EY Tax Monthly News Update – Edition 10, 2025

EY Tax News Update: Edition 10, 2025

Welcome to the final edition of EY’s tax news for 2025. This edition covers key tax developments for November. You can also find details of upcoming EY Global webcasts, along with links to EY insights.

We will be back next year to keep you updated on what has been happening in the tax world. In the meantime, we wish you a safe and happy holiday season.

In brief

Inland Revenue updates

• Don’t miss your chance to have your say on current draft consultation items:
  • Fringe benefit tax exclusion for benefits relating to health or safety
  • Shortfall penalties for evasion and taking an abusive tax position
  • Depreciation rate for battery energy storage systems
  • Software development expenditure and software as a service customisation and configuration costs
  • Payments by employers on the death of an employee to executors and family
• Stay on top of new finalised guidance:
  • Interpretation Statements: GST secondhand goods input tax deduction; meaning of payment for GST purposes; tax treatment of emission liabilities and emissions units for non-forestry industries registered in the Emissions Trading Scheme; whether and when a taxpayer is carrying on a business for income tax purposes
  • Other: Product Rulings; Foreign Investment Fund Determination
• Consultation on taxation of company loans to shareholders
• Basic Compliance Package questionnaire to include new questions
• Ongoing focus on tax debt
• Other updates

Government and other updates

• Supreme Court decision in landmark New Zealand case
• Refresh of screen production rebate
• Economic update
• Other updates

International updates

• Australia
• United States
• OECD

EY Global webcasts

• The future of tax: leveraging agentic technologies to redefine tax operation
• What to expect from global financial services regulation in 2026

EY insights    

• Tax Guides – various tax matters covering over 150 jurisdictions
• The Latest on BEPS and Beyond | November 2025
• OECD holds Tax Certainty Day, presenting MAP and APA statistics and addressing dispute prevention and resolution developments
• G20 Leaders' Declaration reflects continued engagement to address Pillar Two concerns
• The cost of cutting out. The cost of carrying on.
• How to optimize your global strategy amid asymmetric globalization

Current draft consultation items 

New finalised guidance

Inland Revenue guidance items finalised since our last update include:

Consultation on taxation of company loans to shareholders

Inland Revenue is consulting on proposed changes intended to improve the way new loans by companies to shareholders are taxed. The proposals aim to address the concern that the current tax rules mean shareholders who borrow from their company may pay less tax compared with other taxpayers who are fully taxed on their salary, wages and dividends, or profits they earn as a sole trader or partnership.

The key proposal is for a new time limit rule that would treat certain shareholder loans as dividends if not repaid within 12 months from the end of the income year they were made. If progressed, the intention is that this rule would apply only to new loans made on or after 4 December 2025, and only to companies whose total lending to shareholders is $50,000 or more. The $50,000 threshold is intended to ensure the rule does not impact small businesses and ordinary transactions.

The Officials’ Issues Paper and a related information sheet are available here, with an Inland Revenue media release here. The closing date for submissions on the proposals is 5 February 2026.

Basic Compliance Package questionnaire to include new questions 

Inland Revenue is updating its Basic Compliance Package (BCP) questionnaire to include new questions on Investment Boost, as well as additional questions on tax governance. The updated questionnaire will apply to the next BCP cycle, beginning in early 2026.

For further information on the new questions being added to the BCP, please reach out to your usual EY Tax Advisor.

Ongoing focus on tax debt 

Inland Revenue’s focus on collecting tax debt as well as pursuing overdue returns continues, with several campaigns underway. Points to note include:

• Information on some of Inland Revenue’s debt collection campaigns has featured on other Government websites – for example, see business.govt.nz here.
• Inland Revenue is broadening its debt campaign to include taxpayers with GST and employer debt older than 12 months. Inland Revenue’s Community Compliance team will be active in the community from late November to mid-December as part of this initiative. See Inland Revenue’s website here.
• Inland Revenue has been contacting taxpayers with overdue individual income tax returns – see Inland Revenue’s website here and here. 

Other updates 

Other Inland Revenue updates include:

• Inland Revenue has published a summary of submissions received on its draft long-term insights briefing (LTIB) along with copies of the submissions – see Inland Revenue’s Tax Policy website here. The finalised LTIB is expected to be published by the end of the year.
• Information for those affected by serve weather conditions in Canterbury, Clutha and Southland is available on Inland Revenue’s website here.
• Refer to Inland Revenue’s website here for information on high-priced bloodstock yearlings at Karaka or Christchurch 2026. 

Supreme Court decision in landmark New Zealand case 

In a landmark decision, the Supreme Court has upheld the findings of the Employment Court and Court of Appeal that four individuals were employees rather than independent contractors and therefore subject to statutory protections under the Employment Relations Act 2000. For the full decision, see the Courts of New Zealand website here.

This decision may result in wide ranging impacts for many organisations using independent contractors, as well as having implications for digital platforms and gig economy workers. We recommend organisations review any existing independent contractor relationships, as misclassification may result in a number of adverse implications.

We also suggest keeping a watching brief on the changes proposed by the Government in the Employment Relations Amendment Bill, which are intended to clarify the definitions of ‘employee’ and ‘contractor’.

If you would like to discuss the potential impact of the decision on your business, please contact your usual EY Tax Advisor.

Refresh of screen production rebate 

In response to industry feedback, the Government is updating the International Screen Production Rebate with the aim of ensuring New Zealand remains an attractive destination for the global film industry in what is an increasingly competitive global market. This announcement is likely to be welcome news for those impacted.

A related Beehive release (see here) provides further details of the changes which will apply from 1 January 2026. 

Economic update

Treasury has published the Interim Financial Statements of the Government for the three months ended 30 September 2025. Key figures include:

• Tax revenue of $29.1 billion, which was $0.5 billion (1.6%) lower than forecast
• Operating balance before gains and losses (excluding ACC) deficit of $4 billion, which was $0.5 billion more than the forecast deficit

Refer to the Treasury media release here for more information.

Keep an eye out for Treasury’s Half Year Economic and Fiscal Update, expected to be released on 16 December 2025. The Government’s priorities for Budget 2026 will also be set out in the Budget Policy Statement on the same date.

Other updates

Other updates include:

• The rate of interest that applies to low-interest employment-related loans for fringe benefit tax purposes is decreasing again, this time from 6.67% to 6.29%. The new rate applies from the quarter beginning 1 October 2025, with the relevant regulations coming into force on 25 December 2025. See the Income Tax (Fringe Benefit Tax, Interest on Loans) Amendment Regulations (No 3) 2025.
• Fees and levies that Customs and the Ministry for Primary Industries charge for goods management will be changing from 1 April 2026 and existing Customs goods fees will be replaced by levies. Some of the changes are likely to be substantial, such as for those in the business of low-value imports. See the Customs website here.
• The National Party has announced an election policy focused on KiwiSaver, stating that if elected next year, National will increase default contribution rates by 0.5% from 1 April 2029, rising by 0.5% p.a. until 1 April 2032, to achieve a 6% contribution each from employers and employees (resulting in a combined rate of 12% by 2032, matching Australia). This policy would expand on the current changes under which the default contribution rate is rising from 3% to 4% by 1 April 2028. See the National Party website here.
• The Land Transport (Revenue) Amendment Bill has been introduced into Parliament. This Bill includes changes intended to improve the road user charges (RUC) system – marking the first step towards replacing petrol tax with RUC for light petrol vehicles. See the Beehive release here. The Government has also recently launched a Request for Information on paying for RUC electronically, with details in the Beehive release here. 

Australia

Updates from Australia include:

• Australia’s new Net Zero Plan and 2035 emissions target marks a significant shift in its climate policy and trade strategy and is an important reminder for New Zealand exporters to closely watch trends in sustainable trade. The plan keeps a Border Carbon Adjustment (BCA) under consideration, which could impact New Zealand exporters. For example, Australia imports a significant amount of New Zealand’s stone and glass materials, and this is just one product category highlighted for inclusion within the scope of a future Australian BCA. Further information on Australia’s plan can be found in EY TradeWatch | Issue 2, 2025 available via ey.com here.
• The Australian Taxation Office (ATO) released draft instructions for consultation in relation to completing the public country-by-country reporting annual report, with the first reports due by 30 June 2026. Refer to the EY Global Tax News Alert here for further information.
• The ATO finalised its Practical Compliance Guideline (PCG) 2025/4 Global and domestic minimum tax lodgment obligations - transitional approach, relating to the implementation of the OECD Pillar Two global minimum tax solution in Australia. The PCG provides administrative guidance on new lodgement obligations and outlines the ATO’s soft-landing approach to penalties during the transition period. It also helps taxpayers understand expectations for compliance and how to demonstrate ‘reasonable measures’ to mitigate penalties. Further details can be found in the EY Global Tax News Alert here.

United States

The following EY Global Tax News Alerts are available:

• US announces new trade frameworks and expanded agricultural tariff exclusions (see also New Zealand Beehive release: Trade Minister cautiously welcomes US tariff relief on key exports)
• US President announces new trade and economic deal with China and commitments to Republic of Korea

OECD

The OECD has released an update to the Model Tax Convention. The update includes clarifications on when short-term cross-border remote working (such as from a home office) creates a taxable presence for business, in response to the increase in such arrangements following the COVID-19 pandemic. It also includes a new alternative provision on how income from activities connected with the extraction of natural resources — such as oil, gas and minerals - should be taxed. Refer to the EY Global Tax News Alert here for more information.

Separately, the OECD has launched public consultation on the global mobility of individuals. The consultation is intended to address whether there are tax challenges arising from changed ways of working, including through technology that facilitates remote and cross-border working. While the document focuses on issues relating to personal income tax and employment income, it also seeks to bring out challenges in the corporate tax space (such as issues relating to permanent establishments, residence as well as transfer pricing and other issues). Further information and a link to the consultation document is available on the OECD website here. 

• The future of tax: leveraging agentic technologies to redefine tax operation – register here to watch the replay
• What to expect from global financial services regulation in 2026 – register here

Refer to the below guides, thought leadership articles and regular newsletters available on ey.com:

• Tax Guides – browse our in-depth guides covering corporate tax, indirect tax, personal taxes, transfer pricing and other tax matters in more than 150 jurisdictions
  
• The Latest on BEPS and Beyond | November 2025
• OECD holds Tax Certainty Day, presenting MAP and APA statistics and addressing dispute prevention and resolution developments
• G20 Leaders' Declaration reflects continued engagement to address Pillar Two concerns
• The cost of cutting out. The cost of carrying on.
• How to optimize your global strategy amid asymmetric globalization

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