New Taxation Bill Introduced

The New Zealand government recently introduced the Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Bill, a wide-ranging package designed to attract talent, simplify compliance, and improve employee outcomes.

Key updates include:

• Digital Nomads: From 1 April 2026, overseas visitors can live and work in New Zealand for up to 275 days within an 18-month period without paying NZ income tax - provided they are not employed by a NZ-based business.The tax rules have now come in to play to keep things consistent and to clarify that non-resident visitors that undertake remote work will also not be regarded  as a NZ tax resident if they live 275 days in NZ over an 18 month period with any of the remote income earn by these type of persons non taxable in NZ. This would only apply to natural persons that who arrive in NZ on 1 April 2026 onwards. 
   
• Foreign Investment Rules for Migrants: A new Revenue Account Method (RAM) lets eligible migrants calculate tax on foreign investments more simply, with a 30% pre-tax discount on disposal gains. This should particularly benefit US migrants and returning residents. Refer our earlier published article here. 
   
• Trust disclosure order: The government are reviewing the trust disclosure rules and whether they would continue collecting the trust disclosure information. Should they stop or reduce the collected information, the changes are proposed to apply from the 2026/2027 income years only.  
   
• Open loop cards (FBT): Earlier this year, IR published in QB 25/07 that if an 'open loop card' such as Prezzy Cards are provided to staff that this is more equivalent to cash and should be accounted for under the PAYE regime as opposed to the FBT regime. They've now included a section that will allow employers the discretion to treat it under either regime and is backdated to take effect for any such benefits provided on or after 16 April 2025. This is likely to mitigate any amendments required for those that have treated such benefits as subject to FBT in their Q1 FBT return. 
   
• Employee Share Schemes: Unlisted companies can now choose to delay the taxing point on employee shares until a liquidity event (such as an IPO, sale, or dividend), reducing cashflow strain on staff and better aligning tax with realised value.
   
• Excess electricity sold back to the grid: Income from selling surplus residential solar electricity will be tax-exempt, although deductions for related expenses will no longer be allowed. Any corresponding expenses will be non-deductible. Note that this won't apply to business farms etc. 
   
• KiwiSaver Changes: Mandatory employer contributions will rise to 3.5% in 2026 and 4% in 2028, while employees can choose to maintain contributions at 3%.
   
• SaaS Clarification: Software-as-a-Service provided from offshore will be formally excluded from non-resident contractors’ tax (NRCT), unless NZ-based infrastructure or personnel are involved—ending long-standing uncertainty.
   
• Crypto & PIE Funds: Income from crypto transaction validation will now qualify as PIE income, with the rule applied retrospectively to 2009 to ensure consistent treatment across asset classes.

While these measures are generally pro-growth and pro-investment, some commentators note the lack of broader reforms - such as loosening PIE and thin-capitalisation rules, which could have further incentivised foreign capital and infrastructure investment.