On March 14, 2024, the New Zealand Inland Revenue released Amendment Paper No. 20 outlining proposed amendments to the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill.

The proposed changes are as follows:

  • Reinforce the ability to claim interest deductions for residential investments, allowing an 80% deduction from 1 April 2024 to 31 March 2025. The provisions also propose to enforce a full 100% deduction from 1 April 2025. The existing plan proposes reducing deductions to 25% from 1 April 2024 and eliminating them from 1 April 2025;
  • Replace the existing 10-year, 5-year new build, and 5-year bright-line tests with a 2-year bright-line test for taxing income from disposals of residential land;
  • Eliminate depreciation deductions for industrial and commercial buildings with a useful life of 50 years or longer.
  • To prevent overreach, a valuation rule applies when someone disposes of trading stock below market value. This rule deems the income derived as the market value of the stock on the disposal date. This valuation rule only applies in instances such as:
    • When trading stock is sold to an associated person,
    • When a person sells stock to themselves for personal use or consumption,
    • When stock is not sold in the course of conducting business to generate income or excluded income, or a combination of both.
  • In accordance with the  Gaming Duties Act 1971, a provision of a new gaming duty or offshore gambling duty at 12% is proposed. This duty applies to GST-registered individuals outside New Zealand who provide remote gambling services to New Zealand residents.
  • Implementing a transitional regulation enabling electronic marketplace operators to exclude contracts for short-stay or visitor accommodation made before 1 April 2024
  • Provide clarification of the proposed exemption from the double tax agreement (DTA) source rule for technical services fees in cases where the connection of the income to New Zealand is insubstantial. This involves expanding the scope of “technical services fees” to include “fees for technical, management, or similar services” to ensure that this broader fee category is exempt from the DTA source rule.