New Zealand’s tax intermediary regime confronts digital reality

The article is relevant to members in New Zealand and was current at the time of publication.

Tax intermediaries play a key role in helping many New Zealand taxpayers manage their tax affairs, including preparing and lodging returns.

Who should be able to act as a tax intermediary — and, in some cases, provide complex tax advice — is the focus of Proposed Legislative Changes for Intermediaries, outlined by Inland Revenue (IR) in an officials’ issues paper issued on 1 May 2026.

Aim: reduce compliance barriers

IR has proposed reforms to New Zealand’s tax intermediary framework to strengthen system integrity, reduce compliance barriers and align the rules with an evolving digital tax ecosystem.

CPA Australia has outlined in a submission to IR its support for the review and for measures to strengthen regulation of tax intermediaries, while urging IR to avoid unnecessary barriers and clarify several proposals.

“New Zealand’s tax intermediary system is welcome territory for reform because, although many taxpayers have simple affairs, there remains a significant regulatory gap for people who can represent taxpayers before Inland Revenue,” says CPA Australia’s regulations and standards lead, Belinda Zohrab.

“The Tax Administration Act identifies different types of intermediaries, but it does not clearly define the services tax agents can provide, nor does it impose the kind of qualification, professional development, good-standing or disciplinary requirements seen in other comparable jurisdictions.”

10-client rule to go

IR has proposed replacing the long-criticised “10-client rule” for tax intermediaries with mandatory membership of an approved professional body.

“Essentially, as long as you do not have criminal convictions and you have 10 clients — in other words, a large family — you are in,” says Angus Ogilvie FCPA, managing director of Generate Accounting Group and CPA Australia’s representative on IR’s tax agents cohort group.

“You do not need an accountancy degree, you do not need to belong to a professional body, and you do not need any prior experience. It is astonishingly low.”

DSPs’ existence acknowledged

A key IR proposal is a new category for digital service providers (DSPs), recognising that they already operate within the tax system but are not expressly recognised in legislation.

The category would bring DSPs into a regulatory framework that reflects their role, requiring them to uphold tax-system integrity, meet accreditation standards and operate under terms of use set by the Commissioner.

IR says DSPs vary widely, from software-only providers to platforms that calculate liabilities or facilitate payments, and legislation needs enough flexibility to reflect that diversity.

CPA Australia agrees DSPs should be formally recognised but says the issues paper misses an opportunity to define “tax advice” and address the role of artificial intelligence in tax services.

Zohrab says IR should start addressing where responsibility sits when taxpayers rely on software-generated prompts or calculations, rather than delay consideration of AI and digital advice.

She says CPA Australia supports separating software-only DSPs from those providing advice and recommends that DSPs offering tax advice should meet the same professional standards as tax agents. She also cautions against automatically admitting existing DSPs, arguing all should apply for approval to ensure consistent governance.

“CPA Australia’s concern is that once software begins influencing taxpayer decisions, it may be moving from software provision into tax advice,” adds Zohrab. “That raises important questions about accountability, liability and the standards that should apply to DSPs, particularly as artificial intelligence becomes more embedded in tax administration.”

IR has also sought feedback on a possible “tax crediting agent” model, under which intermediaries could calculate anticipated income tax and make payments throughout the year on behalf of customers. IR presents this as a possible alternative for taxpayers who do not have tax withheld at source.

Zohrab says CPA Australia agrees the underlying problem is real but warns the model risks blurring the line between software assistance and regulated tax advice.

Other IR proposals

Other IR proposals include creating a bookkeeper category, extending integrity requirements to other intermediary categories and widening the Commissioner’s discretion to disallow nominated persons where integrity risks arise.

Zohrab says professional body membership would provide oversight that is currently missing, particularly if IR does not intend to build an extensive regulatory regime itself.

“Professional body membership, education, relevant experience, ethical obligations and disciplinary oversight are stronger indicators of service quality than the existing 10-client rule,” she says.

“However, the framework should not prevent family members, nominees or community-based supporters from helping vulnerable taxpayers where that support is working well. Regulation should protect the public without creating unnecessary cost or complexity.”