EY Tax Monthly News Update – Edition 4, 2025

EY Tax News Update: Edition 4, 2025

Welcome to the latest edition of EY’s tax news. This edition covers key tax developments for April 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:
  • Mutual transactions of associations (including clubs and societies)
  • Whether an off-market share cancellation is made in lieu of the payment of a dividend
  • Commissioner’s duty of care and management

• Stay on top of new finalised guidance:
  • Interpretation Statements: implications of residential property moving between standard tax rules and mixed-use asset rules; amalgamations; general guidance on partnerships; using the cost method to determine foreign investment fund income; forestry activities registered in the Emissions Trading Scheme
  • Questions We’ve Been Asked: income tax implications of providing short-stay accommodation; amalgamations; income tax treatment of gift cards and products provided as trade rebates or promotions
  • Operational Statement: authority to act for tax agents and others
  • Special Report: GST on accommodation and transportation services supplied through online marketplaces
  • Technical Decision Summaries: disposal of shares following amalgamation; distribution and resettlement of trusts
  • Other items: Product Ruling

• Trust disclosures post-implementation review
• Increased tax compliance work continuing at pace
• Changes to various interest rates
• Other updates, including new participating advisor programme

Government and other updates

• Budget 2025 – what to expect?
• Changes proposed for GST and unincorporated joint ventures
• Economic update

International updates

• OECD/G20 Inclusive Framework
• United Nations negotiating committee of Framework Convention on International Tax Cooperation

EY Global webcasts

• What’s next for BEPS 2.0: how the latest developments impact companies
• EU Omnibus: Charting the path forward for CBAM
• How to manage increasing evidentiary requirements in transfer pricing

EY insights    

• Tax Guides – various tax matters covering over 150 jurisdictions
• New Zealand enacts generic emergency response tax relief measures and other changes
• Winning over New Zealand consumers: Rethinking cost, trust and AI
• The 2025 EY Global Tax Policy and Controversy Outlook
• How a license to lead can transform human potential in an AI world
• The Latest on BEPS and Beyond | April 2025

Current draft consultation items

New finalised guidance

Inland Revenue guidance items finalised since our last update include:

Trust disclosures post-implementation review

Inland Revenue has completed a post-implementation review of the increased disclosure requirements that were introduced for trustees from the 2021–22 income year. Inland Revenue’s Report on the post-implementation review is available here.

Overall, Inland Revenue is of the view that the disclosure regime should be maintained, but has recommended changes to improve future disclosures and reduce compliance costs by:

• Reducing subjectivity – making it simpler to comply by reducing the number of subjective tests in the rules
• Reducing granularity – by removing unnecessary breakdowns of disclosures
• Improving taxpayer experiences – through improving guidance, forms and myIR

A summary of Inland Revenue’s key recommendations can be found in Table 5 of the Report.

A limited number of changes to the trust disclosure requirements have been legislated for already as part of the Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Act 2025 (see EY Tax News Update: Edition 3, 2025).

In terms of the timeframe for other changes, Inland Revenue has largely recommended progressing the recommendations for the 2025 trust tax returns – with some exceptions for recommendations considered to require further work. Among the latter is a recommendation to consider whether small trusts should be exempt from the disclosure rules or have reduced requirements, which Inland Revenue has recommended be considered for the 2026 year.

Increased tax compliance work continuing at pace

An Inland Revenue media release emphasises that increased tax compliance work is continuing at pace, with a noticeable increase in Inland Revenue audit activity as well as a focus on debt collection. In the first half of the financial year (from July - December 2024), Inland Revenue opened 50% more audits than the same time last year.

A range of data is being used by Inland Revenue to inform its compliance work, including data from trusts, the Companies Office, payment service providers data and crypto data. In addition, the hidden economy (including within the construction sector) and electronic sales suppression tools continue to be areas of focus. See the Inland Revenue media release here. Information on Inland Revenue’s “Tax Toolbox” campaign to engage and educate taxpayers in the construction industry is also available here.

Changes to various interest rates

From 8 May 2025, Inland Revenue’s use-of-money interest (UOMI) rate for underpayments of tax will decrease from 10.88% to 9.89%, and the UOMI rate for overpayments of tax will decrease from 4.3% to 3.27%. See the Inland Revenue release here.

In addition, the rate of interest that applies to low-interest employment-related loans for fringe benefit tax purposes has decreased from 8.41% to 7.38%. The new rate applies from the quarter beginning 1 April 2025, with the relevant regulations coming into force on 8 May 2025. See the Income Tax (Fringe Benefit Tax, Interest on Loans) Amendment Regulations 2025 along with the Inland Revenue release here.

Other updates

Other Inland Revenue updates include:

• Inland Revenue has published information on its website regarding the new participating advisor programme. Broadly, under the programme Inland Revenue will recognise certain reviews carried out by approved participating advisors and will appropriately limit their own compliance activities for a taxpayer on the same compliance issues. Certain conditions apply and the initiative is currently limited to reviews of “significant enterprises” (an entity or group with annual turnover of at least $30 million or 50 employees). See Inland Revenue’s website here for details, and get in touch with your usual EY tax advisor if you would like to find out more.
• A new pilot programme aimed at improving Inland Revenue’s debt collection process will see Inland Revenue’s current third-party provider contact approximately 3,000 taxpayers with a tax debt of less than $5,000. See the Inland Revenue releases here and here.
• Inland Revenue has started a digital advertising campaign on common fringe benefit tax errors and will also work directly with some industries such as construction. Refer to Inland Revenue’s website here for more information.

Budget 2025 – what to expect?

New Zealand’s 2025 Budget will be delivered on 22 May. In a pre-Budget speech on 29 April, Finance Minister Nicola Willis indicated that there is unlikely to be any additional or higher rates of taxes on wages, savings, wealth or capital announced as part of the Budget.

Speaking to the media, Minister Willis also indicated that no tax changes for charities will be made as part of the 2025 Budget following the recent consultation on taxation and the not-for-profit sector, but that work in this space is expected to continue.

Other key points from the pre-Budget speech include:

• New spending initiatives will be limited to priority areas such as health, education, law and order and defence
• Expect to see some modest measures to support business growth and some carefully targeted cost of living relief
• A significant reduction in the 2025 Budget operating allowance (the amount of money available for new spending), which has been reduced to $1.3 billion – a $1.1 billion reduction compared to the previous Treasury forecast
• Money freed-up from the Government’s savings drive is likely to be redeployed to supplement new spending in priority areas

You can read the pre-Budget speech on the Beehive website here. Keep an eye out for coverage of any tax-related developments from the 2025 Budget in our next EY Tax News Update.

Changes proposed for GST and unincorporated joint ventures

A government discussion document seeks feedback on proposed changes to the GST rules for joint ventures. The proposals are largely intended to ensure the GST rules are fit for purpose for joint venture arrangements and to minimise compliance costs.

The main proposal is to remove joint ventures from the unincorporated body rules in the GST Act by default, such that a joint venture would not ordinarily be treated as a “person” that must be registered separately for GST purposes. However, the members of a joint venture could still choose to register the joint venture separately. Under the default position, a “flow-through” approach would allow GST registered members of a joint venture to individually account for GST on any supplies made or received in the course of the joint venture activity.

Other related technical and consequential changes are also considered, and draft legislative wording for most of the policy proposals is contained in an Appendix to the document. The discussion document is available here, with submissions due by 16 May.

Economic update

From the Treasury

Treasury has published the Interim Financial Statements of the Government for the eight months ended 28 February 2025. Key figures include:

• Tax revenue of $79.9 billion, which was $0.9 billion (1.1%) higher than forecast. The largest variance was in relation to GST, being $0.6 billion (3.1%) above forecast.
• Operating balance before gains and losses (excluding ACC) deficit of $5 billion, which was $1.6 billion less than the forecast deficit.

Refer to the Treasury media release here for more information.

From Stats NZ

Figures released by Stats NZ show inflation increased slightly to 2.5% in the year to March 2025, but remains within the Reserve Bank’s target range of 1 - 3%. See the Stats NZ release here and related Beehive release here for further information.

EY Global Tax News Alerts are available in relation to the following developments:

• OECD/G20 Inclusive Framework issues statement following plenary meeting – see here
• UN negotiating committee of Framework Convention on International Tax Cooperation releases roadmap and guidelines – see here

What’s next for BEPS 2.0: how the latest developments impact companies – watch on demand here

EU Omnibus: Charting the path forward for CBAM – register to watch the replay here

How to manage increasing evidentiary requirements in transfer pricing – 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
• New Zealand enacts generic emergency response tax relief measures and other changes
• Winning over New Zealand consumers: Rethinking cost, trust and AI
• The 2025 EY Global Tax Policy and Controversy Outlook
• How a license to lead can transform human potential in an AI world
• The Latest on BEPS and Beyond | April 2025

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