Chartered Accountants Australia and New Zealand (CA ANZ) has welcomed the Government’s push to simplify compliance through the Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Bill. We support the Bill’s broad intent to modernise tax administration, reduce compliance costs, and align rules with modern business practice.

However, CA ANZ cautions that several proposals need refinement to ensure the Bill delivers genuine simplification in practice, achieving clarity, fairness, and flexibility rather than introducing further uncertainty or administrative burden.

Tax treatment of visitors to New Zealand

CA ANZ supports the introduction of a new framework for taxing non-resident visitors (digital nomads), an important update reflecting global mobility and remote work trends. The changes clarify that a non-resident visitor’s presence in New Zealand on its own does not create a fixed establishment for an offshore enterprise. The income derived by the non-resident visitor will additionally be exempt if the services were performed for a non-resident. The income must be subject to tax in the non-resident visitor’s home country.

However, CA ANZ urges clearer guidance on what constitutes “work requiring physical presence in New Zealand” to avoid inconsistent interpretation. It also recommends aligning the tax start date with immigration settings to streamline introduction, and encourages Inland Revenue and Immigration NZ to jointly measure the regime’s success using real-world data on visitor stays and remote-work patterns.

Employee share schemes

CA ANZ does not support the proposed deferral regime for employee share schemes (ESS) in its current form, warning that the design adds unnecessary complexity and fails to resolve key liquidity and valuation challenges.

The submission recommends:

• A realisation-based or employee-elected taxing point, ensuring employees are taxed when they actually receive cash proceeds, not when shares vest.
• Removal of dividend payments as a taxing trigger, since dividends do not necessarily create liquidity.
• Extending the regime to all companies, not just unlisted entities, to enhance fairness and flexibility.
• Employee-level choice, so individuals who bear the tax liability can decide whether to defer. As the proposed regime only defers the taxing date, employees should have the choice to defer even if this means accepting the likelihood of a higher tax amount later. This approach would respect individual circumstances and ensure that the party exposed to the tax liability controls the timing of that liability.

CA ANZ also opposes the proposed change to section CE 7B, which would tax employees before they beneficially own the shares, and the proposed change to employer deduction timing (section DV 27). Both are seen as unnecessary disruptions to a framework that currently works well in practice.

Overall, CA ANZ argues for targeted amendments rather than wholesale reform, retaining the clarity and balance established under the 2018 ESS regime.

Trust disclosure rules

CA ANZ supports repealing the trust disclosure provisions in sections 59BA and 59BAB of the Tax Administration Act 1994, which have imposed significant compliance costs on small family trusts. However, it strongly recommends that Inland Revenue does not replicate these rules administratively under general information-gathering powers.

By 2026–27, Inland Revenue will already have five years of comprehensive trust data. CA ANZ considers this sufficient for monitoring purposes and urges that any ongoing collection be proportionate, purpose-driven, and privacy-conscious.

It further recommends revising the Financial Statements (Domestic Trusts) Order 2022 to ensure the reporting obligations of small family trusts — most of which earn under $180,000 a year — are fair, practical, and consistent with their scale.

Retention of section 17GB

CA ANZ opposes the proposed repeal of section 17GB of the Tax Administration Act, which currently allows Inland Revenue to collect data for tax-policy development. Retaining this power, with safeguards for relevance, proportionality, and privacy, is essential for evidence-based policy design. The submission calls for continued use of the Generic Tax Policy Process to ensure appropriate consultation and transparency.

Other measures supported

CA ANZ supports proposals that enhance administrative efficiency and taxpayer certainty, including:

• Information sharing by Ministerial agreement, provided privacy and transparency safeguards remain explicit.
• Exemption of residential sales of excess electricity, which should be extended to trustees of family trusts that own the home.
• Power for the Commissioner to set key tax rates (such as use-of-money interest and deemed rate of return) via determination. However, we recommend that the methodology for the setting of these rates be reviewed, querying the appropriateness of various fixed margin adjustments included in the relevant formulae. 

CA ANZ’s submissions on GST and unincorporated joint ventures and the FIF (including the realisation-based method (RAM)) are discussed in separate articles.