Revenue Minister Simon Watts announced the update on Wednesday, which he said would "sharpen the focus" on growing the economy. Photo: RNZ / Nick Monro
The government is pushing ahead with changes to foreign investment fund rules and fringe benefit tax, and looking to refine Working for Families and Family Boost as part of its refreshed tax and social policy work programme.
Revenue Minister Simon Watts announced the update on Wednesday, which he said would "sharpen the focus" on growing the economy by making New Zealand a more attractive place for capital, talent and small business investment.
"The initial work programme we released last year focused on boosting productivity, bringing in much-needed capital and skills, and streamlining international tax settings. Our refreshed work programme builds on this momentum," Watts said.
"The refreshed work programme is about removing regulatory barriers and delivering a stable, predictable tax environment that directly supports growth and opportunity."
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In March, the government said it was proposing changes to the foreign investment fund (FIF) rules, including the addition of a new method to calculate a person's taxable income under the FIF regime.
Robyn Walker, a tax partner at Deloitte, said at the time the current settings caused problems for many migrants.
"If you're not actually receiving any income then you don't have any cashflow to pay the tax that arises under these methods."
In April, a consultation document was issued on proposed changes to fringe benefit tax, including removing the definition of a "work-related vehicle" which currently cannot be a car and has to be sign-written.
Watts said on Wednesday that the new work programme would include other changes, such as refining and evaluating Investment Boost, and modernising the tax treatment of visitors working in New Zealand, which are included in the Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Bill.
It would also consult on GST issues, and look to simplify and uphold the integrity of the tax system, as well as progressing Inland Revenue compliance work and reduce tax debt.
Watts said it would also look to improve Family Boost, including investigating a possible direct data feed with early childcare centres, and progress Working for Families improvements.
The government has been consulting on changes designed to tackle the problem of Working for Families overpayments, which can land families with debt.
Consultation was beginning on Wednesday on refined thin-capitalisation proposals to encourage investment in infrastructure.
"These changes will help ensure our settings are modern, competitive, and do not inadvertently discourage productive investment," Watts said.
"The government is also committed to making life easier for small businesses. This will include continuing work on simplification of the Fringe Benefit Tax subject to fiscal considerations. We will also be consulting on improvements to the GST regime.
"We are also working with intermediaries to reduce compliance costs and make tax treatment simpler and fairer. Inland Revenue is currently exploring a more flexible approach to income tax payments for sole traders and small businesses, and plans to consult on this in the first part of next year.
"We continue to focus on simplifying the tax system and improving integrity. This includes our ongoing policy work looking at the taxation of charities and not-for-profits, Inland Revenue's compliance programme and the government's ongoing commitment to ensuring that tax legislation remains up to date and fit for purpose.
"We're getting on with targeted, practical reforms. This means listening to stakeholders, removing barriers, and delivering a stable, predictable tax environment that supports growth and opportunity for every New Zealander."
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