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.
4 February 2025
Use of Money Interest Rates decrease
- The Taxation (Use of Money Interest Rates) Amendment Regulations 2024 (SL 2024/254) introduced updated UOMI rates, effective 16 January 2025.
- Taxpayers’ paying rate of interest on unpaid tax has decreased from 10.91% to 10.88% per annum.
- The Commissioner’s paying rate of interest on overpaid tax has decreased from 4.67% to 4.30% per annum.
Customs (Levies and Other Matters) Amendment Bill
The Customs (Levies and Other Matters) Amendment Bill was introduced to the New Zealand Parliament on December 18, 2024. This omnibus bill aims to enhance revenue collection on goods by making it fairer and more effective.
Key changes include:
- Part 1: Amendments to the Customs and Excise Act 2018 to require certain persons to pay a levy to the chief executive of Customs when a levy order is in place.
- Part 2: Amendments to the Waste Minimisation Act 2008 to enable efficient cost recovery of product stewardship fees.
- Part 3: Amendments to the Goods and Services Tax Act 1985 to align GST treatment for imported goods over $1,000 with other goods. This includes expanded criteria for GST refunds on returned goods and provisions ensuring GST is only paid once on warranty replacements.
These changes aim to streamline processes and ensure fairness in the collection of customs duties and taxes. Public consultation closes 10 March 2025.
PwC publications
Take a look at PwC’s commentary on the Government’s Half Year Economic and Fiscal Update (HYEFU). The HYEFU highlighted a deterioration in the economic and fiscal outlook compared to Budget 2024 forecasts - economic growth is predicted to begin to recover from 2025. However, it will be slower than previously forecast. The fiscal outlook is weaker across all indicators compared to Budget 2024.
Read more
Recent Inland Revenue publications
- TDS 25/01: Sale of leasehold interests in residential and commercial units. This technical decision summary considers the following topics: PIE rules; Asset and income derived from development and whether this transaction still falls within the rules for a PIE.
- IS 25/03: Income tax - identifying the relevant item of property for depreciation purposes. This interpretation statement provides general guidance on how to identify the relevant item of property when applying the depreciation rules in the income tax legislation. The relevant item of property must be identified to ensure it is a depreciable item and, if so, to determine the applicable depreciation method and rate from which amounts of depreciation losses may be calculated.
- IS 25/02: FBT – travel by motor vehicle between home and work. This interpretation statement considers when employer-provided travel by motor vehicle between home and work is a fringe benefit subject to FBT.
- IS 25/01: Income tax – deducting costs of travel by motor vehicle between home and work. This interpretation statement considers who can claim income tax deductions for expenditure on travel by motor vehicle between home and work under the specific deductibility rules for motor vehicle expenditure, and in what circumstances.
- DET 24/04: Amortisation Rates for Listed Horticultural Plants. This supplementary determination acknowledges that Mānuka, cultivated and managed as part of a farming activity primarily to promote the production of honey or another mānuka product (not being timber), is recognised by the Commissioner as a listed horticultural plant for tax purposes.
- IS 24/10: Income tax – Share investments. This interpretation statement provides guidance for individuals who invest in shares, so they are aware of their tax obligations. The statement covers when an investor will have a tax liability for dividends, share sales and attributing interests in foreign investment funds. The statement focuses on investors who use online investment platforms, although the principles in the statement apply more widely to other forms of share investment by individuals (such as through brokers and financial advisors).
Open consultations
- PUB00519: Can section CB 3 apply to amounts derived from the disposal of land? This draft QWBA considers whether s CB 3 of the Income Tax Act 2007 can apply to amounts derived from the disposal of land. Section CB 3 provides that an amount derived from an undertaking or scheme for the purpose of making a profit is income of a person. Consultation closes 14 February 2025.
- PUB00493: Income tax and GST – industries other than forestry registered in the Emissions Trading Scheme. This interpretation statement applies to industries registered in the Emissions Trading Scheme, other than forestry which is taxed differently. The statement sets out the conceptual framework for the income tax treatment of emission liabilities and emissions units (NZUs) in these sectors. It then explains how to calculate deductions for emission liabilities and it discusses the treatment of NZUs as income. Finally, there is a brief discussion of the GST treatment of NZUs. Consultation closes 27 February 2025.
- For a discussion on forestry activities registered in the ETS see PUB00452: Income Tax and GST – forestry activities registered in the Emissions Trading Scheme.
- ED0263: Cash collateral is “money lent”. The Commissioner has previously taken the view that payments of money in the form of cash (cash collateral) as part of, and to secure obligations under, security lending and derivative transactions was not money lent, so there was no RWT or NRWT withholding obligation for the interest payments arising. This draft Operational Statement outlines a change of view by the Commissioner and sets out the new approach. Consultation closes 28 February 2025.
- Consultation on employee share scheme timing issues. Inland Revenue has launched consultation on a policy proposal to address a taxation timing issue for employee share schemes offered by start-up companies. The proposal suggests deferring the taxation point for eligible schemes, as well as the company's deduction, until a liquidity event occurs to fund the tax on income. Officials seek views on the desirability and feasibility of such an approach. Consultation closes on 14 March 2025.
For more information about upcoming consultations please see here for Tax Technical and here for Tax Policy.
Recently closed
- Amendments to foreign investment fund (FIF) rules. Inland Revenue has launched consultation on policy proposals to address an aspect of New Zealand’s FIF rules. By imposing tax on unrealised income the current rules could be deterring some people from choosing to settle in New Zealand. The proposal suggests allowing some migrants to pay tax on dividends and realised gains. Consultation closed 27 January 2025.
- PUB00458 - Income tax – Using the cost method to determine foreign investment fund (FIF) income. This draft statement explains when a New Zealand 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 of when an independent valuation may be required to apply the cost method, and how the cost method can be applied. Consultation closed 20 December 2024.
- PUB00462 - What is the income tax treatment of gift cards and products provided as trade rebates or promotions? This draft Question We’ve Been Asked (QWBA) explains the income tax treatment of gift cards and products provided by trade suppliers to trade customers (business to business) as trade rebates, promotions, or rewards for trade customers buying goods or services from trade suppliers. Consultation closed 18 December 2024.
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