New Zealand

Double taxation agreements (DTAs)

New Zealand is currently negotiating new and updating DTAs with several countries, including Australia, Fiji, Germany, Hungary, Iceland, the Netherlands, Portugal, Slovenia, South Korea, and the United Kingdom.

New Zealand has DTAs negotiated with Croatia and Iceland which have been signed but is not yet in force, with an effective date to be determined. 

Non-Resident Visitors

The Tax Bill included an overhaul of the tax treatment of visitors to New Zealand, specifically around ‘digital nomads’ working in New Zealand while remaining non-resident. The amendments in the Bill introduce a definition for a “non-resident visitor”, which would be specifically exempt from the 183-day rule (discussed in further detail below).  

The definition of a non-resident visitor is a natural person who is: 

• is in New Zealand for 275 days or fewer over an 18-month period, 

• was not a New Zealand resident / transitional resident immediately before becoming a non-resident visitor, 

• is not receiving a family scheme entitlement (nor is their partner), 

• is lawfully present in New Zealand under the Immigration Act 2009, and 

• is tax resident in a jurisdiction with a tax substantially similar to New Zealand’s income tax. 

Further, the person’s work must not be: 

• performed in New Zealand for a New Zealand resident or branch; or 

• offering goods or services in New Zealand for income from persons or businesses in New Zealand; or 

• required to be done while physically present in New Zealand. 

The proposals in the Bill also include specific income tax exemptions for services income earned by a ‘non-resident visitor’ and to disregard the activities of the ‘non-resident visitor’ when considering the tax residency of a foreign company.  See more details in our Tax Tips on the Tax Bill here: https://www.pwc.co.nz/insights-and-publications/subscribed-publications/tax-tips/tax-bill-key-proposed-changes-and-implications.html

Best Start and Working for Families tax credits

The 2025 Budget included changes to the Best Start tax credit and the Working for Families tax credit. Under the changes, the abatement threshold (the income level at which the entitlements begin to reduce) for Working for Families will increase from 42,700 New Zealand dollars (NZD) per year to NZD 44,900. 142,000 families will receive an average of NZD 14 more per fortnight as a result.

Further changes included applying an income test to the first year of the Best Start tax credit, which previously provided a flat amount of NZD 73 per week, up to a maximum of NZD 3,838 regardless of income. This aligns with the testing applied in the second and third years of the Best Start tax credit.

KiwiSaver

The 2025 Budget also announced a number of changes to KiwiSaver, which aim to increase the funds available for investment in New Zealand assets and to strengthen the overall accumulation of members’ savings.

Employee share scheme (ESS) reporting

The Tax Bill includes a number of proposed changes to the ESS tax regime, which would allow for the deferral of the taxation point for employees of these companies and changes to the timing of employer deductions.

The deferral would allow taxpayers to defer the taxing date until a ‘liquidity event’ occurs in relation to the shares, i.e. when the company lists on the stock exchange, the shares are sold or cancelled, or the company pays a dividend on those shares (but not if dividends are paid on other shares). It is designed to address issues for early stage companies where employees might find it difficult to pay taxes on shares they cannot sell at the taxing point, or where valuation might be problematic.

See more details in our Tax Tips on the Tax Bill here: https://www.pwc.co.nz/insights-and-publications/subscribed-publications/tax-tips/tax-bill-key-proposed-changes-and-implications.html

Foreign investment funds (FIFs)

The FIF regime subjects persons with interests in certain foreign entities (that are not controlled foreign companies) to New Zealand tax. You can find further details on the FIF regime in the Income determination section.

The government has confirmed its intention to progress ongoing efforts to modernise FIF regulations to make New Zealand more attractive to migrants; as reflected by the inclusion of a proposed ’Revenue Account Method‘ in the Tax Bill allowing qualifying new migrants to calculate FIF income on a realisation basis. Qualifying migrants include natural persons who become New Zealand tax resident on or after 1 April 2024, provided they were non-resident for at least five years before becoming a New Zealand tax resident. RAM may also apply to family trusts where the principal settlor meets the same criteria.

Under the RAM eligible taxpayers will be taxed on dividends received and 70% of any realised gain on disposal of qualifying foreign shares (described as a 30% discount). Similarly, 70% of a loss on disposal is able to offset future RAM gains. As an integrity measure, losses cannot be offset against dividend income, but they can be carried forward. The RAM is expected to be generally limited to shares in foreign companies acquired before becoming a New Zealand tax resident (or under arrangements entered into before then), and generally excludes listed shares and most managed funds. Eligible taxpayers will need to elect to apply the RAM.

As mentioned above, the Tax Bill is expected to be enacted before the end of March 2026.

‘FamilyBoost’ tax credit

The FamilyBoost tax credit was introduced in 2024 in relation to childcare costs incurred by families. The credit is available from 1 July 2024, with changes announced in July 20205 which apply from the July–September 2025 quarter that families can claim from 1 October 2025.

The amount of the credit for a quarter is equal to 40% of the licensed early childhood education (ECE) fees paid for that quarter, up to a maximum of NZD 1,560. However, the amount of the credit abates at the rate of seven cents in the dollar when quarterly household income is greater than NZD 35,000. The amount of the credit is zero when quarterly household income is NZD 57,286 or more.

The tax credit results in a refund for the applicant and is based on actual ECE fees incurred, subject to eligibility requirements. A New Zealand tax resident caregiver of one or more children enrolled with a licensed early childhood service for which ECE fees are incurred may be entitled.

Interest limitation rules

Interest deductibility for borrowing on residential investment property is being phased back in over the next two tax years. Since1 April 2024, 80% of the interest expenses incurred for amounts borrowed in relation to residential property have been deductible. This is regardless of when the property was acquired or when the loan was drawn down. From 1 April 2025, interest deductibility will be fully restored (i.e. 100% deductibility), subject to other provisions governing interest deductibility.