Global Daily Tax News, New Zealand Updates Guidance On Shortfall Penalties, (Sep 2, 2025)

New Zealand's Inland Revenue Department has launched a consultation on newly updated and replaced interpretation statements on the shortfall penalties for not taking reasonable case, taking an unacceptable tax position, and gross carelessness.

The IRD said: "The existing items are still technically correct but are being updated for a number of legislative changes and new case law. Examples have also been updated and additional examples provided."

Guidance on the "tax position" and "tax shortfall" requirements relevant to all shortfall penalties has been included in a new separate interpretation statement, as has the guidance on reductions and other matters common to all shortfall penalties. These matters were previously discussed (in varying detail) in each of the existing interpretation statements.

The guidance has been updated to reflect:

• legislative amendments prescribing the the circumstances in which a taxpayer who uses a tax agent will be treated as having taken reasonable care; and

• the removal of GST and withholding-type taxes from the scope of the unacceptable tax position shortfall penalty.