Tax Updates: 16 June 2025

Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion on any national or international tax issues, please contact Richard via email at richard@gilshep.co.nz.

Update to various annual rates and other Determinations

Inland Revenue has just published the following updates to various annual rates you can use for your clients in certain situations:

OS 19/03 (CPI 2025): “2025 CPI adjustment to Operational Statement OS 19/03: Square metre rate for the dual use of premises”

This Operational Statement (OS) operates in tandem with section DB 18AA of the Income Tax Act 2007 (ITA07), which allows taxpayers to use a simplified method for calculating deductions for premises used for both business and personal purposes. So instead of having to keep records of all the expenses that relate to your home, for example, you can calculate your home office claim using the formula (total premise costs × business proportion) + (business square metres × square metre rate), where total premise costs are those individualised costs like rent, mortgage interest and rates. The square metre rate for the 2025 income year (1 April 2024 to 31 March 2025) is set at $55.60.

DET 09/02 (CPI 2025): “2025 CPI Adjustment for Determination DET 09/02: Standard-cost household service for childcare providers”

Determination (DET) 09/02 sets out the standard-cost household service that has been provided as childcare services by taxpayers, who are natural persons, in their own domestic accommodation. It also sets out the components of expenditure that are generally incurred in the provision of the standard-cost household service by these taxpayers. Once again, the basis for the initial publication of the Determination is a tax simplification measure, whereby taxpayers who provide childcare services in their home, for which they are paid an income amount, can use the standard-cost method to calculate their deduction rather than using an actual cost calculation. When used, the taxpayer is only required to report income on their tax return, to the extent the amount received exceeds the deduction calculated. The 2025 update provides for an hourly standard cost per child of $4.56 for the 2025 income year (1 April 2024 to 31 March 2025), with the annual fixed administration and record-keeping standard cost set at $446.

DET 19/02 (CPI 2025): “2025 CPI adjustment to DET 19/02: Short-stay accommodation”

This Determination (DET 19/02) sets standard costs that can be treated as expenditure incurred in deriving income from providing a short-stay accommodation service. If a taxpayer chooses to use the standard costs, income from providing the short-stay accommodation service will be exempt up to the amount of those costs. Income from providing the accommodation will only need to be returned to the extent it exceeds the standard costs. Any additional costs related to providing the accommodation cannot be deducted if they relate to an item covered by the standard costs. The 2025 update provides for a daily standard cost of $63.00 for each guest for an owned dwelling, and $57.00 for each guest in a rented dwelling.

DET 19/01 (CPI 2025): “2025 CPI adjustment to DET 19/01: Household boarding service providers”

DET 19/01 was initially published to target taxpayers who provide private boarding services in their home, if they have no more than four boarders at any time during the income year. The purpose of the Determination was to set the standard costs that can be treated as expenditure incurred in deriving income from providing the boarding accommodation. As with the previous two Determinations, if a taxpayer chooses to use the standard costs, income from providing the private boarding service will be exempt up to the amount of those costs. Income from providing the private boarding service will only need to be returned to the extent it exceeds the standard costs. The 2025 update provides for a weekly standard cost (per boarder) for the 2025 income year (1 April 2024 to 31 March 2025) of $237.00.

DET 25/03: “Determination of amount of a particular payment (being per diem allowances paid in the screen production industry) that shall be regarded as expenditure incurred relating to those payments”

Unlike the previous four releases, DET 25/03 is not an annual update, and it has application to payments made on or after 1 July 2025.

The screen production industry pays per diem allowances to resident and non-resident contractors and resident and non-resident entertainers (contractor/entertainer) working on screen productions in New Zealand (NZ). These allowances are to cover the additional costs of food as well as other minor incidental expenses incurred in NZ by the contractor/entertainer while they are working away from their town of normal residence. This Determination sets out the amount regarded as expenditure incurred in the production of particular schedular payments when those payments are per diem allowances paid to contractors/entertainers working in the screen production industry in NZ. The Determination provides that where any resident or non-resident contractor, or resident or non-resident entertainer receives a per diem allowance in relation to services provided to a screen production while working away from their town of normal residence and that allowance is a schedular payment, the sum of $100 per day shall be regarded as expenditure incurred in the production of the payment. If the total amount of the payment is less than $100 per day, the total amount of the payment shall be regarded as expenditure incurred in the production of the payment. Only to the extent that the per diem payment exceeds $100, will the payer be required to deduct tax from the excess.

DET 25/02: “Determination of expenditure incurred relating to payments made by New Zealand Clinical Research to volunteers”

The final Determination recently released by IR has application for the period 1 January 2025 onwards and applies to payments made by NZ Clinical Research Group (NZCR) to people who volunteer to participate in clinical medical trials run by NZCR. It provides that when any NZCR volunteer receives a schedular payment for providing services to NZCR in carrying out any NZCR clinical trial, that payment, up to a maximum of $150 per trip, shall be regarded as being a reimbursement payment for actual expenditure incurred in undertaking that activity. If, however, the volunteer receives any additional reimbursement (in addition to the amount received from NZCR) for expenditure they have incurred, the amount exempted under the Determination shall be reduced by that additional reimbursement. Any payment a NZCR volunteer receives for providing services to NZCR in carrying out any NZCR clinical trial up to and including $150 is exempt income. Any amount received more than $150 is subject to withholding tax.

This article was originally published through the ‘A Week In Review’ newsletter. If you would like to receive Richard’s tax updates every Monday morning, you can subscribe here.