EY Tax Monthly News Update – Edition 6, 2025

EY Tax News Update: Edition 6, 2025

Welcome to the latest edition of EY’s tax news. This edition covers key tax developments for June and July 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:
  • Draft 2025 long-term insights briefing
  • Income tax – business activity
• Stay on top of new finalised guidance:
  • Questions We’ve Been Asked: whether a taxpayer can claim a deduction for expenditure on repairing a recently acquired capital asset; whether GST applies to a deposit the seller retains in a cancelled land sale agreement
  • Operational Statements: Commissioner of Inland Revenue’s search powers; section 17B notices; kilometre rates for the business use of vehicles for 2025 income year; square metre rate for the dual use of premises for 2025 income year
  • Determinations: 2025 CPI adjustments to standard-cost amounts for household services
  • Technical Decision Summaries: business restructure; GST – input tax deductions, grants, omitted sale; charitable trust – transfer of assets; application of schedular payment rules
  • Other items: other Determinations and Case Summaries
• Focus on compliance set to continue
• Submissions on taxation and not-for-profit sector consultation 
• Other updates, including regarding Investment Boost 

Government and other updates

• Significant tax legislation may be coming 
• Economic update
• Other updates 

International updates

• Australia
• United States

EY Global webcasts

• How trade and tariff developments impact supply chain and operations

EY insights    

• Tax Guides – various tax matters covering over 150 jurisdictions
• New Zealand Private Capital Monitor 2025
• Canada announces surtax on steel imports, initiates short supply consultations, halts DST collection
• UN releases draft issues notes on the Framework Convention on International Tax Cooperation
• European Parliament approves simplifications to CBAM procedures suggested by European Commission
• How responsible AI can unlock your competitive edge
• What if disruption isn't the challenge, but the chance?
• Sustainability-centric businesses 40% more confident than siloed peers
• The Latest on BEPS and Beyond | July 2025

Draft 2025 long-term insights briefing released for consultation

Inland Revenue, like other government departments, is required to produce a long-term insights briefing (LTIB) once every three years. LTIBs look at long-term trends, risks and opportunities along with possible policy responses. They are developed by departments independently of ministers. As a result, they do not reflect current government policy, nor do they seek to identify immediate actions or make recommendations to current ministers. Instead, the aim is to promote public discussion on key policy issues.

Following consultation on the scope of its 2025 LTIB in late 2024, Inland Revenue has now released its draft 2025 LTIB for consultation, titled Stable bases and flexible rates: New Zealand’s tax system. The draft LTIB examines the implications of rising fiscal pressures on the tax system and suggests changes that could be made to enhance fiscal resilience. It looks at the underlying economic factors that different tax bases can tax and the pros and cons of various tax system design choices.

Key points include:

• New Zealand is facing rising fiscal pressures – including due to an aging population.
• Importance of a flexible tax system – to increase the amount of revenue raised in response to changing expenditure needs if required, while maintaining fairness and efficiency.
• Stable core structure – is important to allow people to plan for the future and avoid imposing unexpected losses or windfall gains. The Draft LTIB considers that basing New Zealand’s tax system on the two main bases of income tax and GST provides a balanced approach.
• Options for increasing flexibility of the income tax base – such as broadening the scope of capital gains taxed or considering a dual income tax model such as in Norway.  
• Increasing GST – is an option but would raise concerns as to how this would impact lower-income households. The Draft LTIB explores potential measures such as offset tax credits to mitigate these effects.
• Alternative tax bases – such as payroll tax, wealth tax and inheritance tax, are considered, along with their potential impacts on equity and efficiency.

The draft LTIB, along with a summary and related documents, is available on Inland Revenue’s website here. Submissions close on 1 September 2025. If you would like further information or assistance with making a submission, please get in touch with your usual EY tax advisor.

Other current draft consultation items 

New finalised guidance

Inland Revenue guidance items finalised since our last update include:

Focus on compliance set to continue

Inland Revenue has outlined how it will use the increased funding allocated to it in Budget 2025. Key points include that Inland Revenue is intending to:

• Further increase audits and debt collection in areas of high risk and/or value
•  Investigate specific sectors such as property, the hidden economy and trusts, and investigate more targeted compliance activity measures
• Make improved use of data and intelligence
• Shift to an automated process to collect data from third parties such as banks
• Increase collection in relation to Small Business Cashflow Scheme loans in default

Inland Revenue also provided highlights from its third quarter results (to 31 March 2025), noting that they have assessed additional tax of $880.8 million from audit activity. The total number of Inland Revenue-initiated liquidations in the March quarter is 67.5% higher than the same quarter last year, and the number of prosecutions initiated during the quarter has more than doubled. Refer to the Inland Revenue media release here for further details.

Submissions on taxation and not-for-profit sector consultation 

Inland Revenue has proactively released submissions received on the Taxation and the not-for-profit sector officials’ issues paper issued for consultation earlier this year, along with a summary of the main themes emerging from the consultation.

Inland Revenue has stated that “all matters discussed in the issues paper are being considered further and could be subject to further consultation.” See Inland Revenue’s Tax Policy website here for more information.

Other updates

Other Inland Revenue updates include:

• Publication of the following in relation to Investment Boost:
  • Commentary on the legislation – see here
  • Information on Inland Revenue’s website – see here
• Increased scrutiny of the horticulture sector – refer to the Inland Revenue media release here
• Relief for farmers and growers impacted by flooding in the Nelson, Tasman, and Marlborough regions – see Inland Revenue’s website here, here and here, and a related Beehive release here  

Significant tax legislation may be coming

A new tax bill may be introduced soon which could contain a raft of significant proposed tax changes. It is possible the bill may include several amendments relating to proposed reforms that have recently been subject to consultation.

Future editions of the EY Tax News Update will cover any key proposals – watch this space.

Economic update

From the Treasury

Treasury has published the Interim Financial Statements of the Government for the eleven months ended 31 May 2025. Key figures include:

• Tax revenue of $111.2 billion, which was $0.6 billion (0.6%) higher than forecast. The largest variance was in relation to corporate tax, being $0.7 billion (4.4%) above forecast.
• Operating balance before gains and losses (excluding ACC) deficit of $7.9 billion, which was $0.2 billion less than the forecast deficit.

Refer to the Treasury media release here for more information.

From Stats NZ

Updates include:

• Gross domestic product increased 0.8% in the March 2025 quarter (following a 0.5% increase in the December 2024 quarter), and the quarterly current account deficit is at $5.5 billion. See the Stats NZ website here and here and related Beehive release here for further information.
• Inflation increased to 2.7% in the 12 months to the June 2025 quarter, up from 2.5% in the previous quarter. See the Stats NZ website here and related Beehive release here.

Other updates

Other updates include:

• The Government has proposed changes to FamilyBoost, including increasing rebates from 25% to 40% of early childhood education costs (to a maximum of $1,560 per quarter), slowing the abatement rate and lifting the threshold for maximum eligible household income to $229,100 per annum. For further details, refer to the Beehive release here and Inland Revenue’s Tax Policy website here. 
• The International Monetary Fund (IMF) published a paper finding that weak productivity growth continues to be problematic for New Zealand – see Monica Petrescu. "New Zealand's Productivity Challenge: New Zealand", Selected Issues Papers 2025, 075 (2025), accessed 23 July 2025, see the IMF website here.
• The Government has released its Q3 Action Plan (see here) which includes a focus on promoting supermarket competition, the cost of housing, the cost of energy and enabling open banking. See the Beehive release here.

Australia  

The Australian Tax Office has:

• Released draft guidance on determining 'debt quantum' in the context of the thin-capitalisation rules, and in relation to public country-by-country reporting exemption applications and registration form – see the EY Global Tax News Alerts here and here for details
• Updated its website guidance on administration of Australia's Pillar Two global and domestic minimum tax rules – see here

United States

The following EY Global Tax News Alerts are available:

• US Treasury Secretary asks Congress to not enact retaliatory tax proposal (see here), and a related EY Global Tax Alert titled G7 issues statement on global minimum taxes (see here)
• Changes to GILTI, FDII and BEAT, among others, included in final reconciliation legislation, but not previously proposed remedy for "unfair foreign taxes" – see here
• Court of International Trade rules tariffs under International Emergency Economic Powers Act unlawful; appeals court temporarily reinstates tariffs as case proceeds – see here
• US increases import tariffs on aluminum and steel – see here
• USTR extends certain exclusions from China Section 301 tariffs – see here
• US sends tariff letters to various countries ahead of the new negotiation deadline of 1 August 2025 – see here  

How trade and tariff developments impact supply chain and operations – 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
• New Zealand Private Capital Monitor 2025
• Canada announces surtax on steel imports, initiates short supply consultations, halts DST collection
• UN releases draft issues notes on the Framework Convention on International Tax Cooperation
• European Parliament approves simplifications to CBAM procedures suggested by European Commission
• How responsible AI can unlock your competitive edge
• What if disruption isn't the challenge, but the chance?
• Sustainability-centric businesses 40% more confident than siloed peers
• The Latest on BEPS and Beyond | July 2025

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