Tax Policy Bulletin

Pre-election Economic and Fiscal Update released

The Treasury issued its 2026 Pre-election Economic and Fiscal Update (PREFU) on 29 September, showing an improved fiscal outlook compared with Budget 2026. The OBEGALx1 deficit is now forecast to be $6.8 billion in 2026/27, compared with $11.4 billion forecast at Budget 2026, before narrowing to $0.8 billion in 2027/28. The books are still forecast to return to surplus in 2028/29, although the forecast surplus has increased from $2.6 billion at Budget to $4.0 billion.

A key driver of the improvement is higher tax revenue. Treasury expects the economy to be larger in nominal terms than at Budget, with higher and more persistent inflation lifting nominal GDP. Forecast core Crown tax revenue has been revised up by $11.4 billion over four years (excluding policy decisions) and, reflecting the improved cash position, the Government’s forecast borrowing programme has been reduced by $15 billion across the forecast period. However, Treasury continues to highlight considerable uncertainty around the outlook, particularly from oil prices, inflation and interest rates.

Election campaigns get underway

National and Labour officially launched their election campaigns in Auckland last weekend, outlining their respective priorities for the election.

National’s launch centred on its “no new taxes” message and the release of a 10-point pledge card. The pledges include economic growth and higher wages, compulsory KiwiSaver with increased contributions and a $1,500 “Baby Boost”, extending paid parental leave from 26 to 30 weeks, and returning the Government’s books to surplus.

Labour’s launch focused on the cost of living, with Chris Hipkins announcing a policy to reduce eligible student loan balances by 10% for New Zealand-based graduates.

The launches also highlighted the notable contrasts on each major party’s tax policies. Christopher Luxon repeatedly emphasised National's commitment to no new taxes in his speech while Chris Hipkins reiterated the trade-offs of Labour's targeted capital gains tax policy. For more election tax policy news, you can read our recent Tax Tips, which summarises the key tax policies announced by the major political parties ahead of the 2026 election and what they could mean for taxpayers and businesses. 

Other recent announcements

• Orders in Council for Double Tax Agreements with the Republic of Croatia and the Republic of Slovenia Information release. 
  • This information release includes documents relating to the Double Tax Agreements (Republic of Slovenia) Order 2026 and the Double Tax Agreements (Republic of Croatia) Order 2026. Published 17 September 2026.
  • This was followed later in the month by a pair of Order in Council commentary documents:
    • Double Tax Agreements (Republic of Croatia) Order 2026 Order in Council commentary
    • Double Tax Agreements (Republic of Slovenia) Order 2026 Order in Council commentary
• TDS 26/14 Deductibility of forestry expenditure. 
  • This item summarises an adjudication about the deductibility of forestry expenditure. Published 17 September 2026.
• TDS 26/15 GST liability on deregistration.
  • This item summarises an adjudication that considered the GST registration and deregistration of a Taxpayer in the context of property sales. Published 17 September 2026.
• TDS 26/16 Complying trust. 
  • This item summarises a private ruling about whether a trust was a complying trust under s HC 10(1). Published 22 September 2026.
• TDS 26/17 Restructure and use of losses.
  • This item summarises a private ruling that considered the transfer of assets between group companies as part of a restructure and the carry forward and use of losses of the recipient company after the restructure. Published 28 September 2026.
• Reports to Ministers in 2026 Information release.
  • Reports and briefing notes provided to the Minister of Revenue’s office by Inland Revenue. Published 28 September 2026.
• Orders in Council for Approved Information Sharing Agreement with Ministry of Business, Innovation and Employment. Information release.
  • This information release includes documents relating to the Orders in Council for the Approved Information Sharing Agreement between Inland Revenue and the Ministry of Business, Innovation and Employment. Published 28 September 2026.
• Standard costs for home-based services Overview.
  • Home-based service providers meeting certain criteria can choose to use standard costs instead of their actual expenses when calculating their taxable income.  Inland Revenue reviews the standard costs annually for movements in the Consumers Price Index, as collected in this Overview. Published 30 September 2026.
• TDS 26/18: Income tax Proceeds of sale
  • This item summarises a private ruling that considered whether the proceeds from an insurance company’s sale of properties are income to the company. Published 1 October 2026.

Open consultations

• PUB00548 Can an Active Investor Plus visa holder become tax resident under the permanent place of abode test?
  • There have been some questions and uncertainty raised around the potential for Active Investor Plus visa holders to trigger New Zealand tax residence. We have been asked, in particular, whether an Active Investor Plus visa holder buying a residential property in New Zealand and staying there when in New Zealand during the investment period (and beyond) may result in the person having a permanent place of abode in New Zealand and so being tax resident here. This “question we’ve been asked” (QWBA) provides guidance on how the Commissioner sees the permanent place of abode test applying in various AIP visa scenarios. Consultation closes 13 October 2026.
• PUB00266 Income Tax – Non-resident software suppliers’ payments derived from New Zealand
  • This interpretation guideline addresses payments made by New Zealand entities to non-residents in connection with software transactions. Its focus is on explaining the principles behind the classification of common types of software transactions. It also outlines the relevant income tax implications of those transactions under New Zealand law, including the impact of double tax agreements (DTAs). Consultation closes 31 October 2026.
• ED0265 Mutual associations (including clubs and societies)
  • This draft operational statement explains the income tax treatment of amounts societies, clubs and other not-for-profit associations receive from members, other than amounts subject to a specific tax exemption such as for charities or sports clubs. It describes how the mutual association provisions override the principle of mutuality meaning that supplies of trading stock and services to members may be taxable.  In addition, following legislative changes proposed in the Taxation (Annual Rates for 2026–27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill, membership subscriptions, fees and levies will generally be exempt income for not-for-profit organisations.  Organisations with net income of less than $10,000, will have no tax liability and may choose not to file tax returns. Consultation closes 11 December 2026.

Recently closed consultations

• PUB00504 Income Tax cash incentives for banking customers
  • This question we’ve been asked explains the income tax treatment of a cash incentive payment (also known as a cashback payment) that a bank pays to a borrower who is a cash basis person under the financial arrangements rules. It explains when a cash incentive payment will not be taxable and will not give rise to any tax obligations for the borrower who receives it. It also explains when a cash incentive payment will be taxable and the time at which it must be accounted for when it is. Consultation closed 3 September 2026.

For more information about upcoming consultations please see here for Tax Technical and here for Tax Policy.