New Zealand

Double taxation agreements (DTAs)

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

Best Start & Working for Families

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 per year to $44,900. 142,000 families will receive an average of $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 $73 per week, up to a maximum of $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 increase the funds available for investment in New Zealand assets and to strengthen the overall accumulation of members’ savings.

Employee share scheme reporting

The government announced in Budget 2025 it intends to proceed with the taxation of employee share schemes offered by start-ups and unlisted companies, which would allow for the deferral of the taxation point for employees of these companies. This deferral would apply to both the timing of the tax obligation and the calculation of the income. 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.

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 group taxation section.

The Government has confirmed its intention to progress ongoing efforts to modernise FIF regulations to make New Zealand more attractive to migrants and digital nomads, however the draft legislation for these reforms is not expected to be released until later in 2025. This includes a proposed "Revenue Account Method" allowing qualifying new migrants to calculate FIF income on a realisation basis. 

‘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.

The amount of the credit for a quarter is equal to 25% of the licensed early childhood education (ECE) fees paid for that quarter, up to a maximum of 975 New Zealand dollars (NZD). However, the amount of the credit abates at the rate of 9.75 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 45,000 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.