Tax Watch: 22 April 2026

Transfer pricing documentation

IRD has strengthened its guidance for transfer pricing documentation highlighting taxpayers must keep sufficient, locally relevant records. Failing to do so will increase the risk of an audit and may lead to penalties if IRD has to make any adjustments to an entity’s reported position.

Centrally prepared documentation will also be treated as inadequate if it doesn’t reflect local facts, and IRD expects transfer pricing documents to signed off by local management.

This is a clarification of existing practice, and OECD aligned documentation is still acceptable.    

Technical decision summary: Sale and subdivision of land

A private ruling has been made on a staged land subdivision sold over eight years, where the sale and purchase agreement included a “lowest price” clause for tax purposes under s EW 32(3) of the Income Tax Act 2007. IRD determined the agreement was a financial arrangement due to deferred settlement and payments, but it was not an excepted or short term agreement.

Ultimately, the Tax Counsel Office concluded the agreed purchase price was the “lowest price,” so no financial arrangement income or loss arose for either party. Although income recognition did not arise in this case, it is a timely reminder that transaction structures can materially influence tax outcomes.

Inland Revenue consultation open for comment

This interpretation statement considers s 10(6) of the Goods and Services Tax Act 1985, which provides for a reduced value for a supply of domestic goods and services in a commercial dwelling for more than four weeks. This reduced value rule results in an effective GST rate of 9%. The time from which the reduced value applies depends on whether the commercial dwelling is a residential establishment and if there is upfront agreement that the domestic goods and services will be supplied for more than four weeks in total. Submissions close 29 May 2026.