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EY Tax News Update: Edition 3, 2026
Welcome to the latest edition of EY’s tax news. This edition covers key tax developments for March 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:
- Portfolio investment entity income from land development activities
- Options for relief from tax debt
- Bare trusts and mortgages
- Stay on top of new finalised guidance:
- Revenue Alert: Failure to pay pay-as-you-earn (PAYE) deductions to Inland Revenue
- Interpretation Statements: Goods and Service Tax (GST) treatment of supplies of payment processing or facilitation services to merchants; shortfall penalties
- Technical Decision Summary: Discretionary Investment Management Service fees
- Determination: 2026 International tax disclosure exemption
- Other Determinations
- Uptake of Investment Boost continues to be monitored
- Other updates
Government and other updates
- New legislation enacts several significant changes
- Economic update
International updates
- Australia
- United States
EY Global webcasts
- In the Spotlight: How to lead humans through the fear of AI
EY insights
- Tax Guides – various tax matters covering over 150 jurisdictions
- US Customs and Border Protection details new CAPE process in ACE to administer IEEPA duty refunds; phased rollout planned
- European Commission publishes proposal on the 28th Regime (EU Inc.)
- Tariff turbulence: 5 actions businesses should take now
- Preparing for the rise of e-invoicing and the transformation of the tax audit landscape
- How the ‘side-by-side’ minimum tax accord will reshape global policy
- The Latest on BEPS and Beyond | March 2026
Inland Revenue updates
Current draft consultation items
|
Consultation item type |
Description |
Public consultation closes |
|---|---|---|
|
Draft Question We’ve Been Asked PUB00508: Income tax – portfolio investment entity income from land development activities |
Considers whether income derived from developing land, dividing it into lots and/or erecting buildings on the land for the purpose of sale is eligible income for a portfolio investment entity under section HM 12 of the Income Tax Act 2007. Concludes that this income is eligible income under section HM 12. |
15 April 2026 |
|
Draft Standard Practice Statement ED0261: Options for relief from tax debt |
Sets out the Commissioner’s practice when considering the options of debt relief from the requirement to pay tax, interest or penalties. The options available to the Commissioner are to write-off amounts, enter into an instalment arrangement, remit amounts, or a combination of these options. The Commissioner will consider several factors when granting relief from tax. The Commissioner also has discretion not to grant relief and may take steps to recover the outstanding tax, including applying to have the taxpayer made bankrupt or liquidated. |
8 May 2026 |
|
Draft Question We’ve Been Asked PUB00544: Income tax – Bare trusts and mortgages |
Considers whether a bare trust can exist in relation to trust property that is subject to a mortgage. |
11 May 2026 |
New finalised guidance
Inland Revenue guidance items finalised since our last update include:
|
Finalised guidance name |
Description |
|---|---|
|
Revenue Alert RA 26/01: Failure to pay PAYE deductions to Inland Revenue |
Highlights the criminal penalties that may apply where employers do not pass PAYE and other amounts deducted from an employee’s salary or wages to Inland Revenue by the due date. Notes that making deductions and failing to pay them to Inland Revenue is a serious offence carrying a maximum sentence of up to 5 years in prison. Highlights that where appropriate, the Commissioner will consider the possibility of prosecution action where such behaviour is identified. This item is likely to form part of Inland Revenue’s wider focus on tax debt. A related Inland Revenue media release is available here. |
|
Interpretation Statement IS 26/02: GST treatment of supplies of payment processing or facilitation services to merchants |
Applies to entities that provide payment processing or facilitation services, including payment technology, to merchants. These entities include payment service providers, buy now, pay later providers and other suppliers of payment technology or infrastructure. Provides a framework to determine whether services provided to merchants are financial services. Also explains whether there is a single supply or multiple supplies of services that may have different GST treatments. |
|
Various Interpretation Statements and fact sheets relating to shortfall penalties: IS 26/03 - IS 26/03 FS 1 |
Several Interpretation Statements (IS) and accompanying fact sheets have been published in relation to shortfall penalties, replacing previous guidance due to legislative changes and new case law. The threshold requirements for a shortfall penalty, that there be a "tax position" and a "tax shortfall", are explained in IS 26/03. IS 26/04 - IS 26/08 explain the legal test for different types of shortfall penalties. When a shortfall penalty is reduced or increased and other matters that are relevant when a penalty has been imposed are explained in IS 26/09. |
|
Technical Decision Summary TDS 26/02: Discretionary Investment Management Service fees |
Summarises a decision of the Tax Counsel Office in relation to a private ruling about whether the single global fee charged by a Discretionary Investment Management Services provider is an exempt supply of financial services for GST purposes. |
|
Determination ITR37: 2026 International tax disclosure exemption |
Sets out which interests in foreign companies and foreign investment funds the Commissioner does not require a person to disclose for the administration of the international tax rules for the year ended 31 March 2026. |
|
Other |
|
Uptake of Investment Boost continues to be monitored
As detailed in the previous edition of EY Tax News Update, early highlights from a survey on Investment Boost were released by Inland Revenue in February 2026. A fuller analysis of the survey responses is now available on Inland Revenue’s Tax Policy website here.
Of note is that ongoing monitoring of Investment Boost uptake will occur through Inland Revenue’s regular annual reporting channels, including through the:
- Financial Statements Summary (IR10) – see Inland Revenue’s website here for information on a new Investment Boost keypoint applicable from the 2026 income tax year
- Basic Compliance Package
- Annual repetition of the voluntary survey to build a picture of how awareness, uptake and influence of Investment Boost are developing as the policy beds in
Other updates
Other Inland Revenue updates include:
- Inland Revenue is working through a process to extend information sharing about unpaid tax (credit reporting) to a wider range of credit reporting agencies. Further information is available on Inland Revenue’s website here.
- A series of five short topic-based webinars are available on Inland Revenue’s website here detailing various tax changes taking effect from April 2026.
- Information for those affected by severe weather conditions is available on Inland Revenue’s website here (for those in Canterbury) and here (for those in the Whanganui and South Wairarapa districts).
Government and other updates
New legislation enacts several significant changes
The Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Act 2026 (the Act) received Royal assent on 30 March 2026.
The Act contains several key tax reforms, including:
- Tax treatment of visitors to New Zealand: ‘non-resident visitors’ working remotely for offshore employers will be able to stay longer in New Zealand before triggering certain tax obligations. The new rules also limit the impact of the visitor’s presence on the offshore employer. The changes apply to a person who commences a visit to New Zealand on or after 1 April 2026. In an increasingly mobile working world, these reforms should help provide certainty for visitors and their employers.
- New ‘revenue account method’ for foreign investment funds (FIFs): eligible taxpayers have the option of calculating FIF income on certain investments on a realisation basis (i.e., dividends and a proportion of gains/losses on disposal). These amendments apply from 1 April 2025 to individuals who became tax resident in New Zealand on or after 1 April 2024 and will provide welcome relief for eligible migrants.
- Changes to thin capitalisation settings for infrastructure investment: a new elective rule allows an ‘eligible infrastructure entity’ to deduct interest on qualifying debt without a thin capitalisation income adjustment. The exemption applies only to genuine third-party debt for which the lender’s recourse is limited to the assets and income of the infrastructure entity. These changes apply from the 2026-27 income year and are likely to be well received by impacted taxpayers.
- GST and unincorporated joint ventures: members of a joint venture can choose to individually account for GST on supplies made or received in the course of the venture, rather than having to register the venture separately.
- Employee share scheme (ESS) changes: from 1 April 2026, unlisted companies can elect into a regime in which employees who receive shares as part of an ESS can defer their tax liability until a liquidity event occurs when the shares can be more easily valued and sold. Deferral applies to both resulting income for the employee and to the deduction claimed by the employer. This change is intended to help the start-up sector attract and retain talent.
- Changes focused on reducing tax debt: including a pilot scheme to allow tax pooling funds to be used for historical income tax debt relating to the 2022–23 and 2023–24 income years in some cases. This is a time limited measure intended to enable Inland Revenue to determine whether income tax debt can be effectively collected through an extended tax pooling period.
- Repeal of certain information-gathering provisions: the trust disclosure provisions and the provision that allowed Inland Revenue to collect information for the purposes of tax policy development have been repealed. It is expected that Inland Revenue will be able to rely on other existing information-gathering powers.
- Other reforms across a range of areas: including a new tax exemption for income derived by an individual from the residential supply of excess electricity, aligning the definition of contractor for tax purposes with the employment law definition, remedial amendments to Investment Boost, changes to the fringe benefit tax (FBT) rules but no wholesale reform of the FBT regime, an increase in cash-basis person thresholds for the financial arrangements rules, various GST remedials and several information sharing provisions.
The Act is available on the New Zealand legislation website here. You can also refer to our EY Global Tax News Alert here. If you would like further information on any of the reforms and how they might impact you, please reach out to your usual EY tax advisor.
Economic update
From the Treasury
Treasury has published the Interim Financial Statements of the Government for the seven months ended 31 January 2026. Key figures include:
- Tax revenue of $70.4 billion, which was 0.1% below forecast
- Operating balance before gains and losses (excluding ACC) deficit of $6 billion, which was $1.9 billion less than the forecast deficit
Refer to the Treasury media release here for more information.
Separately, the Treasury has published four Long-term Fiscal Statement background papers which contribute to the evidence base underpinning public discussion on New Zealand’s long-term fiscal sustainability. See the Treasury website here for details.
From Stats NZ
Figures released by Stats NZ show New Zealand’s gross domestic product increased 0.2% in the December 2025 quarter, following a 0.9% increase in the September 2025 quarter. See the Stats NZ website here and related Beehive release here.
International updates
Australia
The Australian Taxation Office (ATO) has released a Decision Impact Statement (DIS) following the High Court’s decision in Commissioner of Taxation v PepsiCo Inc & Anor [2025] HCA 30.
The DIS emphasises that the outcome turned on the unique facts and circumstances of the appeals and that the ATO considers the decision does not limit the Commissioner’s ability to challenge intellectual property arrangements, including characterisation, embedded royalties and the application of anti‑avoidance rules.
Refer to the EY Global Tax News Alert here for details.
United States
On 12 March, the United States Trade Representative announced new investigations under Section 301 of the Trade Act of 1974 into the acts, policies and practices of 60 economies related to the "failure to impose and effectively enforce a ban on the importation of goods produced with forced labour." New Zealand is included within the investigation.
The United States (US) government may, depending on the outcome of the investigation, impose tariff or non-tariff measures targeting products of the subject economies to address any identified burdens on US commerce. Further details are available in an EY Global Tax News Alert here.
EY Global webcasts
- In the Spotlight: How to lead humans through the fear of AI – register here to watch the replay
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
- US Customs and Border Protection details new CAPE process in ACE to administer IEEPA duty refunds; phased rollout planned
- European Commission publishes proposal on the 28th Regime (EU Inc.)
- Tariff turbulence: 5 actions businesses should take now
- Preparing for the rise of e-invoicing and the transformation of the tax audit landscape
- How the ‘side-by-side’ minimum tax accord will reshape global policy
- The Latest on BEPS and Beyond | March 2026
Contact us
Dean Madsen | New Zealand Tax Leader
Ernst & Young, New Zealand
Dean.Madsen@nz.ey.com
Paul Dunne | New Zealand Tax Policy Leader
Ernst & Young, New Zealand
Paul.Dunne@nz.ey.com
Aaron Quintal | Partner, Private Client Services
Ernst & Young, New Zealand
Aaron.Quintal@nz.ey.com
Sarah-Jane Leslie | Senior Manager, Tax Policy
Ernst & Young, New Zealand
Sarah-Jane.Leslie@nz.ey.com