Inland Revenue - Tax policy Tax Policy

News and information about the Government's tax policy work programme, including:
- proposed changes to the laws that Inland Revenue is responsible for
- updates on the progress of bills through Parliament
- policy announcements


An officials’ issues paper, Purchase price allocation, sets out proposals to ensure that parties to the sale of a business or commercial property adopt the same allocation of the global price to the various assets, and base this allocation on relative market values.

The proposals aim to increase taxpayer certainty, prevent vendors and purchasers from engaging in allocation practices that reduce tax revenue, and to minimise administrative costs.

Any amendments resulting from these proposals will be included in a tax bill planned for introduction in the first half of 2020.

Submissions close on 14 February 2020.

Advisers have sought assistance from Inland Revenue on the correct tax treatment of MKP Milk Price Futures Contracts, which are derivative contracts traded on the NZX Derivatives Market.

Inland Revenue officials have released for feedback a draft general financial arrangements determination, Draft determination G31 - NZX Milk Price Futures Contracts: an expected value approach.

It proposes an expected value approach to the taxation of these contracts when they are entered into by farmers who do not use IFRS and who enter into the contracts for the sole purpose of hedging the price received for all or part of their anticipated future milk production. Inland Revenue proposes to release this determination in order to clarify and simplify the tax treatment of these contracts. The finalised determination is intended to apply to all such transactions entered into on or after 1 April 2020.

Officials invite submissions on the proposed determination. In particular, we are seeking submissions on:

- the nature of the legal relationship between farmers and their brokers and the obligation of farmers to pay initial margin and to pay and receive variation margin;

- what in commercial practice actually occurs in relation to a farmer’s payment of initial margin and payment and receipt of variation margin; and

- any practical outcomes you expect from following this determination compared to your current approach.

Send your submissions to with “Milk price futures financial arrangements determination” in the subject line.

The closing date for submissions is 13 December 2019.