The Taxation (Annual Rates for 2022-23, Platform Economy, and Remedial Matters) Bill (No 2) (the “Bill”) was reported back from the Finance and Expenditure Committee (“FEC”) on 2 March with a number of recommendations. (You can read KPMG’s taxmail on the Bill as introduced here.) The reported back Bill, the FEC’s report and Officials’ Report on submissions are available here.

(Note: The Government has indicated that it will introduce some additional measures to the Bill, via Supplementary Order Paper, as part of its tax response to the effects of Cyclone Gabrielle. We expect these changes will be introduced in the upcoming Committee stage.)

Key FEC recommendations

We summarise the main recommendations below. 

GST and the platform economy

The Bill proposes that electronic marketplace operators facilitating short-term accommodation, ride-sharing/hailing, and food and beverage delivery services will become responsible for collecting GST on services sold through their marketplaces. This will be the case regardless of the GST status of the underlying service provider. 

This proposal will proceed with some adjustments, including:

  • In response to a KPMG submission, Inland Revenue will provide the GST registration details of underlying suppliers to the electronic marketplace operators to ensure the “flat-rate credit scheme” (which provides a GST input tax credit) works as intended.   
  • Underlying suppliers with sales of NZ$500,000 or more in any 12-month period through electronic marketplaces will be able to unilaterally opt-out of these rules and continue paying GST (and claiming input credits) directly. The Bill as introduced required agreement with the marketplace operator.
  • The opt-out threshold for large-scale accommodation providers will apply if they have 2,000 or more nights per year available on at least one electronic marketplace. This may create issues if multiple platforms are used and the number of nights offered on some platforms is less than 2,000. A better option in our view, would have been to apply the nights threshold across all marketplaces. The opt-out can also be applied on an aggregate basis – that is, at a group level if there are multiple group entities providing accommodation. This is a welcome change.

In a minority view, the National Party has opposed the proposal on the basis that it amounts to a “new tax on digital services” which “will have the effect of worsening the cost of living crisis by increasing prices on food, transport, and accommodation”. The National Party has indicated that it will reverse the proposal. Given the 1 April 2024 application date, this leaves platforms and businesses in a very difficult position of when and how to get ready for a change that may be repealed before it comes into effect depending on the outcome of the upcoming election.

Information reporting requirements for platforms

The FEC has recommend the application date of the OECD’s model information reporting framework for digital platform operators be split.

Platform operators that facilitate the provision of short-term accommodation and personal services will have information collection obligations commerce from 1 January 2024 (for reporting to Inland Revenue in early 2025), as originally proposed.

Platform operators that facilitate the sale of goods and vehicle rentals will be brought into the reporting framework at a future date, by an Order in Council within three years of the Bill being passed. This is to align New Zealand’s implementation of these extended reporting rules with that of other countries, namely in the EU. 

Cross-border worker tax reforms

The Bill includes a number of proposals to clarify the requirements for non-resident employers who may have employees in New Zealand:

  • A “safe harbour” from NZ employer tax obligations if certain requirements are met.
  • A 60-day grace period for complying with NZ employer tax obligations if domestic law or tax treaty exemptions cease to apply.
  • Transferring the FBT and employer superannuation contribution tax (“ESCT”) requirements to employees.
  • Taxing foreign superannuation under PAYE rather than FBT.

The key recommended changes include:

  • The 60-day grace period will apply in more cases, including where the ordinary time frame for compliance is unable to be met. In a welcome move, FEC has accepted submissions on the need for Inland Revenue to provide greater guidance on how the grace period will work in practice. (In particular, KPMG was concerned around the need for non-resident employers to take “reasonable measures” to utilise the grace period and how this would practically be interpreted by the Commissioner.)
  • In response to submissions, including by KPMG, removing the requirement for non-resident employers to communicate to each employee that they must meet their own NZ tax obligations. (This requirement created practical issues where employees of different group entities may be present in NZ.)   
  • Non-resident employers will remain primarily liable for FBT and ESCT and will be required to provide employees with information to help them to comply. FBT on benefits will be payable at marginal rates rather than the top FBT rate. (These changes were in response to concerns raised around the ability for employees to fund the NZ tax cost.)
  • Employers will retain the option to pay FBT rather than PAYE on foreign superannuation contributions.

The requirement for NZ payers of non-resident contractors to report information about the contractor, contract payments and non-residence contractors’ withholding tax (“NRCT”) has been removed from the Bill, pending further consultation. We welcome the FEC hitting “pause” on the reporting rules to ensure the requirements will be workable and not overly onerous. The proposal allowing New Zealand employers to apply the domestic law NRCT exemptions as if they were a “single payer” have also been removed from the Bill.  

Dual residence company changes

The FEC has recommended a number of changes to the integrity measures accompanying the dual residence company changes, including:

  • The intercompany dividend exemption will continue to apply to dividends paid to an Australian dual resident company.
  • Allowing imputation credits to be attached retrospectively to dividends arising as a result of the application of the integrity measures.
  • The trigger event for application of NZ’s corporate migration tax rules will be the earlier of when tax relief as a result of DTA non-residence is actually claimed or 2 years following the receipt of tax authority confirmation of DTA non-residence.

The changes, particularly relating to the triggers for application of the corporate migration tax rules when a company becomes DTA non-resident, are welcome.  

Bright-line test remedials

KPMG made submissions on a number of remedial items to ensure the “rollover relief” rules from the residential bright-line test operate as intended.  We were pleased to see that these submissions have largely been accepted (with application to transfers on or after 1 April 2022), including:

  • Ensuring rollover relief operates as intended for inherited property that a person subsequently settles on a family trust. In the absence of this change, a family trust holding the property would be subject to the bright-line test even though the settlor would not if they retained ownership of the property.
  • A family trust will no longer be disqualified from rollover relief due to having not-for-profit beneficiaries other than a NZ registered charity.  Many family trusts have a standard clause in their trust deeds permitting distributions to a wide range of charities and not-for-profits (e.g. clubs and societies) whether in NZ or elsewhere, which meant that rollover relief was not available.  

FBT exemption for employer subsidised public transport

Despite attracting widespread media attention and submissions (over 400 submissions were received largely from a Cycling Action Network campaign), the FEC has declined to extend the FBT exemption to other forms of “environmentally friendlier” transport such as bicycles, e-bikes, and scooters.

This appears to be on the basis that the exemption in the Bill aligns the FBT treatment of employer subsidised public transport fares with employer provided car parks. There is no such mismatch in the FBT treatment of other forms of transport or in the treatment of reimbursements for travel costs.  

The Bill does extend the FBT exemption to support provided for impaired persons who are unable to use public transport and are supported by the Government’s Total Mobility scheme. 


  • The FEC largely rejected various submissions to ease some of the criteria for application of the Build-to-Rent (“BTR”) exemption from the residential interest limitation rules (such as the need to offer a 10-year tenancy and personalisation policies). However, the FEC has clarified that BTR land can be held under a joint ownership structure and removed the requirement for BTR land to be “contiguous land”.
  • The FEC has also made a number of changes to the “non-active trust” definition, including to clarify that receipt solely of “excluded income” (such as tax paid income from a PIE fund) does not result in the loss of non-active status and to increase the allowable bank changes and administration costs to $1,500. (A non-active trust is not required to file a trust disclosure).
  • In a welcome administrative change, members of consolidated imputation groups will no longer have to file individual "nil" imputation returns (from the 2021/22 year). Officials have also suggested rules for dealing with imputation balances where a company leaves a consolidated group.