New Zealand

Double taxation agreements (DTAs)

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

New Zealand has DTAs negotiated with Belgium. Croatia, Iceland and the United Kingdom that have been signed but are not yet in force, with an effective date to be determined.

Non-resident visitors

Changes were made around the tax treatment of visitors to New Zealand, specifically around ‘digital nomads’ working in New Zealand while remaining non-resident. The new rules introduced a definition for ’non-resident visitors‘, which are 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 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

• 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 amendments 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

Shareholder loans

Budget 2026 amended the treatment of company loans made to shareholders, directors, and their close relatives with effect from early June 2026. Following the changes, where a company is removed from the Companies Register with an outstanding shareholder loan or overdrawn shareholder current account still in place, the borrower would be treated as deriving taxable income six months after deregistration. This new rule will apply to companies that are removed from the register on or after 4 December 2025.

The rule operates through the financial arrangements regime by treating the remaining payments under the arrangement as discharged, triggering a base price adjustment.

Charities, donations, not-for-profit (NFP) sector

The charities and NFP sector has seen a significant amount of consultation since the release of an issues paper in February last year. Budget 2026 announced a range of changes that are proposed to apply to the sector going forward.

In particular, a new cap on entitlement to donation tax credits (DTCs) has been enacted. The cap is now set to the lesser of NZD 100,000 or the donor’s taxable income. In practical terms, this means the maximum donation tax credit available to an individual would be NZD 33,333.33. Budget 2026 also proposes a handful of tweaks to the DTC regime. These include in-year refunds, optionality to refund DTCs directly to the charity the donor has donated to.

The announcements also confirm the Government’s intention to progress a legislative change ensuring membership subscriptions and levies received by taxable NFPs, such as clubs and societies, remain non-taxable. This provides welcome certainty for organisations that rely on member funding as a core source of income, particularly in light of recent discussion about Inland Revenue’s interpretation of the current law.

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 progressed efforts to modernise FIF regulations to make New Zealand more attractive to migrants, as reflected by the introduction of the ’revenue account method‘ (RAM) 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. The RAM may also apply to family trusts where the principal settlor meets the same criteria.

Under the RAM, eligible taxpayers are 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 generally limited to shares held by qualifying new migrants 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 need to elect to apply the RAM.

Budget 2026 proposes to expand the RAM to apply to all New Zealand residents. Additional Budget 2026 proposals for FIFs include an increase to the de minimis threshold for overseas investments from NZD 50,000 to NZD 100,000, expansion of the attributable FIF income method, and clarification of the 10-year FIF exemption for New Zealand companies which migrate offshore. 

Interest limitation rules

Interest deductibility for borrowing on residential investment property was being phased back in. From 1 April 2025, interest deductibility will be fully restored (i.e. 100% deductibility), subject to other provisions governing interest deductibility.