If you’re an Australian SME or family business using a New Zealand company to hold or manage property, this new guidance could directly affect how your income is taxed, how expenses are claimed, and what benefits your shareholders may be deemed to receive.
Inland Revenue’s New Guidance: QB 25/16 Explained
Inland Revenue’s May 2025 publication, QB 25/16, explains how income tax applies when a close company offers short-stay accommodation through platforms like Airbnb, Booking.com, or Bookabach.
The rules depend on whether the mixed-use asset rules or the standard tax rules apply.
- When the mixed-use asset rules apply:
These rules apply when the property is used for both income-earning and private purposes (for example, rented out part-time but also used by shareholders). The company’s rental income is taxable, but when the dwelling is used by an associated person (like a shareholder) or rented at below 80% of the market rate, the company earns exempt income. Expenses are apportioned under the mixed-use asset formula — and importantly, a close company cannot opt out of these rules. - When the standard tax rules apply:
If the mixed-use asset criteria don’t apply, the company must use the standard income tax rules. In this case, all income from short-stay accommodation is taxable, and the company can claim deductions for related expenses.
Implications for Australian Businesses Operating in NZ
Many Australian SMEs use New Zealand companies to hold property for business trips, short-term rentals, or staff use. Under the new guidance, even limited or personal use by shareholders can trigger tax consequences in New Zealand.
- Shareholder and employee benefits:
If shareholders or employees use the property without paying market rent, Inland Revenue treats this as either a non-cash dividend (for shareholders) or employment income (for employees, including shareholder-employees). This means that private use isn’t “tax-free” — and could increase your New Zealand tax exposure. - Expense deductions:
Only the portion of expenses directly linked to income-producing activity is deductible. This is particularly important for companies with properties used part-time or seasonally.
Why This Matters for Australian SMEs
The mixed-use asset rules have existed for some time, but Inland Revenue’s latest clarification makes it clear that company-owned properties are firmly within scope — even when used occasionally for personal or shareholder purposes. For Australian family-owned companies or small groups investing in New Zealand property, this means it’s vital to:
- Maintain accurate records of property use (both income-earning and private).
- Understand when shareholder use may create a taxable benefit.
- Ensure your accountant applies the right set of tax rules — mixed-use or standard.
Need cross-border tax advice? Our specialists in Australia–New Zealand tax can help you structure your NZ operations efficiently and meet all local requirements.
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The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.