The Government’s latest round of tax proposals signals they are attempting to simplify the system, support growth, and tighten areas where integrity matters.

Many of these changes won’t take effect until 2026–2028. Whether you’re running a business, investing overseas, or managing family finances, now is the time to understand what’s coming.

Strengthening Integrity and Closing Loopholes

One key proposal targets shareholder loans. If a company is removed from the register with outstanding loans to shareholders, those amounts will be treated as taxable income after six months. A six-month window will allow for inadvertent removals. This rule will apply retrospectively to companies removed from the register on or after 4 December 2025.

Similarly, changes to thin capitalisation rules for foreign-owned banks aim to align tax settings with prudential capital requirements, limiting excessive debt loading and protecting New Zealand’s tax base.

A Simpler, More Practical System for Businesses

One of the strongest themes across the proposals is reducing complexity for businesses.

Non-resident contractors’ tax (NRCT) is set for an overhaul. The exemption threshold is proposed to increase from $15,000 of contract payments to $75,000 per year, and a “single-payer” approach will make it much easier to determine whether withholding applies. The single-payer approach means the payer only has to consider their own contractual activity and would no longer need to know about the contractor’s activity with third parties. Low-risk entities may also fall outside the rules entirely, reducing compliance costs and administrative burden. These changes are proposed to apply from 1 April 2027.

Fringe Benefit Tax (FBT) is also getting a long-awaited refresh. Instead of tracking the number of days a vehicle is available for private use, businesses will adopt a category-based system where vehicles are classified into one of six categories. Depending on the vehicle category, either 0%, 20%, 35% or 100% of the cost of the vehicle will be subject to FBT. This change is designed to simplify calculations and provide greater certainty—no more logbooks and guesswork. The annual value of FBT under the cost method also rises from 20% to 22.80%.

Supporting Growth, Innovation, and Investment

To drive economic growth, the Government is refining incentives for innovation.

The Research & Development Tax Incentive (RDTI) will become more accessible and flexible. Start-ups could benefit from in-year payments, improving cashflow and enabling continued investment in innovation.
At the same time, administrative rules will be more forgiving, helping businesses avoid losing entitlements due to minor errors.

For investors, changes to the foreign investment fund (FIF) rules are significant. More people will be able to use the Revenue Account method, that taxes realised gains rather than unrealised income, reducing cashflow pressure. The de minimis threshold is also increasing from $50,000 to $100,000 per person, meaning fewer smaller investors will need to deal with complex FIF calculations. These changes will be effective 1 April 2026 for the 2026/27 income tax year.

Making Life Easier for Individuals, Migrants, and Families

Proposed updates to financial arrangement rules aim to reduce the impact of fluctuating exchange rates on foreign investments. From 1 April 2027, changes to these rules will remove the requirement to return unrealised foreign exchange movements as taxable income for certain taxpayers, giving the option to use a foreign currency as the base currency for calculations.

The Working for Families scheme is also being simplified. Fewer income adjustments will need to be considered, and eligibility rules—particularly around residence—are being made clearer and easier to apply. The amount of the in-work tax credit also increases by $50 per week. Around 143,000 families will see this increase with another 14,000 families becoming eligible.

A Boost for Charities and Community Organisations

Charities and not-for-profits play a vital role in New Zealand communities, and these proposals acknowledge that.

Key changes include:

• Increasing the effective tax-free threshold for small not-for-profits from $1,000 to $10,000 effective from the 2027-28 income tax year
• Simplifying filing obligations for smaller organisations
• Maintaining non-taxable treatment of membership subscriptions

There are also updates to donation tax credits, including setting a cap of $100,000 which will limit a donee’s annual credit to around $33,000. This change will apply to donations made on or after 1 April 2027.

What Does This Mean for You?

Although most of these changes are still proposals, the direction is clear:

✅ Some simplification is coming
✅ Compliance costs could reduce in some areas
✅ Opportunities are opening for innovation and investment
✅ Integrity rules are tightening where needed

For many individuals and businesses, this will mean revisiting current structures, tax positions, and planning strategies.

Your Next Step

Don’t wait until these changes take effect. The earlier you understand and plan for them, the better positioned you’ll be.

Whether it’s reviewing your business setup, reassessing your investments, or understanding how your family entitlements may change, now is the ideal time to take action.

Let’s make sense of it together.
Get in touch for a discussion about what these changes mean for you—and how you can stay one step ahead.