Business and Tax Updates June 2026: IBBZ Accounting

Summary:

As June 2026 comes to a close, many businesses and individuals are progressing with the preparation of their financial statements and income tax returns for the year ended 31 March 2026. This remains an important time to ensure accounting records are accurate, bank and balance sheet accounts are fully reconciled, and all compliance obligations with Inland Revenue are appropriately managed.

With the 2027 financial year now underway, businesses should review their cash flow, confirm their GST and payroll positions, and prepare for upcoming provisional tax and other payment obligations. Maintaining organised records and addressing outstanding matters early can help prevent processing delays, penalties and unnecessary interest costs.

Inland Revenue continues to place increased emphasis on overdue returns, unpaid tax balances and ongoing compliance. Businesses and taxpayers should ensure that returns are filed on time, agreed payment arrangements are maintained, and accounting records are kept complete and up to date to reduce the risk of further recovery or enforcement action

We also encourage you to visit our YouTube channel, Tax Accountant, where we share ongoing tax updates, compliance tips, and insights to help you manage your personal and business finances with confidence.

At IBBZ Accounting, we are committed to helping you stay compliant and plan with confidence. Our team is always here to support you throughout the financial year.

Thank you for your continued trust in our services. 

Key Business Updates

1. Official Cash Rate (OCR) Remains at 2.25%

The Reserve Bank held the OCR at 2.25% on 27 May 2026. The decision was evenly split, with three members supporting a hold and three supporting an increase to 2.50%. The chair’s casting vote kept the rate unchanged.

However, the Reserve Bank indicated that OCR increases are likely to be required during 2026. The next OCR announcement is scheduled for 8 July 2026. Small businesses should not assume that lending rates will continue falling and should review floating-rate debt and upcoming loan refix dates.

2. Economy grew during the March quarter

New Zealand’s GDP increased by 0.8% in the March 2026 quarter, following revised growth of 0.5% in the December 2025 quarter. This indicates that the economy was recovering, although business conditions continue to vary significantly between industries.

Important Tax Updates

1. New IRD kilometre rates for the 2026 income year

IRD released the following rates for the year ended 31 March 2026: 

The 14,000-kilometre threshold is based on the vehicle’s total business and private travel, while only the business-use portion is deductible. Businesses should use the new rates when preparing their 2026 accounts and review employee mileage reimbursement policies.

2. Proposed Tax Changes Affecting Migrants

• Foreign currency investments: Proposed changes would reduce the impact of unrealised foreign exchange gains and losses under the financial arrangements rules.

• Personal foreign accounts: Common arrangements such as overseas personal bank accounts, private home mortgages and foreign credit cards may be removed from the financial arrangements rules.

• Active Investor Plus migrants: Special calculation rules are proposed to prevent unexpected tax liabilities arising from investments held when an individual becomes a New Zealand tax resident.

• Most migrant-related changes are expected to apply from 1 April 2027, with certain Active Investor Plus changes proposed to apply retrospectively from 1 April 2025. 

3. Charities and Not-for-Profit Organisations

• Donation tax credit limit: The maximum qualifying annual donation may be limited to the lower of $100,000 or the donor’s taxable income.

• At the current 33⅓% credit rate, the maximum annual donation tax credit would be approximately $33,333.

• Small not-for-profits: The effective income tax exemption threshold may increase from $1,000 to $10,000 from the 2027–28 income year.

4. Trust Distributions to Tax-Exempt Beneficiaries

• Private trusts allocating beneficiary income to a tax-exempt organisation may be required to physically pay the income within a specified period.

• Where the allocated income is not paid within the required period, it may be taxed at the trustee tax rate.

• The proposed rule would apply from the 2028–29 income year.

5. Company Loans to Shareholders

• Outstanding shareholder loans may become taxable income six months after the lending company is removed from the Companies Register.

• The proposal may apply to loans involving shareholders, directors and close relatives of shareholders or directors.

• Businesses considering company removal should ensure shareholder current accounts and outstanding loans are reviewed and resolved beforehand.

6. Non-Resident Contractors’ Tax

• The exemption threshold for non-resident contractors’ tax is proposed to increase from $15,000 to $75,000.

• New Zealand payers may only need to consider payments made under their own contractual arrangements when applying the threshold.

• Certain compliant branches, representative offices and limited partnerships may be excluded from the NRCT rules.

• These changes are proposed to apply from 1 April 2027.

7. Proposed Fringe Benefit Tax Changes

• Company vehicles may be classified according to their level of private use rather than applying the same calculation approach to most vehicles.

• Proposed categories include:

  • Full or mainly private use – 100% inclusion

  • Mainly business use with some private use – 35% inclusion

  • Commuting to one regular worksite – 20% inclusion

  • Commuting to multiple worksites – potentially 0% inclusion

  • Pool vehicles with no private use – 0% inclusion

• Separate FBT valuation rates are proposed for standard, hybrid and fully electric vehicles.

• The changes are intended to reduce record-keeping and compliance costs and are proposed to apply after 1 April 2027

8. Green Party 2026 Tax Policy

The following points are political policy proposals and are not current tax law.

• A proposed annual wealth tax of 2.5% on net assets exceeding $10 million.

• A proposed 33% tax on inheritances and gifts exceeding $1 million, with exemptions proposed for family homes and family farms.

• A proposed company tax rate of 33% for the largest 0.7% of companies, while retaining the 28% rate for small and medium-sized businesses.

• A proposed 5% withholding tax on certain service and licence fee payments made to large technology companies.

• Removal of residential rental property interest deductibility.

• Restoration of the residential property bright-line period to 10 years.

• The first $10,000 of annual personal income would be tax-free.

• A new personal income tax rate of 45% on income exceeding $160,000.