Business and Tax Updates June 2025: IBBZ Accounting

Summary:

Thank you for your continued trust in us.

With the new tax year underway, now is an ideal time to review your financial affairs, complete any outstanding records, and evaluate your current tax position. Taking a proactive approach early can improve outcomes and help mitigate compliance risks throughout the year.

At IBBZ Accounting, we are committed to delivering expert guidance and tailored solutions that support both your personal and business financial goals.

We encourage you to take this opportunity to ensure your records are up to date, obligations are met, and planning is in place for the year ahead. As always, we are here to support you at every step.

Thank you for your continued trust in our team.

Key Business Updates

1. March GDP Beats Forecasts, Signals Gradual Recovery

New Zealand’s economy grew 0.8% in the March 2025 quarter—surpassing both market (0.7%) and RBNZ (0.4%) forecasts—marking the strongest growth since mid-2023. The rebound was driven by manufacturing, business services, and household spending, though some sectors like media and telecommunications declined. With annual GDP still 0.7% lower, the recovery remains uneven. The stronger result supports the Reserve Bank’s cautious stance, with major banks now expecting no further OCR cuts at the July review.

2. Middle East Conflict May Impact Fuel Prices, Inflation, and KiwiSaver

Following U.S. strikes on Iranian nuclear facilities, global markets are on alert amid fears of retaliation and possible disruption to oil shipments through the Strait of Hormuz—a key global supply route. For New Zealand, which imports all its fuel, this could lead to a sharp rise in petrol prices and broader inflationary pressure due to higher transport and goods costs. Financial markets have already shown early signs of volatility, and KiwiSaver balances may fluctuate in the short term. The Government has advised New Zealanders in the region to leave while commercial flights remain available and has deployed an aircraft for evacuation support. The situation remains uncertain, and the economic impact will depend on how tensions evolve in the coming weeks.

3. Rising Butter Prices Amid Record High Primary Exports

New Zealand’s primary exports are headed for a record nearly NZ $60 billion in the year ending 30 June 2025—driven by a 16 % surge in dairy export earnings to approximately NZ $27 billion. This boom in global demand has pushed domestic butter prices up over 60 % year on year. For SMEs in bakeries, cafés, and artisanal food production, these elevated input costs are squeezing margins. Many are forced to renegotiate supply contracts, increase retail prices, or explore imported substitutes. Given the strong overseas appetite for NZ dairy, there’s also an opportunity for producers to market premium butter products at a higher price point—albeit with sound cost management strategies in place.

4. Launch of Invest New Zealand

A new government agency, Invest New Zealand, has been established to attract international investment, particularly in innovation and tech. While primarily aimed at large-scale investment, small businesses with scalable products or services may benefit through partnerships, grants, or future export connections. Entrepreneurs in high-growth sectors such as technology, manufacturing, and services should stay informed on programmes that emerge from this initiative. 

5. Digital Nomad Visa & Procurement Reforms

The government has announced a new digital nomad visa, allowing overseas remote workers to stay in New Zealand for up to nine months, untaxed for the first 90 days. This could boost demand in local hospitality, co-working, and tourism sectors. At the same time, procurement rules are being simplified—removing certain wage and environmental criteria—making it potentially easier for small businesses to win government contracts. This opens the door for SMEs to compete more effectively but may also increase competitive bidding.

6. Construction Sector Delays and Legal Disputes

Major infrastructure projects, such as the Puhoi–Warkworth motorway and the New Zealand International Convention Centre, are facing cost overruns and legal disputes involving key contractors like Fletcher Building. These delays may impact subcontractors, suppliers, and small businesses tied to construction. Business owners in affected industries should monitor project developments, assess exposure, and protect their cash flow by tightening payment terms and diversifying customer bases.

Important Tax Updates

1. Reminder: Income Tax Filing Deadline – 7 July 2025

A reminder that the standard due date for filing your individual income tax return for the year ended 31 March 2025 is 7 July 2025, unless you have an extension of time (EOT) through a registered tax agent. If you do have EOT, your filing deadline is extended until 31 March 2026. Please ensure all necessary information is submitted in time to avoid late filing penalties. If you’re unsure whether you have an EOT in place, or need assistance preparing your return, feel free to contact us.

2. Kilometre rates for the business use of vehicles for the 2025 income year

The Tier One rate is a combination of your vehicle's fixed and running costs. Use it for the business portion of the first 14,000 kilometres travelled by the vehicle in an income year. This includes private use travel.
The Tier Two rate is for running costs only. Use it for the business portion of any travel over 14,000 kilometres in an income year.

3. New IRD Determination on Per-Diem Allowances in Screen Production Industry

Inland Revenue has issued Determination DET 25/03, effective from 1 July 2025, clarifying the tax treatment of per-diem allowances paid to contractors and entertainers working away from home in New Zealand’s screen production industry. Under this determination, up to $100 per day may be treated as exempt income provided no additional goods or services (such as meals or accommodation) are supplied to the worker by the payer. Any amount exceeding this threshold will be subject to PAYE withholding. If the full $100 per diem is paid without other benefits, no tax deduction is required. Production companies and contractors should ensure payroll systems are updated to reflect this treatment from the effective date.

4. Consultation on Overseas-based Student Loan Borrowers

Inland Revenue has opened consultation on PUB00497, titled “Student Loans – Overseas borrowers and their obligations,” to clarify when a borrower is classified as a New Zealand–based or overseas-based borrower, impacting interest accrual and repayment obligations. The draft interpretation statement outlines factors affecting a borrower’s residency status—such as employment, study, or volunteering overseas—and the associated interest rates: 4.9% standard interest and 8.9% late payment interest for 2025–26. Other measures include allowing a nominated person and setting up a temporary repayment suspension (up to 12 months) for borrowers temporarily abroad. Submissions are invited through 18 July 2025, and IRD seeks feedback on improving clarity and administrative processes.