Business and Tax Updates October 2025: IBBZ Accounting

Summary:

Spring is in full bloom, and with daylight saving now underway, it’s the perfect time to refresh and refocus on your financial goals. As we head into the final quarter of the year, it’s a good time to review your progress, ensuring your GST, payroll, provisional tax and year-to-date financials are on track. Staying proactive now will help you finish the year smoothly and confidently.

October has also brought several key updates from Inland Revenue, Immigration NZ, and other regulatory bodies. In this edition, we highlight the important tax, and compliance changes you should be aware of to stay informed and well-prepared for the months ahead.

At IBBZ Accounting, we are committed to helping you stay compliant and plan with confidence. Our team is always here to support you throughout the financial year.

Thank you for your continued trust in our services.

Key Business Updates

1. OCR Cuts and Monetary Easing

The RBNZ has made a 50 basis point cut to the OCR, bringing it down to 2.50%. The previous cut in August 2025 lowered the OCR from 3.25% to 3.00%. The RBNZ has signalled that further cuts are possible, depending on inflation and economic growth dynamics.

Positive impact:

• Lower interest rates provide relief for those on variable loans or refixing fixed rates, helping to ease cash flow pressure.

• Business may be encouraged to expand operating, upgrade equipment or hire more staff.

• Households more likely to borrow and spend, lifting demand for goods and services.

• A lower OCR usually weakens the NZD, making exports more competitive overseas.

Risk factors:

• A weaker NZD raises the cost of imports such as fuel, raw materials and equipment.

• If demand doesn’t rise enough, businesses may still face squeezed profit margins.

• A big cut often signals weak economic conditions, so businesses should remain cautious about over-expansion.

In summary:

A lower OCR reduces financing costs and can stimulate demand, but it also raises import costs and reflects economic fragility. Businesses need to balance growth with risk management. 

2. Immigration Update – Expansion of Skilled Occupation List

Immigration NZ will expand the Skilled Occupation List under the Accredited Employer Work Visa (AEWV) from 3 November 2025, adding 87 new roles across health, technology, trades, and professional services. The new National Occupation List (NOL) replaces the old ANZSCO codes and will make it easier for employers to sponsor overseas staff.

What It Means for Businesses:

• Easier access to skilled workers: A wider pool of eligible occupations helps address staff shortages.

• Longer visa terms: Many roles will qualify for up to five-year work visas improving workforce stability.

• Simplified process: Job checks will move to the NOL system, streamlining AEWV applications.

• Ongoing compliance: Employer Accreditation, fair-pay standards and NZ worker recruitment checks still apply.

Important Tax Updates

1. Capital Gains Tax Proposal – Labour Party’s Announcement Ahead of 2026 Election

The Labour Party has announced a new Capital Gains Tax (CGT) proposal as part of its 2026 election campaign. According to their release on 28 October 2025, Labour plans to introduce a targeted CGT aimed at growing the economy and funding initiatives such as free doctor visits.

The proposal would apply to both residential and commercial properties, expanding beyond the existing Bright-Line Test that currently covers only residential investment properties. The introduction date is proposed as 1 July 2027, with a tax rate of 28% on any gains made after that date.

A property valuation would likely be required as at 1 July 2027 to determine each property’s cost base for calculating taxable gains. For example, if a property purchased in 2000 for $400,000 is valued at $1.5 million on 1 July 2027 and later sold for $2 million, only the $500,000 gain made after the valuation date would be taxed at 28%.

Although the proposal has attracted support from some tax experts for providing greater clarity and fairness, its implementation will depend on Labour forming the next government. They are not currently in power, and this remains a policy proposal rather than legislation.

The Labour Party is expected to release further details outlining how the proposed tax would operate and how the revenue generated would be allocated, including funding for free doctor visits and other social programmes.

2. IRD Tightens Enforcement on Overdue GST and Employer Taxes

The IRD is renewing focus and escalation strategy announced this month.

Targeted campaign:

The IRD is launching a targeted campaign focusing on customers whose GST and or PAYE (employer) returns debt are overdue, mainly owing less than 12 months old that have already cycled through billing but remain unpaid.

Escalating steps:

• Direct contact - IRD will first reach out to the taxpayer to resolve the debt or overdue returns, either via full payment or by proposing an instalment arrangement.

• Follow-up contact - If there is no response, IRD will leave a message asking for return contact.

• Final contact attempt - If still no engagement, IRD will make one last attempt without leaving further messages.

3. Two-step verification is compulsory for all myIR users and text message is now available

Starting October 2025, Inland Revenue has made two-step verification (2SV) compulsory for all myIR users to enhance account security. Customers will now be required to verify your login using an additional step, either through an authenticator app or by receiving a text message (SMS).

The new SMS option makes it easier and faster to access your myIR account securely.

Passkey & “Trust this device” Notes:

• If you log in using a myIR passkey, the 2SV security code is not required. Inland Revenue.

• If you select “Trust this device”, you may not have to enter a 2SV code for up to 90 days on the same browser. Note: clearing cookies resets this.