax Policy Bulletin

Income Tax (FamilyBoost) Amendment Bill

Minister of Finance Hon Nicola Willis introduced the Income Tax (FamilyBoost) Amendment Bill (the FamilyBoost Bill) into the House on 16 September 2025. A motion to accord urgency to the Bill was agreed to, and the FamilyBoost Bill immediately progressed to third reading, awaiting royal assent.

The FamilyBoost Bill proposes to adjust the FamilyBoost tax credit settings to increase the number of families eligible for the scheme and the quarterly payment amount. Specifically, the proposed changes to the FamilyBoost settings would:

• increase the percentage of early childhood education expenses claimable from 25% to 40%, raising the maximum quarterly tax credit payment from $975 to $1,560, and
• reduce the abatement rate from 9.75% to 7%, increasing the maximum qualifying household income per quarter from $45,000 to $57,286.

The proposed amendments would take effect retrospectively from 1 July 2025.

New Zealand’s GDP shrinks 0.9% in June 2025 quarter

Statistics New Zealand data shows a gross domestic product reduction of 0.9% in the June 2025 quarter, greater than forecast by economists at the major banks. Finance Minister Nicola Willis attributed the reduction to global uncertainty, particularly announcements around the United States tariffs, but stressed that the economy has been growing in the third quarter pointing towards lower interest rates and increased mortgage lending.

Recent Inland Revenue publications

• IS 25/20 Student Loans – Overseas borrowers and their obligations - This interpretation statement discusses when a student loan borrower will be a New Zealand-based borrower versus an overseas-based borrower and how each status impacts the interest that accrues on their loan and their repayment obligations. Issued 15 September 2025.

• IS 25/19 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. Issued 11 September 2025.

• OP 25/02 Commissioner’s operational position on the FBT treatment of open loop cards provided by employers to employees - This operational position builds upon QWBA 25/07 released on 16 April 2025 and states the Commissioner's view of the correct tax treatment for when an employer provides an open loop card (as defined in the QWBA) to an employee. In short, the employer should gross up the face value of the open loop card given to an employee and return PAYE on that amount. Issued 8 September 2025.

Open consultations

• PUB00509 Income tax implications of providing sponsorship - This consultation considers the income tax implications for a business that provides sponsorship to an organisation, event, person or cause, where the taxpayer (the sponsor) intends that the sponsorship will promote or advertise their business. Consultation closes 21 November 2025.

• PUB00500 Shortfall penalties - s141A, 141B and 141C of the Tax Administration Act 1994. The Commissioner is seeking public feedback on the update and replacement of the existing interpretation statements on the shortfall penalties for not taking reasonable care, taking an unacceptable tax position and gross carelessness.  The existing items are still technically correct but are being updated for a number of legislative changes and new case law. Consultation closes 31 October 2025.

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

Recently closed

• 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 closed 19 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 closed 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 closed 10 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 closed 8 September 2025.