Tax policy news

Inland Revenue is reviewing the rules relating to the donation tax credit. The review will assess whether the donations tax credit regime is operating effectively, efficiently, is achieving its intended outcomes and remains fit for purpose and the future.

This review is part of the regulatory stewardship programme required of all state agencies for the rules they administer. The review is expected to be completed by mid-2024.

For more information: 

About this review

A Supplementary Order Paper for the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill has been referred to the Finance and Expenditure Committee on 6 September 2023 for their consideration. It contains proposals to: 

• ensure that the main home exclusion from the bright-line test is not affected by a property owner needing to vacate their North Island flood/cyclone damaged home for more than 12 months so it can be remediated/repaired
• ensure that the bright-line and other land-based timing tests in the Income Tax Act 2007 are not triggered when local authorities or the Crown buy-out properties impacted by the 2023 Auckland flood events and/or Cyclone Gabrielle, and
• allow Fonterra to deduct certain distributions to its shareholders, consistent with the treatment that applied under the previous constitution.

Minister's media statement

Supplementary Order Paper No 423

Commentary to the Supplementary Order Paper

The Government has introduced the Digital Services Tax Bill into the House today.

The Bill would allow the Government to impose, at an appropriate time, a tax on gross revenues of large multinational entities with highly digitalised business models that earn income from New Zealand. The digital services tax would not be imposed before 1 January 2025. The application date can be extended by an Order in Council, which the Government would do if it was satisfied with the progress of the Pillar One of the OECD’s multilateral solution.

• Digital Services Tax Bill

The Government’s Taxation Principles Reporting Bill was passed by Parliament on 23 August 2023. The new legislation aims to increase transparency and the public’s understanding of tax policy development by establishing a reporting framework informed by tax principles.

The Bill requires Inland Revenue to publish a report on the operation of the tax system in light of these principles. The first of these reports is due by the end of this year.

The Bill now awaits the Royal assent. Detailed coverage of the new legislation will be provided in an upcoming Tax Information Bulletin.

View the Bill at the Government Legislation website:

Taxation Principles Reporting Bill

Two Orders in Council have been made updating the rates for use of money interest and the rate for calculating fringe benefit tax on employer-provided, low interest loans.

The new underpayment rate for use of money interest is 10.91% (previously 10.39%). The new overpayment rate is 4.67% (previously 3.53%). These will apply on and after 29 August 2023.

The new prescribed rate of 8.41% (previously 7.89%) for calculating fringe benefit tax on employer-provided loans applies for the quarter beginning 1 October 2023 and subsequent quarters.

Inland Revenue has published special reports detailing the changes ahead of coverage in an upcoming edition of the Tax Information Bulletin.

Special reports on update to rates for UOMI and FBT on low-interest loans