Upcoming employment information changes
From 12 September 2026, Inland Revenue is introducing changes to improve the quality of Employment Information (EI) reporting, and is preparing for stronger validation rules in the future. When filing employee details through myIR, users will see warnings for missing or incorrect information.
These warnings must be acknowledged before filing, but returns can still be submitted without correction. IRD is also launching a new "Check your employment information" validation service in both myIR and gateway services. This will allow employers and payroll providers to identify errors before filing. In addition, myIR validation reports will now clearly display both errors and warnings, giving users better visibility of potential data issues.
FBT prescribed interest rate increase
The prescribed FBT rate applying to low-interest employment-related loans has been updated, increasing from 5.77% to 6.07% with effect from 1 October 2026.
Changes to taxpayer rulings determination applications
From 14th September 2026 applications for private, product or status rulings must be submitted via myIR. Although the application process has changed, the information required and legislative process to support the applications remain the same. IRD have posted a list of frequently asked questions about this change.
Government cancels fuel tax hike to ease cost of living pressure
The Government has announced it will defer next year’s increases to fuel excise and road user charges to 2028. They will gradually be reintroduced through a series of 5 cent increases. The resulting revenue shortfall will be offset through additional funding for the National Land Transport Fund.
Exposure drafts:
Can an Active Investor Plus Visa holder become a tax resident under the permanent place of abode test?
Draft guidance issued by Inland Revenue confirms an AIP visa holder can be treated as a New Zealand tax resident under the PPOA test, even where they continue to maintain a home and tax residence overseas. The draft reiterates that simply owning a residential property in New Zealand is insufficient to establish a PPOA.
However, where a person habitually uses the property and has a durable, ongoing connection to New Zealand, the property may be regarded as their PPOA. The guidance discusses the factors relevant to this assessment, including the amount of time spent in New Zealand, family and business connections, and the nature and extent of the person's links to their New Zealand dwelling. These are not new considerations; they simply restate the existing factors relevant to the PPOA test.
The draft also notes the potential implications of becoming a New Zealand tax resident including exposure to tax on worldwide income and the commencement of the transitional resident regime, which may provide temporary exemptions for certain foreign-sourced income. Submissions on the exposure draft close on 13 October 2026.
Non-resident software suppliers’ payments derived from New Zealand
Inland Revenue has updated and modernised the 2003 guidance on how payments from New Zealand customers to non-resident software suppliers should be classified and taxed. The draft incorporates modern software business models, introduces new guidance on cloud computing services, and the role of distributors and other intermediaries.
The draft explains that the tax treatment of software payments depends on the substance of the transaction and classifies transactions into categories such as cloud services, copyright sales and licenses, sales and leases of copyrighted software, know-how, and software development or modification services. These classifications determine whether payments are treated as royalties, business income, rental income, service income, or potentially not taxable in New Zealand, taking into account withholding tax rules, source rules, and applicable double tax agreements.
Insight:
New Zealand’s donation tax credit changes
Budget 2026 introduced a $100,000 annual cap on individual donation tax credits. Grant Thornton has authored a paper with Moran Law and Forsyth Barr which explores the impact of the changes and the planning opportunities available through trusts, companies and charitable foundations.
