01/06/2026
Last week’s budget headlines were mostly about fiscal restraint, an earlier return to surplus, Winston’s supposed wins, and the “tax/not tax” levy on banks to help fund the Reserve Bank. However, there was also a surprising amount of tax related reforms within the detail. Some measures have already been introduced in legislation, while others are expected later this year.
Below is a summary of the key proposed changes that may affect you.
▪️Foreign Investment Fund (FIF) changes
From 1 April 2026, the Government proposes to expand access to the Revenue Account Method (RAM) for unlisted foreign shares to all New Zealand tax residents. The FIF de minimis threshold is also proposed to increase from $50,000 to $100,000, reducing compliance requirements for smaller investors.
Additional flexibility is proposed for the attributable FIF income method and clarification is expected around the 10-year FIF exemption for companies migrating offshore and listing overseas.
▪️Fringe Benefit Tax (FBT) simplification
From 1 April 2027, the Government proposes to simplify FBT on motor vehicles by removing the requirement to track vehicle availability days. Vehicles would instead fall into set usage categories. The current work-related vehicle exemption is proposed to be removed.
▪️Shareholder loans on company strike-off
For companies removed from the Companies Register on or after 4 December 2025, any unpaid shareholder loans may become taxable income to the shareholder six months after deregistration under the financial arrangement rules.
▪️Foreign currency financial arrangement changes
From 1 April 2027, certain migrants may be able to calculate financial arrangement income in a foreign currency. The Government also proposes to remove many personal foreign currency accounts and mortgages from the financial arrangement rules. Separate concessions are proposed for Active Investor Plus visa holders.
▪️Non-resident contractors’ tax (NRCT)
From 1 April 2027, the NRCT regime is proposed to be simplified by:
• Increasing the exemption threshold from $15,000 to $75,000
• Allowing payers to consider only their own contractual relationship with the contractor
• Excluding certain low-risk compliant entities from NRCT requirements
• Introducing a dedicated NRCT PAYE tax code
▪️Charities and not-for-profits
Key proposed changes include:
• Membership subscriptions and levies for taxable not-for-profits remaining non-taxable
• Donation tax credits becoming claimable during the year from 1 April 2028
• Donation tax credits being capped at the lower of $100,000 or taxable income
• Small not-for-profits (income under $10,000) receiving increased deductions and reduced filing obligations
▪️Research & Development Tax Incentive (RDTI)
From the 2027–28 income year, businesses may be able to claim RDTI quarterly rather than annually. Inland Revenue will also have greater discretion to accept late filings and minor amendments.
▪️Financial institution levy
As noted above, a new levy is proposed for banks, insurers, and non-bank deposit takers to fund prudential regulation and supervision.
Many of these measures are still proposals and may change before enactment. We will continue monitoring developments and will contact affected clients as further details become available.
Please contact us if you would like advice on how any of these proposed changes may affect you or your business.
We also note the government is committing funding of $15 million per annum for the next four years towards Inland Revenue debt compliance activities in a bid to reduce ballooning levels of outstanding tax debt.
If you would like to see more of the detail you can go the Budget 2026 website
Unless otherwise stated, funding in this document refers to total operating expenditure over the forecast period (the four years to 2029/30). Capital funding is a one-off sum.
