Income tax: income, capital/revenue, capital contribution property

GST input tax deductions, taxable activity, taxable supplies, GST registration

This interpretation statement considers what an employee share scheme is, including the exclusions to the definition. The statement then explains when the share scheme taxing date arises and when shares are held by or for the benefit of an employee. It also covers the circumstances when the share scheme taxing date may be deferred. Finally, it addresses how benefits are apportioned when some of the employee’s entitlement arises when they are non-resident.

Income tax and GST input tax deductions: Whether expenditure incurred by the Taxpayer on educational courses, motor vehicle costs, home office costs, power, insurance, rent, advertising, website, eftpos, and stock was deductible.

Output tax deductions for indemnity payment under a deed, shortfall penalties

New legislation

• SL 2024/254: Taxation (Use of Money Interest Rates) Amendment Regulations 2024

Determinations

• FDR 2025/01: Determination under section 91AAO of the Tax Administration Act 1994 that investors in JPM Aggregate Bond-NZD Hedged Dividend Class X Shares may not use the fair dividend rate method to calculate FIF income 
• FDR 2025/02: Determination the fair dividend rate method may not be used to calculate FIF income by investors in the iShares Core Global Aggregate Bond UCITS ETF–NZD hedged (Accumulating) share class

Interpretation statement

• IS 25/03: Income tax – identifying the relevant item of property for depreciation purposes

Case summary

• CSUM 25/04: Commissioner of Inland Revenue v Kaur

Technical decision summary

• TDS 25/01: Sale of leasehold interests in residential and commercial units

2025 determination lists the national standard costs for specified livestock.

The proposed financing arrangement is to fund the refurbishment of a capital asset. The Applicants were two companies that were unable to source finance from traditional bank lending or by way of supplier financing.

This decision is consistent with the outcome in two earlier decisions that interlocutory decisions of the TRA were not amenable to appeal (MJ Wetherill (2004) 21 NZTC 18,924 (CA) and Jiao (2009) 24 NZTC 23,763 (HC)). These cases were applied to conclude a strike out decision did not determine the Taxpayer’s tax challenge. Rather it brought to challenge to an end without addressing the substantive tax issues raised by the challenge. 

Tax Information Bulletin - Vol 37 No 2, March 2025

Commissioner's statement

• Notice of withdrawal: Tax treatment of computer software

Determination

• DET 24/04: Amortisation Rates for Listed Horticultural Plants

Rulings

• BR Prd 24/04: Kiwibank Limited
• BR Prd 24/05: Air New Zealand Limited

Interpretation statements

• IS 24/10: Income tax - Share investments
• IS 25/01: Income tax - deducting costs of travel by a motor vehicle between home and work
• IS 25/02: FBT - travel by motor vehicle between home and work

Case summaries

• CSUM 25/01: Goodricke v Commission of Inland Revenue [2024] NZHC 3639
• CSUM 25/02: Goodricke v Commissioner of Inland Revenue [2024] NZHC 3818 (costs)
• CSUM 25/03: Commissioner of Police v Cheng [2024] NZHC 3242

Technical decision summaries

• TDS 24/21: Accommodation provided to an employee
• TDS 24/22: Transitional residency and cryptoassets
• TDS 24/23: Depreciation loss on asset no longer used
• TDS 24/24: Share scheme taxing update