EY Tax Monthly News Update – Edition 9, 2025

EY Tax News Update: Edition 9, 2025

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

In brief

Inland Revenue updates

• Don’t miss your chance to have your say on current draft consultation items: 
  • Income tax implications of providing sponsorship
  • Deductibility of repairs and maintenance expenditure
  • Deductibility of asbestos removal costs
  • GST treatment of supplies of payment processing or facilitation services to merchants
  • Working for Families tax credits and family scheme income
  • Fringe benefit tax exclusion for benefits relating to health or safety
  • Shortfall penalties for evasion and taking an abusive tax position

• Stay on top of new finalised guidance: 
  • Interpretation Statement: meaning of ‘taxable activity’ for GST purposes
  • Question We’ve Been Asked: public private partnership projects and business continuity test for losses
  • Technical Decision Summaries: disposal of cryptoassets; supply of accommodation in a serviced apartment; restructure and transfer of shares; application of the business continuity test to a consolidated group
  • Other: withdrawal of Standard Practice Statement on imaging of electronic storage media; Case Summary

• Continued focus on tax debt and change in approach to credit reporting rules
• Insights from 2024-25 Annual Report
• Other updates, including new examples on Investment Boost web page and updated Public Remedials Log
  

Government and other updates

• Refreshed Tax and Social Policy Work Programme
• Treasury’s Long-term Fiscal Statement provides outlook on New Zealand’s fiscal future
• Economic update
• Other updates, including Labour Party’s targeted capital gains tax election policy
  

International updates

• Australia
• United States
• OECD
  

EY Global webcasts

• What’s new in sustainability reporting with ISSB standards

EY insights    

• 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
• How strong tax governance builds trust and compliance
• Three steps tax teams should take to prepare for quantum computing
• Does today’s disruption provide the blueprint for tomorrow’s growth?
• Top 10 business risks and opportunities for mining and metals in 2026
• EU adopts CBAM Omnibus Regulation
  

Current draft consultation items 

New finalised guidance

Inland Revenue guidance items finalised since our last update include:

Continued focus on tax debt and change in approach to credit reporting rules

The Commissioner is reviewing the approach taken with respect to the credit reporting legislation which allows Inland Revenue to share debt information with approved credit reporting agencies in some cases. This is likely to be part of Inland Revenue’s wider focus on reducing tax debt.

As part of this review, Inland Revenue has:

• Withdrawn previous General Article Information Sharing with approved Credit Reporting Agencies (issued in 2017) – see the Notice of Withdrawal here
• Advised that aspects of the commentary on the credit reporting legislation in Tax Information Bulletin item “New legislation: Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017” (Vol 29, No 4, May 2017 at 62-66) should not be relied on

Broadly, the Commissioner now considers that:

• Where a taxpayer (who has been advised that they owe debt) does not engage with Inland Revenue, Inland Revenue may still have made ‘reasonable efforts’ to recover the tax debt; direct engagement with the taxpayer is not necessarily required
• Formal notification of the Commissioner’s intent to disclose debt information only needs to be served on the company itself, not on every director of the company

Further information on Inland Revenue’s renewed approach to credit reporting, including information on a targeted pilot that is currently underway, is available on Inland Revenue’s website here.

Separately, a number of targeted campaigns primarily aimed at taxpayers with GST or employer tax debt are underway. Information on these campaigns is available on Inland Revenue’s website here and here, and in an Inland Revenue media release here. One of the possible outcomes of these campaigns could involve Inland Revenue seeking to recover the debt directly from the taxpayer’s bank account.

Insights from 2024-25 Annual Report

Inland Revenue’s Annual Report for 2024-25 (Report) shows $1.4 billion in compliance revenue, exceeding targets and delivering a return of $11.81 for every dollar spent, an increase from $9.50 in the previous year.

The Report shows increased audits, with 49% more audits opened than last year, and notes a renewed focus on managing tax debt and overseas student loan repayments. A related Inland Revenue media release refers to positive outcomes from targeting high-risk sectors such as property non-compliance, trusts, organised crime, and the hidden economy, and from leveraging new uses of data and insights to better target enforcement efforts.

The Annual Report is available here, with a related Inland Revenue media release here.

Other updates

Other Inland Revenue updates include:

• In response to requests from taxpayers for further guidance, Inland Revenue’s Investment Boost web page has been updated to include some examples, particularly around the available for use test. See Inland Revenue’s website here.
• Inland Revenue’s Public Remedials Log has been updated to October 2025. The Public Remedials Log seeks to inform the public about remedial legislative issues that Inland Revenue has considered and tracks the progress of each item through the legislative amendment process. It can be found on Inland Revenue’s Tax Policy website here.

Refreshed Tax and Social Policy Work Programme

The Government Tax and Social Policy Work Programme (Work Programme) has been refreshed. This refresh is the first update to the coalition Government’s Work Programme since it was originally released in November 2024.

The updated Work Programme contains various projects which are currently already before Parliament in the Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Bill, including:

• New rules for non-resident visitors
• Changes to allow for the new ‘revenue account method’ for taxing foreign investment funds (FIFs)
• A new deferral option for taxing employee share schemes
• A suite of reforms to the information collection and sharing rules to increase tax data sharing across government
• Many other remedial changes including to various GST rules and Investment Boost

In terms of existing policy projects which have not yet progressed into a Bill, we now know that:

• Work continues on the simplification of FBT – we may see progress in this space next year
• The review of tax settings for the charities and not-for-profits sector is still on the list but per the Minister’s speech:
  • The Government is no longer looking to progress reforms focused on the taxation of charities’ business income; however Inland Revenue will focus on ensuring compliance with the current rules
  • Potential new rules for donor-controlled charities and improved transparency for accumulated profits may be considered

The Work Programme also contains some new items which will be welcome news to impacted taxpayers, including reforms to the financial arrangements rules (particularly for new migrants) and simplification for both the ‘approved issuer levy’ and non-resident contractors’ withholding tax. The Work Programme also indicates that work will be undertaken in relation to possible further reform of the FIF rules – referred to as ‘FIF stage 2’.

Heading into the 2026 election, we can expect the Government to keep the focus on tax reforms that support economic growth. Tax incentives to boost certain sectors, to attract additional investment or stimulate innovation may yet be on the cards.

Finding ways to raise additional revenue while not expanding the tax base is likely to continue to be a key focus. Given Inland Revenue’s success to date on raising extra revenue from increased compliance work (an $11.81 return for every $1 invested so far) we would not be surprised to see additional compliance funding. In addition, base maintenance measures which improve administrative efficiency, overall compliance or debt collection, could be prioritised in the face of growing fiscal pressures.

Treasury’s Long-term Fiscal Statement provides outlook on New Zealand’s fiscal future

The Treasury has published its 2025 Long-term Fiscal Statement, which “…highlights the growing pressures on New Zealand’s public finances and calls for a proactive, balanced response to ensure long-term fiscal sustainability.” Of note, Treasury’s modelling predicts that if spending and revenue policies were left unchanged until 2065, government debt would rise to around 200% of gross domestic product.

Key points from the related Treasury media statement (available here) include:

• Population ageing remains a significant long-term fiscal challenge and is expected to result in a substantial increase in the cost of superannuation and healthcare over coming decades
• New Zealand’s debt is higher than anticipated and it is vital that New Zealand closes its structural fiscal deficit sooner rather than later
• Successive governments will need to consider a mix of options to deliver fiscal sustainability over the coming years

Economic update

From the Treasury

Treasury has published the financial statements of the Government for the year ended 30 June 2025. Key figures include:

• Tax revenue of $121.1 billion, which was $0.9 billion (0.7%) higher than expected
• Operating balance before gains and losses excluding ACC (OBEGALx) deficit of $9.3 billion, which was $0.9 billion less than the forecast deficit

Refer to the Treasury website here and related Beehive 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.

From Stats NZ

Inflation increased to 3% in the 12 months to the September 2025 quarter, up from 2.7% in the previous quarter. The Reserve Bank’s target band for inflation is 1 - 3%.

Acting Finance Minister Chris Bishop expressed he was pleased that inflation remained within the target band, however noted it “…highlights the importance of increasing electricity supply and competition…”.

For more information, see the Stats NZ website here and Beehive release here.

Other updates

Other updates include:

• The Labour Party has announced that they will campaign on a ‘targeted capital gains tax’ (CGT) in the lead up to the 2026 general election. The proposed CGT would be a tax of 28% on profits from property sales (excluding the family home and farms). Revenue raised from the CGT would go into the health system, including funding three free doctor’s visits a year for all New Zealanders through a new "Medicard" scheme. Should Labour win the election, they intend for the CGT to take effect from July 2027 on a prospective basis. See the Labour Party website here.
• New Zealand is taking another significant step towards e-invoicing. A change to the Government Procurement Rules means that, starting 1 January 2027, government agencies must ensure ‘large suppliers’ send e-invoices for business-to-government transactions. This change is part of the Government's approach of taking the lead in adopting e-invoicing to help encourage businesses to adopt e-invoicing. Businesses should begin preparations to be e-invoice ready by the deadline, as Government agencies will likely assess supplier readiness in advance. Further details are available in an EY Global Tax News Alert here. See also the Ministry of Business, Innovation and Employment website here.
• The Government has set methane targets for 2050 and confirmed no tax on agricultural methane emissions “…as this would risk closing down farms and send jobs and production overseas. Reductions in methane to meet the targets will be achieved in partnership and through industry leadership and processor incentives…”. For more information, refer to the Beehive release here.
• The Government has announced plans to raise the mandatory climate reporting threshold for listed issuers from $60 million market capitalisation to $1 billion, adjust director and company liability settings, and remove managed investment schemes from the climate reporting regime. Refer to the Beehive release here and see also a related article on ey.com here.

Australia

Updates from Australia include:

• Australia is set to enforce one of the world’s most stringent Public Country-By-Country Reporting (PCbCR) regimes, requiring large Australian groups and foreign groups that have a presence in Australia to publicly disclose detailed tax and financial data – on a jurisdiction-by-jurisdiction basis. With the recent release by the Australian Taxation Office (ATO) of the XML schema approved template and electronic reporting format and implementation guidance, impacted businesses can now move forward with the necessary work to be prepared to meet Australia’s PCbCR legislation. In addition, draft instructions for completing the PCbCR regime report have been released for consultation on the ATO website here. Further information on the rules can be found in a previous article on ey.com here.
• The ATO has issued its final ruling on its interpretation of certain aspects of the thin capitalisation rules third party debt test in Taxation Ruling TR 2025/2, finalising draft TR 2024/D3 issued in December 2024. In addition, final ATO Practical Compliance Guideline PCG 2025/2 has been updated to add schedule 3 for the ATO’s targeted compliance approach concerning restructures undertaken to come within the third party debt test conditions.
• Case law update: in a recent case (available here), the Full Federal Court of Australia has ordered that proceedings appealing the disallowance of objections to penalty assessments be stayed so that the mutual agreement procedure in the Australia - Ireland Double Tax Agreement (DTA) could play out. By way of background, the case involves the question of whether certain sublicence fees were ‘royalties’ within the meaning of the Australia - Ireland DTA.

United States

The following EY Global Tax News Alerts are available:

• US Trade developments include announced new tariffs on pharmaceuticals, Section 232 investigations into imports including robotics, industrial machinery, PPE and medical equipment
• US President announces new Section 232 tariffs on imports of timber, lumber and their derivative products
• US expands export controls to include 50% 'Affiliates Rule' for restricted parties

OECD

From the OECD:

• A Decade of the BEPS Initiative: An Inclusive Framework Stocktake Report to G20 Finance Ministers and Central Bank Governors
• OECD Secretary-General Tax Report to G20 Finance Ministers and Central Bank Governors (G20 South Africa, October 2025) – see also EY Global Tax News Alert here
• OECD publishes the third batch of updated transfer pricing country profiles with new insights on hard-to-value intangibles and simplified distribution rules

• What’s new in sustainability reporting with ISSB standards – watch on demand 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
• How strong tax governance builds trust and compliance
• Three steps tax teams should take to prepare for quantum computing
• Does today’s disruption provide the blueprint for tomorrow’s growth?
• Top 10 business risks and opportunities for mining and metals in 2026
• EU adopts CBAM Omnibus Regulation

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