New Zealand

Double taxation agreements (DTAs)

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

Trustee tax rate

Trustee income is subject to a tax rate of 39% from the 2024/25 income year, subject to some limited exclusions. 

‘FamilyBoost’ tax credit

The FamilyBoost tax credit was introduced in 2024 in relation to childcare costs incurred by families. The credit is available from 1 July 2024.

The amount of the credit for a quarter is equal to 25% of the licensed early childhood education (ECE) fees paid for that quarter, up to a maximum of 975 New Zealand dollars (NZD). However, the amount of the credit abates at the rate of 9.75 cents in the dollar when quarterly household income is greater than NZD 35,000. The amount of the credit is zero when quarterly household income is NZD 45,000 or more.

The tax credit results in a refund for the applicant and is based on actual ECE fees incurred, subject to eligibility requirements. A New Zealand tax resident caregiver of one or more children enrolled with a licensed early childhood service for which ECE fees are incurred may be entitled.

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 recently enacted changes to reduce the bright-line period to two years for residential land disposed on or after 1 July 2024. 

A property is excluded from the bright-line rules if it was mainly a taxpayer’s ‘main home’ for most of the bright-line period. 

Rollover relief is also 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.

Interest limitation rules

Interest deductibility for borrowing on residential investment property is being phased back in over the next two tax years. Since1 April 2024, 80% of the interest expenses incurred for amounts borrowed in relation to residential property have been 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), subject to other provisions governing interest deductibility.