Global Mobility Tax

New Zealand | 2026 Budget announcements—proposed tax changes

Summary

The New Zealand Government announced its Budget on May 28, 2026. Outlined below are the proposed tax changes that will be relevant to globally mobile individuals and their employers. They are only proposals at this stage, so they may change before they are introduced into legislation.

The detail

Foreign Investment Fund (FIF): Changes would apply from April 1, 2026

• NZD 50,000 de minimis threshold to increase to NZD 100,000—this will mean fewer individuals will need to undertake FIF calculations.
• Allow all New Zealand residents (albeit expected to be limited to individuals and family trusts) to use the revenue account method (RAM) for their unlisted foreign shares, so that they only pay tax on realized gains and actual dividends received. The RAM method was enacted in March 2026 with effect from April 1, 2025, but was previously limited to new migrants or returning New Zealanders who had been away for more than 5 years.
• Extend the RAM method to allow all New Zealand residents who are subject to double tax, due to citizenship or right to work in another country (generally migrants from the United States), to use the RAM for their listed shares as well, irrespective of the date they migrated. This method, known as the extended RAM, will help residents who currently experience issues where tax paid under traditional FIF calculation methods is not able to be claimed as a tax credit in their country of citizenship e.g. United States.
• Ensure that founders or early active investors could continue to use the attributable FIF income method (AFI) even if their stake in the business falls below 10% during the expansion of the business.
• Ensure that shareholders in New Zealand companies (directly or via a venture capital fund) can continue to access the 10-year FIF exemption when the business migrates overseas, irrespective of any intermediary process used that may technically disrupt the continuity of ownership requirement.

Financial Arrangement (FA) rules: Changes would apply from April 1, 2027

• Removal of low risk, common foreign currency arrangements such as personal bank accounts, mortgages on private homes, and credit cards with foreign banks from the rules
• New rules to allow some taxpayers to reduce exposure to unrealized foreign exchange gains/losses by allowing income for some financial arrangements to be calculated in the currency of the arrangement and not New Zealand dollars
• Protection for some taxpayers who are exposed to double taxation where income arises on an accrual basis

Fringe Benefit Tax (FBT): Changes would apply to benefits provided after April 1, 2027

Simplification of the rules for private motor vehicles—the main proposal is to apply a category approach depending on the expected private usage of the vehicle up front. This would avoid the need that currently requires the employer needing to track the days the vehicle is available for private use by the employee. The proposal would also remove other exemptions such as the work-related vehicle exemption. Once the category is selected upfront, the employer will only need to revisit this if the expected private use changes materially.

The proposed categories are listed in the table below.

Category	Limitations on use	Inclusion rate
1-full private use	Vehicle mainly for private use (perk vehicles). The provision of the vehicle is generally reflected in the employee’s remuneration package. For determining whether a vehicle is mainly for private use, the fact that other employees have access to the vehicle or not during business hours is ignored. Vehicle does not have to be branded.	100%
2-partial private use	Vehicle mainly for business use. Private use is permitted during rostered days off, public holidays and/or statutory leave days and commuting to and from work. Vehicle must be branded.	35%
2b-limited private use farm vehicles	Vehicle mainly for business use and used to support farming operations on farmland. Private use is permitted when not working. Vehicle must be owned by a closely held company in the business of farming and used by a shareholder-employee. Vehicle does not have to be branded.	35%
3-minor private use	Vehicle for business use. The only private use permitted is commuting to and from work by the same employee (to the same worksite). The vehicle can be used for business use by others at work. Vehicle must be branded.	20%
4-minor private use	Vehicle for business use. The only private use permitted is commuting to and from home to work where “work” requires travel across multiple worksites. The vehicle can be used for business use by others at work. Vehicle must be branded.	0%
4b-no private use pool car	Vehicles exclusively for business use. No private use (other than incidental use). Vehicle does not need to be sign written (that is, pool vehicles). These vehicles are not allocated to a single employee.	0%

Changes to donation tax credit: This change would apply from April 1, 2027

Introduction of a maximum entitlement of eligible donations to the lesser of NZD 100,000 or the taxpayer’s taxable income. Therefore, the maximum claim would be NZD 33,333.33.

Increased funding to IR to help manage debt compliance

The Budget also proposes additional funding to Inland Revenue of NZD 15 million per year to continue to increase compliance and debt collection.

Although not tax related, on the immigration side there are no new immigration policies, however the Government is investing in three new frontline teams to focus on immigration non-compliance and migrant exploitation.

The above proposed tax changes come on the back of some other tax changes that were already recently implemented:

Financial Arrangement (FA) changes

• Changes to the Cash Basis Person (CBP) threshold included doubling the asset/liability threshold and the income/expense threshold from April 1, There is also no longer a requirement to perform complex accrual calculations to determine if the income deferral is less than NZD 40,000. The new thresholds are:

1. Income and expenditure from all financial arrangements on an accruals basis is under NZD 200,000
2. Total (absolute value) financial assets and liabilities is less than NZD 2 million on every day of the income tax year

• Variable principal debt instruments (VPDI’s) such as an overdraft, credit card or current account in a foreign currency are exempt from the FA rules where the aggregate balance of ALL (NZ and foreign) VPDIs does not exceed NZD 100,000 at any time in an income tax year (this threshold was previously NZD 50,000).

Non-resident visitor residence rule

Eligible visitors to New Zealand, specifically digital nomads and remote workers, are treated as non-residents for tax purposes even if they stay up to 275 days in any rolling 18-month period (longer than the previous 183-day rule in a 12-month period). The eligibility conditions are:

• Not a New Zealand resident or transitional resident before arrival
• Lawfully in New Zealand
• Liable for tax in the country of tax residence
• Not receiving any family assistance entitlements, including their spouses/partners (i.e. working for families etc.)
• Not undertaking work that is related to New Zealand (for a New Zealand resident employer or branch, selling goods/services to New Zealand persons, or work that requires physical presence in New Zealand)

This will allow true remote workers/digital nomads to travel to New Zealand and stay longer without triggering a New Zealand tax obligation for them or their foreign employer.

Tax deferred employee share schemes

A new deferral regime for employee share schemes is available for unlisted companies. Employers can elect into the regime with tax on shares deferred until the earliest of these liquidity events (taxing date):

• The date the company lists on a stock exchange
• The date the shares are sold or cancelled

What this means

The majority of these measures will simplify compliance for both employees and employers. Changes to the FIF and FA rules help to reduce barriers for new migrants and retain talent in New Zealand by removing possible double taxation or taxation on an unrealized basis where there is no opportunity to liquidate the asset.

However, all taxpayers need to make sure they are complying with their tax obligations and settling their tax debt on time as the government continues to increase its focus in this area to recover overdue tax and maintain the integrity of the tax system.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Suzie Chichester
Managing Director

Naomi Burwell
Director

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