New Zealand

Commercial buildings - depreciation

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 which is disposed of within two years of acquisition are 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 10 years from the date of acquisition.  The new Government has recently 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, transfers to certain non-profit organisations.

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

New Zealand is expected to be implementing the GloBE Rules, a key component of the Organisation for Economic Co-operation and Development’s (OECD’s) Two-Pillar Solution to address the tax challenges of digitalisation of the economy, with an effective date for some measures as early as income years commencing on or after 1 January 2024. 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 Organisation for Economic Co-operation and Development (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); and
• 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 are 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.

Platforms - goods and services tax (GST)

From 1 April 2024, existing GST rules for electronic marketplaces (that previously applied to remote services and low value imported goods) also apply to taxable accommodation, ride-sharing, and food and beverage delivery services (“listed services”) that are provided through electronic marketplaces.

This means that electronic marketplace operators facilitating these services via their platform are now required to collect and return GST at the standard rate of 15% when they are performed, provided, or received in New Zealand. So, for example, electronic platforms facilitating short-stay/holiday accommodation rentals are required to collect and return GST at 15% on New Zealand accommodation booked through the platform. The platform will become responsible for the GST, rather than the underlying provider of the accommodation – and the GST will be payable even if the underlying provider is not GST registered.

In summary, from 1 April 2024:

• Electronic marketplace operators are considered the supplier of these services for the purposes of GST and responsible for collection and return of GST to Inland Revenue.
• For the underlying supplier, the supply of listed services sold through electronic marketplaces is considered as being made to the electronic marketplace operator and zero-rated for GST.
• For the purposes of the GST recoverability of underlying suppliers: 
• Where the underlying supplier is already registered for GST, they are able to deduct input tax on their expenses in the usual way.
• Where the underlying supplier is not registered for GST, they receive a flat rate credit of 8.5% of the value of the supply.  This is intended to recognise the GST incurred by unregistered underlying suppliers on goods and services used to make supplies of listed services. 

There are some possible exceptions to the above for underlying suppliers to ‘opt out’ of these rules (such that underlying suppliers continue to be responsible for their own GST obligations).  Underlying suppliers with an annual turnover of over NZD $500,000 in a 12-month period may unilaterally opt out of the rules by notifying the marketplace operator.  Marketplace operators and underlying suppliers can also opt-out of the rules by agreement, if the underlying supplier supplies taxable accommodation provided that they list more than 2,000 nights of accommodation on a marketplace in a 12-month period.  Inland Revenue also has the discretion to approve opt-out agreements in circumstances where the size, scale, and nature of the services and activities undertaken by the underlying supplier justifies opting out of the rules (having regard to compliance costs that would arise for underlying suppliers to comply with the rules). 

Double tax agreements (DTAs)

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