The annual rates bill for 2025-26 was reported back to Parliament this month. The Bill as reported back signals what we might expect as the “final cut” of proposed new tax changes. An additional Amendment Paper No. 559 was introduced this month that will be bolted onto the Bill.

We have highlighted some of the tax changes included in this Bill and Amendment Paper below.

Non-resident visa and FIF RAM method

Parliament confirms its intention to make NZ appear more attractive (from a taxation perspective) to mobile talent and foreign capital by making only small tweaks to the non-resident visitor (digital nomad) tax exemption and the new revenue account method (RAM) for foreign investment funds (FIFs). The RAM method generally remains unavailable to existing NZ tax residents (even though it aligns with the general tax treatment of equity investments in other jurisdictions).

Trustee disclosure requirements

Trustees can be relieved to know that the specific trust disclosure rules are likely to be repealed. This should help reduce compliance. Further guidance from IRD regarding the extent of new disclosure requirements for trustee tax returns is anticipated.

FBT on gift cards

All types of gift cards (i.e. to purchase any goods or services) will be defined as a specified fringe benefit from April 2026. This means gift cards cannot be included as part of the low-value FBT exemption moving forward. Employers will still have the option to treat gift cards as PAYE income instead.

Extension to tax pooling period

Under the current rules, tax pooling to reduce use of money interest is only available within 75 days from the terminal tax date (unless for a reassessment). IRD propose trialing an extension to the period that tax pooling is available to assess whether tax pooling can increase total tax revenue. The trial will make tax pooling available to eligible taxpayers for income tax payable in the 2022-23 and 2023-24 years. Under the proposed extension, tax pooling will remain available for these periods until October 2026. If you have an outstanding tax liability during the specified periods, this may be an opportunity to reduce your overall tax expense.

Alignment of Contractor Definition

A recent amendment to the Employment Relations Act 2000 introduced the “gateway test” to determine whether a person is a specified contractor rather than an employee. This is a different test to the employee/contractor distinction for tax purposes. The proposed remedial amendments ensure that where a person is deemed to be a contractor under the Employment Relations Act 2000, they would have the same status for tax purposes. This has the potential to impact income tax, GST and KiwiSaver.

If you have any questions about the proposed changes or tax in general, please reach out to one of the team.