New tax laws to know about

The Act makes a few tweaks to how the Investment Boost rules work to ensure they apply as intended.

• To ensure that it's clear when an asset is "new", or rather "not secondhand" – the materials associated with the Act provide useful clarification for assets like cars (which may have been driven before sale) and buildings (developed for sale but rented out while looking for a buyer).
• Making it clear that the $1,000 low value asset threshold is determined prior to taking an Investment Boost deduction.
• To ensure rules work as intended when assets are transferred between taxpayers.
  

Two clarifications to the non-resident contractors tax (NRCT) rules, including that NRCT does not apply to software-as-a-service, platform-as-a-service and infrastructure-as-a-service contracts, except where people are physically in New Zealand.

A new change added at a late stage of the legislation process are rules to facilitate a pilot of a new way to use Tax Pooling. Income tax debt from the 2022/23 and 2023/24 tax years will be able to be paid using tax pooling until 1 October 2027. Refer to our separate article for more details.

Laws have been in place since 2017 to allow Inland Revenue to credit report taxpayers with tax debt, however some tweaks have been made to make this easier (in essence the existing rules were too restrictive to be of practical use):

• There is a change to no longer require “formal” notification. This was interpreted as hand delivering a notice to an actual person. Going forward options such as myIR securemail will meet the requirement.
• Clarifying that additional debt post the original credit reporting can also be credit reported (if any of the original debt remains outstanding).
  

On 5 January 2026 the OECD published guidance on the new "side-by-side" system. The SBS essentially simplifies the compliance of these rules for taxpayers who are headquartered in the US.

By virtue of the way that Pillar 2 was implemented in New Zealand, we automatically adopt new OECD guidance. However, adoption is ordinarily prospective, meaning that the new SBS rules would only kick in for taxpayers with income years starting on/after 6 January 2026. As such new legislation will allow December balance dates to apply the rules from 1 January 2026 (there is also a special rule for taxpayers who have unusual balance dates around the same time).

Refer to our February 2026 Tax Alert article for more information about the side-by-side package.

The new rules allow flexibility for a joint venture to register for GST, or for joint venture members to separately account for GST (flow through treatment). Elections to adopt flow-through treatment will need to be made by 1 April 2027.

There are a number of other remedial changes to the GST Act, including:

• Once again allowing taxpayers to file elections to enter into the business-to-business zero-rating rules for financial services;
• Amending the taxable supply information rules to require the supplier of goods and services valued at over $1,000 to only hold the recipient details if they notify the supplier that they are registered for GST;
• Clarifying how the bad debt rules work when a Specified Agent (e.g. liquidator) has been appointed and there are tax debts owing;
• Amendments to ensure the secondhand goods rules work as intended;
• Clarification for when properties are opted out of the GST net.
  

After an Inland Revenue interpretation stated that “open loop cards” where subject to PAYE rather than FBT (refer to our May 2025 Tax Alert article) the law has now been amended, effective the date of the interpretation, to ensure that all gift cards remain subject to FBT (however employers can opt to pay PAYE if they prefer). The final rules ensure that FBT treatment is available to employers except where there is a purpose or effect of defeating child support rules (which is a much more targeted rule than originally proposed).

If an employee is reimbursed for the cost of things which would be unclassified fringe benefits if provided directly by the employer, employers now have the choice to pay PAYE on these reimbursements (typically through a gross up) or to treat the reimbursement as a fringe benefit and pay FBT instead.

The health and safety exemption from FBT is being retrospectively amended to ensure that personal protective equipment, including clothing, is exempt from FBT. This follows a draft Inland Revenue interpretation indicating that the exemption could not apply to clothing (refer to our November 2025 Tax Alert article).

Following an employment law decision which concluded that some ride-share drivers were employees rather than contractors, the Employment Relations Amendment Act 2026 (ERA) ensured that such services would be contracting rather than employment arrangements. To ensure that tax rules wouldn’t follow the approach of the Courts, the tax rules have also been amended to ensure that “specified contractors” under the ERA are also viewed as contractors.

Various exemptions are now in place to ensure that eligible visitors to New Zealand are not caught up in New Zealand tax rules if they undertake some work for themselves or a non-resident employer while they are here. The rules do not apply in circumstances where work needs to be performed in New Zealand or the non-resident employer is offering goods or services in New Zealand.

Income earned from selling excess residential solar power into the grid will be exempt income from 1 April 2026. This exemption will only apply to natural persons who are living in the residence with the solar panels (this will include second homes).

The trust disclosure rules have now been repealed. This was an onerous set of annual reporting obligations (however much of the hard information collection has already been done in the 5 years the rules have been operating). While the formal trust disclosure rules are repealed it is anticipated that Inland Revenue will continue to use existing information collection powers to gather similar information. Once new requirements are clear we will let Tax Alert readers know what they are.

More taxpayers will be eligible to be “cash basis persons” under the financial arrangement rules (meaning tax consequences are based on cash transactions rather than on an accrual basis) after thresholds to enter the rules were doubled and the “deferral” rule was repealed. At the request of a submitter, the application date for the change was backdated to the commencement of the 2025-26 income year (rather than the 2026-27 income year) in order for the compliance cost savings to take effect immediately.

Any taxpayers with foreign currency mortgages can apply a new rule which may allow currency fluctuations to be removed from cash basis person calculations.

The Commissioner has a new discretion to remit student loan interest on overseas borrowers in situations where it is considered equitable to do so.

In response to the Middle East conflict, the Government has made a targeted change to the in-work tax credit calculation from 1 April 2026. This will allow qualifying families to receive up to $50 per week of additional credits. This is a time limited benefit which is expected to last for up to 1 year. If the cost of 91 octane petrol drops below $3 per litre for four consecutive weeks the in-work tax credit will revert to its previous level.