Tax Policy Bulletin

Budget 2026 has been released

On 28 May 2026, Finance Minister Nicola Willis delivered Budget 2026, featuring a broad range of tax announcement including some targeted simplifications to address compliance pressures, support investment, and improve the workability of the tax system. Key tax takeaways from Budget 2026 are as follows:

Foreign investment funds (FIFs) – proposed changes include expanding the revenue account method, increasing the FIF de minimis threshold to $100k, preserving access to the attributable FIF income method for certain investors, and clarifying the 10-year exemption.
Charities and not-for-profits – proposed changes include increasing the effective tax-free threshold for smaller NFPs (albeit on a cliff-edge basis), introducing a filing exemption for smaller taxable NFPs, confirming the non-taxable treatment of membership subscriptions and levies, and capping donation tax credits.
Shareholder loans – a new rule to tax outstanding loans to shareholders, directors and close relatives six months after the lending company was removed from the Companies Register. This applies to companies removed from the register on or after 4 December 2025.
Banking sector changes – a proposed prudential levy on banks and other financial institutions aimed at requiring financial market participants to contribute to the cost of Reserve Bank regulation and supervision and further tightening of the banking thin capitalisation rules.

The Taxation (Budget Measures) Bill (No 3) received royal assent on 4 June 2026 and includes four measures: a donation tax credit cap, an NRCT exemption for aircraft dry leasing, the shareholder loan rule mentioned above, and some Working for Families changes.

The remaining Budget tax measures, such as the FIF, charities and NFPs, financial arrangement, FBT, RDTI, broader NRCT and bank thin capitalisation proposals, are expected to form part of a tax bill introduced later in the year. The proposed prudential levy on banks and other financial institutions is expected to be consulted on separately between late July to October 2026.

Please see our Tax Tips publication for more information on the tax reforms introduced, as well as our Budget 2026 - Summary at a glance which covers all the key announcements from the recent Budget, including the economic and fiscal forecast.

New UK/NZ double tax agreement signed

New Zealand and the UK have recently signed a new double tax agreement (DTA) to replace the current 1984 agreement. Once in force, the new DTA is expected to provide greater certainty for businesses and individuals with cross-border tax affairs, while reflecting more modern international tax settings. The agreement will take effect only after both countries complete their domestic approval processes, with application dates then phased in for withholding taxes and other taxes.

The new DTA is in line with New Zealand’s more modern treaties including lower withholding tax rates for dividends paid to certain qualifying shareholders. This should be particularly relevant for groups with NZ/UK ownership structures. Please see Inland Revenue’s announcement here.

Other recent announcements:

QB 26/03 - Income tax – portfolio investment entity income from land development activities. This question we’ve been asked considers whether income derived from developing land, dividing it into lots and/or erecting buildings on the land for the purpose of sale is eligible income for a portfolio investment entity under s HM 12 of the Income Tax Act 2007. It concludes that this income is eligible income under s HM 12. Published 26 May 2026.
NAMV 2026 - Income Tax (National Average Market Values of Specified Livestock) Determination 2026. This determination establishes the national average market value (NAMV) of specified livestock for 2026. Published 28 May 2026.
TDS 26/06 - Living trust, bare trust, distributions. This item summarises a private ruling that considered the proposed amendment to a living trust deed and the later distribution of the trust’s assets to one of the specified beneficiaries when the last of the trustors dies. Published 29 May 2026.
OS 19/04 (KM 2026) - The Income Tax (Kilometre Rates for the Business Use of Vehicles for the 2025-26 income year) Instrument 2026. The Income Tax (Kilometre Rates for the Business Use of Vehicles for the 2025-26 income year) Instrument 2026 sets the kilometre rates, for the purposes of section DE 12 of the Income Tax Act 2007, for the 2025-26 income year for business motor vehicle expenditure. Published 03 Jun 2026.
IS 26/12 - Working for Families tax credits and family scheme income. This interpretation statement gives an overview of eligibility for Working for Families tax credits and discusses the adjustments required to a person’s net income to determine family scheme income. Key adjustments that may be relevant are income from associated trusts and companies, passive income over $500 of dependent children, payments from trusts other than beneficiary income and other payments supporting the family if they total more than $5,000.
- IS 26/12 FS 1 - Working for Families tax credits and family scheme income - fact sheet.
Various Budget 2026 releases. Inland Revenue has issued various publications following the release of Budget 2026:
- Budget 2026 – Information sheets
- Regulatory impact statement - Taxation (Budget Measures) Bill (No 3).
- Bill commentary - Taxation (Budget Measures) Bill (No 3).
- Act commentary - Taxation (Budget Measures) Act 2026.
- Information release - Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Act 2026 – Information release.

Open consultations

Current GST issues Inland Revenue is seeking feedback on a range of current GST issues. Consultation closes 29 June 2026.
PUB00463 GST – Arranging and brokering financial products. This interpretation statement provides guidance about the circumstances in which intermediaries or brokers involved in the supply of financial products will make an exempt supply for GST purposes by arranging (rather than advising on) any financial services. Consultation closes 2 July 2026.

Recently closed consultations

Consultation on proposed Approved Information Sharing Agreement between Inland Revenue and New Zealand Customs Service Inland Revenue and Customs are seeking feedback on a proposed Approved Information Sharing Agreement (AISA). Consultation closed 5 June 2026.
PUB00545 GST – Directors’ fees and board members’ fees. This consultation concerns the Commissioner’s proposal to withdraw, update, and reissue Public Rulings BR Pub 23/01–23/03 on the GST treatment of directors’ and board members’ fees, following amendments to s 6(4) of the GST Act that made parts of BR Pub 23/03 incorrect. The related Commentary, Fact Sheet, and QWBA (QB 23/07) have also been updated to reflect legislative changes, improve clarity, replace references to “tax invoices” with “taxable supply information”, and include a new summary table. Consultation closes 11 June 2026.
Consultation on proposed regulatory framework for intermediaries Inland Revenue is seeking feedback on a proposed regulatory framework for intermediaries, who play a key role in helping people meet tax obligations and access social policy entitlements. The proposals aim to support a wider range of intermediary business models and explore allowing intermediaries to calculate income tax and make payments throughout the year on behalf of customers. Consultation closed 12 June 2026.
PUB00530 GST – Types of unincorporated bodies. This interpretation guideline explains the different types of unincorporated bodies, co-ownership and cost-sharing arrangements, and joint ventures, to help taxpayers determine which GST rules apply to their arrangement. Consultation closed 17 June 2026.