New Zealand

New Tax Bill

The Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Bill (the Bill), introduced in August 2024 is currently before the Finance and Expenditure Committee in New Zealand’s Parliament.

The Bill includes a number of measures including:

• Tax relief measures for future emergency events.
• Implementation of the Organisation for Economic Co-operation and Development's (OECD’s) Crypto-Asset Reporting Framework (CARF).
• Amendments around transfers of overseas pension and superannuation funds into New Zealand.
• Allowing retrospective registration for Approved Issuer Levies (AIL) in limited circumstances.
• Increases to the thresholds relating to exempt employee share schemes.

More details on the Bill are available in our Tax Tips publication at https://www.pwc.co.nz/insights-and-publications/subscribed-publications/tax-tips/new-tax-bill-introduced.html

Depreciation for commercial buildings

Tax depreciation deductions for commercial buildings with an estimated useful life of 50 years or more have been removed (depreciation rate set to 0%) from the start of the 2024/25 income year (the year beginning 1 April 2024 for most taxpayers). 

Interest deductibility

Interest deductibility for borrowing on residential investment property will be phased back in over the next two tax years. From 1 April 2024, 80% of the interest expenses incurred for amounts borrowed in relation to residential property are deductible. This is regardless of when the property was acquired or when the loan was drawn down. From 1 April 2025, interest deductibility will be fully restored (i.e. 100% deductibility).

Bright-line test

Under the bright-line rules, residential land that is disposed of within two years of acquisition is subject to tax (regardless of whether the taxpayer had a purpose or intention of disposal at the time of acquisition). The previous government had extended the bright-line period to ten years from the date of acquisition. The new government has enacted changes to reduce the bright-line period to two years for residential land disposed on or after 1 July 2024. 

Rollover relief is available (subject to certain conditions) for transfers between associated persons, including blood relatives, associated companies, trustees of a trust, and transfers to certain non-profit organisations.

Implementation of the Global Anti-Base Erosion (GloBE) Rules

New Zealand will implement the GloBE Rules, a key component of the OECD’s Two-Pillar Solution to address the tax challenges of digitalisation of the economy, for income years commencing on or after 1 January 2025. See the Taxes on corporate income section for more information.

Platforms - information reporting

The Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 introduced a new information reporting requirement for platform operators based in New Zealand. At a high level, the new rules require platform operators to provide Inland Revenue with information about sellers who provide goods or services through digital platforms. These are based on model rules developed by the OECD, which are incorporated into New Zealand domestic law.

The amendments require platform operators based in New Zealand to collect and provide Inland Revenue with information about the income sellers receive from the following activities, provided through digital platforms:

• Taxable property rentals (including commercial, short-stay, and visitor accommodation).
• Personal services (including any time- or task-based work, such as ride-sharing, food and beverage delivery, and graphic and web design services). 

The sale of goods and vehicle rentals (if there are non-resident sellers on the platform) may also be brought into the rules at a later date.  

Sellers on digital platforms are required to provide additional information to platform operators, including their tax file number, country of tax residence, and other identifying information. New Zealand-based platform operators are required to report information to Inland Revenue about the income earned by sellers on their platform.

New Zealand-based reporting platform operators have been required to collect information on sellers that receive consideration from activities on their platforms from 1 January 2024. Reporting platform operators will be required to report this information to Inland Revenue in early 2025, and Inland Revenue could exchange information with other tax authorities in early 2025.

Double tax agreements (DTAs)

New Zealand is currently negotiating new and updating DTAs with Australia, Croatia, Germany, Hungary, Iceland, Portugal, Slovenia, South Korea, and the United Kingdom.