Snippets May 2025

IRD reassessments without notice

On the 29th March 2025, the Taxation (Annual Rates for 2024−25, Emergency Response, and Remedial Measures) Act received Royal assent.

Of note is that the Act includes an amendment to section 89C of the Tax Administration Act 1994 relating to Inland Revenue’s (IRD) ability to amend an assessment without completing the formal disputes process.

The amendment adds a new provision stating that if a “qualifying individual” provides information to IRD relating to their taxable income and then fails to respond within two months to a request from IRD for additional information, IRD is able to amend their tax position without the need for notice.

The provision is aimed at individuals that need to disclose income that is not otherwise reported to IRD, such as a salary or wage earner who also incurs a rental loss. If that person subsequently discloses the rental income to IRD, but then fails to respond to a request for more information, IRD will have the right to amend the tax position.

The change appears to be as a result of frustration from IRD that certain individuals don’t engage and ignore follow up requests. At this stage, it is unclear how this power will be exercised and how frequently, but it does mean requests for more information from IRD should not be ignored.

Australian Budget

With the New Zealand Budget set to be released on 22 May 2025, it is worth looking over the ditch and seeing whether the grass in Australia is greener as a result of their Budget that was released on 25 March 2025.

A tax cut was introduced for individuals. The rate applying to income between AU$18,201 to AU$45,000 will reduce from 16% to 15% from 1 July 2026 and to 14% from 1 July 2027. As a comparison to NZ, it is worth remembering that Australians enjoy a tax-free threshold up to AU$18,200. This equates to an extra AU$268 and then AU$536 extra ‘in the hand’ across the two years.

A change that will be of interest to New Zealand students is the plan to complete a one-off 20 percent cut in existing student loan balances.

For an embattled hospitality sector and beer drinkers, a pause in the indexation of draught beer excise will occur for two years at an estimated cost of $200m.

With a roading and infrastructure spend of AU$17.1B we can only be jealous of the investment that Australia is able to make, throw in a beer and a tax cut and the grass keeps looking greener.