The NZ Regulatory Board (Regulatory Board) of New Zealand Institute of Chartered Accountants (NZICA) has approved changes to the NZICA Code of Ethics (NZICA Code) that will apply to New Zealand resident members of Chartered Accountants Australia and New Zealand (CA ANZ) and all other practitioners subject to NZICA jurisdiction effective from 1 July 2025 (early adoption permitted).

The changes update the NZICA Code to incorporate recent amendments made by the International Ethics Standards Board for Accountants (IESBA) to the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) as reflected in Final Pronouncement Revisions to the Code Addressing Tax Planning and Related Services, published by the International Federation of Accountants (IFAC) in April 2024.

Overview of changes

The changes – consistent with IESBA’s tax planning project - add two new sections to the NZICA Code:

• Section 280 – for members in business (MIB) who perform tax planning activities (or related activities).
• Section 380 – for members in public practice (MIPP) who provide tax planning services (or related services).

Tax planning activities/services are described as advisory activities/services designed to assist an employing organisation/client in planning or structuring its affairs in a tax-efficient manner.

A related activity (service) is one that is based on or linked to a tax planning arrangement developed by a third-party provider (and/or a client).  In such circumstances, proposed sections will apply to the underlying tax planning arrangement.

Where a member’s activities/services are captured by the new sections, the member will be subject to certain new prescriptive requirements – in addition to complying with other applicable provisions of the NZICA Code – including: 

• obtaining an understanding of anti-avoidance laws and regulations and advising the employing organisation/client to comply with them.
• obtaining an understanding of the nature of the engagement.
• recommending or otherwise advising on a tax planning arrangement to an employing organisation/client only if the member has determined that there is a credible basis in laws and regulations for the arrangement.
• re-assessing the validity of a credible basis in laws and regulations of a tax planning arrangement, if the member subsequently becomes aware of circumstances that might impact their previous determination of that basis.
• considering the reputational, commercial and wider economic consequences that could arise from the way stakeholders might view the tax planning arrangement (“stand-back” test).
• informing the employing organisation/client that the member does not recommend a tax planning arrangement and explaining the basis for their conclusion, if, having performed the stand-back test, the member decides not to recommend or otherwise advise on a tax planning arrangement that the employing organisation/client would like to pursue.
• discussing any uncertainty as to whether a tax planning arrangement will comply with relevant tax laws and regulations with the employing organisation/client.
• explaining the basis on which the member recommended or otherwise advised on a tax planning arrangement to the employing organisation/client.
• where the member does not consider that a tax planning arrangement that their immediate superior/client would like to pursue has a credible basis, taking certain actions including considering whether there is a need to withdraw from the engagement in certain circumstances.

The sections also include guidance material regarding tax planning arrangements involving multiple jurisdictions, potential threats to the fundamental principles arising from providing a tax planning activity/service and documentation.

There are also conforming amendments to section 321:  second opinions.

In addition, the Regulatory Board has made limited NZ specific amendments to the IESBA amendments, primarily to assist members with interpretation of the amendments in the NZ context, including:

• a definition of “credible basis” that draws on an existing tax law concept that members routinely use as a standard to assess the appropriateness of their tax advice and for which there is existing case law and Inland Revenue guidance material to assist members to apply the standard.
• a definition of “tax planning arrangement” to assist with member interpretation of the proposed definition of “credible basis”.
• guidance material to alert members in public practice that technical and professional standards and laws and regulations might have more prescriptive requirements regarding the withdrawal of services and documentation.
• adopting the same effective date as IESBA but articulate it differently i.e. on or after 1 July 2025 (rather than commencing after 30 June 2025) to be consistent with existing formats of the NZICA Code.

Members should refer to the Invitation to Comment (ITC) (see below) for more details of how these amendments impact the NZICA Code.

An overview of limited technical and editorial amendments made in response to submissions received (including changes to the NZ definition of credible basis) can be found in the Management Report (see below)

Conforming amendments have also been approved to TG-1: Tax Compliance and EG-2: Ethics in Tax practice  effective from 1 July 2025 (early adoption permitted)

Submissions / approval process