Snapshot of recent developments

Investment Boost driving real investment, lifting productivity

On 12 February 2026, Minister of Finance Nicola Willis issued a press release on Investment Boost which states that the policy is having positive outcomes through changing investment behaviour, boosting projects, increasing scale and lifting productivity.

A fact sheet accompanies the press release with Inland Revenue survey data. Among firms aware of the policy, 40% increased their investment, with 11% reporting a significant increase directly due to the incentive. Nearly half of firms planning investment over the next five years say the policy is positively influencing those plans.

Initial findings can also be found in this briefing note to Ministers.

Reduction of FBT interest on employment-related loans

On 23 February 2026, the Income Tax (Fringe Benefit Tax, Interest on Loans) Amendment Regulations 2026 Order in Council was published and came into force on 27 February 2026. The amendments reduced the rate of interest that applies for fringe benefit tax purposes to employment-related loans from 6.29% to 5.77%. The new rate applies for the quarter beginning 1 January 2026 and for subsequent quarters.

Reports to Ministers in 2026

On 25 February 2026, Inland Revenue updated its list of reports and briefing notes to Ministers.

FEC reports back on the Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Bill

On 9 March 2026, the Finance and Expenditure Committee reported back on the Annual Rates Bill. Also released was the Inland Revenue departmental report on the Bill and a number of other related reports, which can be found on the Parliament website. The April issue of Tax Alert will review the final form of the legislation and any major reforms in the Bill.

Inland Revenue statements and guidance

Tax Information Bulletin: Vol 38, No 1 (February 2026)

On 2 February 2026, Inland Revenue issued TIB Vol 38, No 1 (February 2026):

New legislation

• SL 2025/260: Income Tax (Tax Credit) Order 2025
• SL 2025/271: Income Tax (Fringe Benefit Tax, Interest on Loans) Amendment Regulations (No 3) 2025
• SL 2025/310: Taxation (Use of Money Interest Rates) Amendment Regulations (No 2) 2025
• SL 2025/259: Tax Administration (Extension of Application Deadline for Research and Development Tax Credits) Order 2025
  

Interpretation statement

• IS 25/26: The Commissioner’s duty of care and management – section 6A of the Tax Administration Act 1994
  

Question we've been asked

• QB 25/22: Do the purchase price allocation rules alter the tax book values of farmland improvements and listed horticultural plans under subpart DO?
  

Case summary

• CS 26/01: Court approves proposal under the Insolvency Act 2006 despite Commissioner’s objection
  

Determination: Declaration that the January 2026 severe weather event is an emergency event for the purposes of family scheme income

On 3 February 2026, Inland Revenue issued DET 26/01, declaring the January 2026 severe weather event as an emergency event for the purposes of family scheme income.

Inland Revenue: 'Income tax - more information' requests reminder

On 4 February 2026, Inland Revenue advised that if you have been issued an 'Income tax – more information' request, please check and complete it as soon as you can. This will help you be aware of your tax position and receive any refunds entitled to, including Working for Families.

Inland Revenue: Provisional depreciation rate for battery energy storage systems (modular)

On 4 February 2026, Inland Revenue issued PROV28: Provisional depreciation rate for battery energy storage systems (modular). The Commissioner of Inland Revenue set a a depreciation rate for Battery Energy Storage Systems (modular) as a new asset class. These are used to store energy generated during off-peak periods for use during peak-demand periods, or available as an energy backup system when power generation is unable to meet energy demand or is out of service.

Draft operational statement: Returns of capital: Off-market share cancellations – bright-line tests and the Commissioner’s notice requirements and other matters

On 9 February 2026, Inland Revenue released an operational statement on ED0267: Returns of capital: Off-market share cancellations – bright-line tests and the Commissioner’s notice requirements and other matters. It follows the release of IS 25/19: Income tax – Whether an off-market share cancellation is made in lieu of the payment of a dividend which explains how the anti-avoidance rule in s CD 22(6) (the “in lieu of dividend” test) and the relevant factors in subs (7) apply to an amount a company pays a shareholder on an off-market cancellation of shares.

The focus of the draft operational statement is on the technical requirement in the bright-line test for a share cancellation resulting in a capital reduction of 10% to 15% for the Commissioner of Inland Revenue to have given a notice under s CD 22(8) that no part of the payment on the share cancellation is in lieu of a dividend under subs (6).

The draft statement also includes an outline of when and how to request a notice, what information to provide when requesting a notice, the practical implications when a notice is issued or the Commissioner of Inland Revenue declines to issue a notice, and the taxation consequences if any capital distribution is later found to be a dividend.

If any capital distribution is later found to be a dividend, this statement also notes the potential effect of the time bar, whether imputation credits can be attached and RWT obligations.

The consultation closes on 23 March 2026.

Updated public guidance work programme

On 10 February 2026, Inland Revenue updated the public guidance work programme 2025-26.

Inland Revenue: Increase to IRD number validation upper limit

On 10 February 2026, Inland Revenue announced that as part of their annual updates, IRD number validation will be updated to support higher numbers. The maximum valid IRD numbers will increase from 150,000,000 to 200,000,000.

Most organisations will not need to do anything, with the length of IRD numbers remaining at 9 digits, and changes will be managed by their intermediaries or digital service providers. Only organisations using custom systems, or who perform manual IRD number checks, will need to make sure their IRD number validation recognises and accepts numbers in the new range.

This maximum valid IRD number increase will be included in updated specification documents (such as Payday Filing File Upload Specifications), available on Inland Revenue’s website from April 2026.

Inland Revenue: Planning for system outage

On 11 February 2026, Inland Revenue announced a planned system outage for Saturday 14 March 6am. During this time, online services – including myIR, SPK2IR and Gateway Services – will be unavailable. Systems are expected to be available again by Sunday 15 March 6pm. Saved drafts in myIR will not be affected.

Inland Revenue: Changes to how Inland Revenue estimate benefit income

On 18 February, Inland Revenue reminded that from 1 April 2026 they are changing how benefit income is estimated for clients receiving Working for Families payments. The key points are:

• Benefit income will be calculated like PAYE income. 
• When a benefit starts, Inland Revenue will first use the Ministry of Social Development exchange rate, then update using Ministry of Social Development  employment information. 
• Benefit income will appear in the income estimate tab on the FAM account.
• Benefit details can be seen in myIR (but not edited).
• Early interventions will include those on benefits if income looks ‘off track’.

Inland Revenue: Best Start Tax Credit

On 18 February 2026, Inland Revenue reminded that from 1 April 2026 Best Start will be income tested from the 1st year, aligning it with the approach already used in years 2 and 3. The annual rate will increase to $4,041.

Determination: Declaration that the February 2026 severe weather event is an emergency event for the purposes of family scheme income

On 19 February 2026, Inland Revenue issued DET 26/02: Declaration that the February 2026 severe weather event is as an emergency event for the purposes of family scheme income. The affected regions were:

• Waipā
• Ōtorohanga
• Rangitīkei
• Manawatū
• Banks Peninsula

The severe weather event is declared to be an emergency event for the purposes of section MB 13(2)(r)(i) of the Income Tax Act 2007. The period relating to the event is set from 14 February 2026 to 31 August 2026.

On 20 February 2026, Inland Revenue encouraged affected taxpayers or the agents of affected taxpayers by the recent severe weather event to contact Inland Revenue if their business or personal income is affected.

Inland Revenue: Closing down a business – improvements to the process

On 20 February 2026, Inland Revenue announced they are improving the steps for closing down a business, so they are easier to follow.

From early March 2026, a standard form will be available to request a letter of no objection for removal from the New Zealand Companies Office register.

The form is 'Company or limited partnership removal from the register: Request for a letter of no objection to removal - IR315A'. It will be added to this page on Inland Revenue’s website.

Inland Revenue: National standard costs for specified livestock

On 23 February 2026, Inland Revenue issued a determination on The National Standard Costs for Specified Livestock for 2026. It applies to any specified livestock on hand at the end of the 2025-26 income year where the taxpayer has elected to value the livestock under the national standard cost scheme for that income year, for the purposes of s EC 23. The national standard costs are set out here.

Product Ruling: Tax treatment for provision of low/self-powered vehicles by an employer

On 23 December 2025, Inland Revenue issued product ruling BR PRD 25/08, Northride New Zealand Limited. Inland Revenue clarified the tax treatment of employment schemes relating to the leasing of self-powered or low-powered commuting vehicles (such as bicycles, electric bicycles, scooters and electric scooters) by a third-party company to an employer, for the benefit of their employee(s). The third-party company (Northside) provided employers with the necessary digital tools and intellectual property to allow the employer to implement an employee bike scheme for its employees, with the option of a salary sacrifice left to the employer’s discretion.

The ruling is effective from 23 December 2025 to 23 December 2028.

Product ruling: Goodman Property Trust 

On 2 March 2026, Inland Revenue published BR Prd 26/01 Covenant Trustee Services Limited as trustee of the Goodman Property Trust. The Ruling relates to the Applicant’s payment of a distribution to its unitholders of an amount equal to the value of its directly held assets on a pro-rata basis and whether this payment is excluded income of the unitholders under s CX 56C. The arrangement will occur as part of a broader transaction that involves the contemporaneous corporatisation of Goodman Property Trust (GMT) and stapling of shares in the ‘corporatised GMT’ and GMT Manager (a licensed manager) to form a single tradeable security (stapled security).

The ruling is effective from 27 February 2026 to 26 February 2027.

Inland Revenue: Employment form updates

Inland Revenue have updated various employer publications.

• The new IR333 (Employer obligations) provides a guide to registering as an employer, deducting tax, filing, paying, and record-keeping and is the main starting point for new employers.
• The IR337 (completing employment information forms factsheet) has been updated for clarity.
• The IR356 (IR56 workers handbook) replaces the previous IR56 taxpayers handbook. IR56 workers are private domestic workers, NZ based employees of overseas employers, embassy staff and US Antarctic Program workers.

Tax cases

Technical decision summary: Opening value of FIF income calculation (private ruling)

On 18 February 2026, Inland Revenue issued TDS 26/01: Opening value of FIF income calculation. It confirms that where a taxpayer ceases transitional residence partway through an income year and applies the Fair Dividend Rate (FDR) method, the opening value of their Foreign Investment Fund (FIF) interests can be nil. In this case, the applicant became a New Zealand tax resident in December 2020, had an approved 31 December balance date, and their transitional residence ended on 31 December 2024; they held FIF interests at that date and calculated FIF income for the year ending 31 December 2025 using FDR. The Tax Counsel Office concluded that the opening value of each FIF interest for that year was nil because the deemed acquisition occurred after the start of the income year, and that the general anti-avoidance provision in s BG 1 did not apply, as this outcome was consistent with Parliament’s intent under the transitional residence and FIF rules, including that no FIF income arises in the year of acquisition (aside from quick sale income).

Note: The items covered here include only those items not covered in other articles in this issue of Tax Alert.