EY Tax Monthly News Update – Edition 1, 2026

EY Tax News Update: Edition 1, 2026

Welcome to the first edition of EY’s tax news for 2026. This edition covers key tax developments for December 2025 and January 2026. 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 – wrapping, bridging, lending, borrowing and staking cryptoassets
  • GST treatment of: services supplied in relation to retirement schemes; court-awarded costs and disbursements; short-stay accommodation
• Stay on top of new finalised guidance:
  • Interpretation Statement: Commissioner’s duty of care and management
  • Question We’ve Been Asked: whether the purchase price allocation rules alter the tax book values of Farmland Improvements and listed horticultural plants under subpart DO of the Income Tax Act 2007
  • Commissioner’s Statement: Inland Revenue Prosecution Guidelines
  • Other: Case Summary; Product Ruling
• Use-of-money interest rates updated
• Other updates

Government and other updates

• Key dates confirmed
• Economic update – including Half Year Economic and Fiscal Update 2025
• Other updates

International updates

• Australia
• OECD

EY Global webcasts

• What to expect from global tax policy and controversy in 2026
• Discover insights from the 2025 EY Tax Risk and Controversy survey
• BEPS 2.0 Pillar Two: the latest OECD releases – first impressions
• 2026 Geostrategic Outlook: Navigating new rules for global business

EY insights

• Tax Guides – various tax matters covering over 150 jurisdictions
• Australian Tax Office steps up Pillar Two readiness, releasing new guidance for taxpayers
• OECD hosts public consultation on global mobility of individuals
• The Latest on BEPS and Beyond | January 2026
• Why AI is poised to make managing tax risk and controversy easier
• Top 10 geopolitical developments in 2026
• Seven essential actions to strengthen your global Pillar Two readiness
• Avoiding the tariff ‘ripple effect’ 

Current draft consultation items 

New finalised guidance

Inland Revenue guidance items finalised since our last update include:

Use-of-money interest rates updated

From 16 January, Inland Revenue’s use-of-money interest (UOMI) rate for underpayments of tax decreased from 9.89% to 8.97%, and the UOMI rate for overpayments of tax decreased from 3.27% to 2.25%. See the Inland Revenue release here.

Other updates

Other Inland Revenue updates include:

• Inland Revenue is continuing its focus on recovering overdue GST and employer (EMP) debt – further information is available on Inland Revenue’s website here.  
• Information for those affected by severe weather conditions in certain parts of New Zealand is available on Inland Revenue’s website here and here.
• Inland Revenue has published some information regarding New Zealand’s adoption of the OECD’s Crypto‑Asset Reporting Framework, noting that New Zealand-based ‘Reporting Crypto‑Asset Service Providers’ should ensure they are ready to collect the required information from 1 April 2026. See Inland Revenue’s website here for more information.  

Key dates confirmed

The Government has announced that:

• Budget 2026 will be delivered on 28 May – Beehive release here
• The 2026 General Election will be held on 7 November – Beehive release here

Economic update

Half Year Economic and Fiscal Update 2025 and Budget Policy Statement 2026

On 16 December 2025, Treasury published the Half Year Economic and Fiscal Update 2025 (HYEFU) and Budget Policy Statement 2026.

HYEFU shows the economy is forecast to grow 1.7% in 2025/26 and 3.4% in 2026/27. However, it also indicates a deterioration in the Crown’s financial position relative to previous forecasts. The operating balance before gains and losses excluding ACC (OBEGALx) is forecast to deteriorate to a deficit of $13.9 billion in 2025/26, which will be the largest OBEGALx deficit as a share of gross domestic product since the 2019/20 year. The OBEGALx is forecast to return to surplus in 2029/30, a year later than previously forecast.

With the results of HYEFU in mind, the Budget Policy Statement sets four priorities for Budget 2026:

• Supporting the delivery of core public services such as health care, education and law and order. Finance Minister Nicola Willis notes that beyond these areas, “…any new funding will need to be found from savings and reprioritisation.”
• Tight control of discretionary government spending while funding a limited number of priority Government policy commitments.
• Addressing longer-term productivity challenges.
• Developing a sustainable pipeline of infrastructure investments.

For more information, see the Treasury website here and here, and related Beehive release here.

Interim Financial Statements of the Government

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

• Tax revenue of $49.1 billion, which was $0.2 billion (0.4%) lower than forecast. Corporate tax and GST tax revenue was 4.9% and 1.2% lower-than-forecast, respectively.
• Operating balance before gains and losses (excluding ACC) deficit of $5.6 billion, which was $1.1 billion less than the forecast deficit.

Refer to the Treasury media release here for more information.

Other updates

Other updates include:

• New Zealand and India have concluded a Free Trade Agreement, eliminating or reducing tariffs on 95% of New Zealand’s exports. For more information, refer to the Beehive release here.
• The Education and Workforce Select Committee has reported back on the Employment Relations Amendment Bill, which includes changes intended to clarify the definitions of ‘employee’ and ‘contractor’. The Select Committee has recommended refinements to the gateway test criteria for contractors to provide clarity on the types of contracting arrangements covered, including platform-based arrangements. For more information, see the Beehive release here. The progress of this Bill may be of particular interest following a recent Supreme Court decision which found four individuals to be employees rather than independent contractors.
• The Government is proposing additional reductions to costs for forest owners in the Emissions Trading Scheme Registry. See the Beehive release here.
• The Climate Change Response (2050 Target and Other Matters) Amendment Bill has been enacted, resetting the biogenic methane target to 14-24% below 2017 levels by 2050. Further information is available in the Beehive release here.

Australia

The Australian Productivity Commission (PC) released the final report for its inquiry into Creating a more dynamic and resilient economy. The PC has recommended Australia shift to a hybrid corporate tax system, combining a lower company income tax of 20% for small and medium businesses earning up to AU$1 billion, and a 28% tax rate for larger firms, with a deductible net cashflow tax of 5% for all companies. The PC report is available here.

OECD

In January, the OECD announced a political and technical agreement by the Inclusive Framework on a comprehensive package for a "side-by-side” arrangement (the Package) with respect to the Pillar Two global minimum tax. The Package is in the form of Administrative Guidance and includes:

• A new Simplified Effective Tax Rate Safe Harbour
• A one-year extension of the Transitional Country-by-Country Reporting Safe Harbour
• A new Substance-based Tax Incentive Safe Harbour
• Two Safe Harbours related to a Side-by-Side System

The Administrative Guidance will be incorporated into the Commentary to the Global Anti-Base Erosion (GloBE) Model Rules. The Package also indicates that the Inclusive Framework will continue working on technical clarifications and simplifications, including for the application of the GloBE Model Rules, as well as on integrity rules.

Impacted companies should review the package carefully and monitor its implementation by relevant jurisdictions, as it contains new information that will have significant implications for the operation of the global minimum tax rules going forward. Further information can be found in the EY Global Tax News Alerts here and here. 

• What to expect from global tax policy and controversy in 2026 – register here
• Discover insights from the 2025 EY Tax Risk and Controversy survey – register here
• BEPS 2.0 Pillar Two: the latest OECD releases – first impressions – watch on demand here
• 2026 Geostrategic Outlook: Navigating new rules for global business – watch on demand here  

• 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
• Australian Tax Office steps up Pillar Two readiness, releasing new guidance for taxpayers
• OECD hosts public consultation on global mobility of individuals
• The Latest on BEPS and Beyond | January 2026
• Why AI is poised to make managing tax risk and controversy easier
• Top 10 geopolitical developments in 2026
• Seven essential actions to strengthen your global Pillar Two readiness
• Avoiding the tariff ‘ripple effect’

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