The 2024/25 Tax and Social Policy Work Programme outlines the New Zealand Government’s priorities for improving tax and social policy systems. The focus is on fostering economic growth, maintaining tax integrity, modernising tax processes, and addressing international tax challenges.
Work Programme Overview
Overarching Goals
- Simplify tax systems and reduce compliance costs.
- Address integrity risks to prevent tax avoidance.
- Strengthen fiscal sustainability for economic recovery.
- Maintain transparency through public engagement in tax policy development.
Main Workstreams
1. Economic Growth and Productivity
The Government aims to support a resilient economy by reducing tax-related biases and encouraging investment in skills and productivity.
Key projects include:
- Improving compliance processes for small businesses.
- Reviewing Fringe Benefit Tax (FBT) rules.
- Updating the Foreign Investment Fund (FIF) tax framework.
- Supporting digital tax administration for intermediaries.
- Simplifying tax compliance for Māori authorities.
2. Integrity of the Tax System
This workstream focuses on preventing tax evasion and maintaining trust in the system.
Key projects include:
- Implementing the Crypto-asset Reporting Framework.
- Reviewing the treatment of software development expenses.
- Clarifying rules for banks and deposit takers under Portfolio Investment Entities (PIEs).
- Enhancing compliance work to reduce tax debt.
3. Modernising the Tax System
The Government seeks to adapt the tax system to evolving business practices and technologies.
Key initiatives:
- Exempting the New Zealand Superannuation Fund from income tax.
- Expanding the Commissioner’s authority to collect policy-relevant information.
- Simplifying GST rules for joint ventures.
- Conducting remedial work to address emerging challenges.
4. Strengthening International Connections
New Zealand remains committed to international tax obligations as an OECD member.
Key initiatives:
- Simplifying tax rules for non-resident contractors.
- Negotiating updates to double tax agreements (DTAs).
- Addressing challenges posed by the digital economy (OECD Pillar 1 and Pillar 2).
- Adjusting KiwiSaver rules for inwards pension transfers.
5. Social Policy Enhancements
The tax system supports social policy objectives, including income support delivery and work incentives.
Key initiatives:
- Improving FamilyBoost measures for families.
- Simplifying KiwiSaver opt-in processes for children under 16.
- Reviewing policy options for student loan borrowers.
6. Other Agency Work
Collaboration with other government agencies ensures alignment with broader national priorities.
Key projects:
- Sharing information with MBIE.
- Supporting responses to organised crime.
- Treaty of Waitangi settlement processes.
Key Legislation Updates
The Taxation (Annual Rates for 2024-25, Emergency Response, and Remedial Measures) Bill includes significant updates across workstreams, such as:
- Threshold changes for employee share schemes.
- Simplifications for Approved Issuer Levy reporting.
- Policy adjustments for charities and not-for-profits.
Why This Matters
This work programme reflects the Government’s commitment to a fair, transparent, and efficient tax system. Businesses and individuals should stay informed about these updates to ensure compliance and take advantage of new opportunities.
The 2024/25 Tax and Social Policy Work Programme demonstrates New Zealand’s focus on modernising its tax system, fostering economic growth, and enhancing social outcomes. For more insights and tailored advice, contact Black Arrow Business Studio—your partner in navigating tax complexities.
Source: IRD
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