New Tax Bill aims to attract migrants to New Zealand

At a glance

• The New Zealand government has released the latest tax bill.
• From 1 April 2026, non-residents can work in New Zealand for up to 275 days in 18 months without New Zealand income tax, provided they don’t work for New Zealand-based employers.
• A new Revenue Account Method (RAM) allows eligible migrants to simplify tax on foreign investments, with a 30% discount on gains from disposals.
• Unlisted companies can defer tax on employee shares until a liquidity event, easing cashflow issues for employees.
• Employer contributions to KiwiSaver will rise to 3.5% in 2026 and 4% in 2028, with employees able to opt to keep contributions at 3%.
• Tax exemption for residential solar electricity sales, repeal of certain trust disclosure rules, clarification that SaaS is excluded from non-resident contractors’ tax (NRCT), and crypto income eligibility for Portfolio Investment Entity (PIE) funds (retrospective to 2009).

The New Zealand government has released the latest tax bill, the Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Bill (Bill) which proposes several relevant tax changes, primarily aimed at attracting migrants to New Zealand and improving the tax position for New Zealand employees.

Highlighted below are the changes we see as the most significant:

• Digital Nomads – The introduction of a new tax rule for 'non-resident visitors' (popularly known as Digital Nomads) which will enable a non-resident individual to visit and work in New Zealand for up to 275 days in any 18-month period without becoming subject to New Zealand income tax. The 'non-resident visitor' rule is subject to several conditions, including a requirement that the individual does not work for a New Zealand employer (or New Zealand branch of a foreign employer). This new rule will apply from 1 April 2026 and for individuals who arrive after that date.
• FIF calculation method for migrants – The introduction of a new foreign investment fund (FIF) calculation method which will allow eligible taxpayers to elect the RAM calculating income from FIF interests, taxing dividends and gains / losses on disposal, with disposals being subject to a 30% pre-tax discount. The RAM applies on a portfolio basis to eligible shares; typically, unlisted foreign shares held before becoming a New Zealand tax resident. A market valuation is required when RAM is first applied. This change provides a more practical option for migrants (primarily from the US) and returning residents facing valuation and liquidity challenges under existing FIF rules.
• Employee share schemes – The introduction of a deferral mechanism for employee share schemes offered by unlisted companies, allowing an employer to elect for the taxing point (the share scheme taxing date) to be deferred until a 'liquidity event', such as a sale of shares, IPO, or dividend payment. The election must be made by the employer and notified to both Inland Revenue and the employee. This change is described as being to ease cashflow pressures for employees and align tax obligations with actual realisation, though in some cases an earlier taxing date may still be preferable given the absence of a comprehensive capital gains tax in New Zealand.
• KiwiSaver contributions – Increasing the compulsory employer contribution rate to complying superannuation funds to 3.5% (from 1 April 2026) and to 4% (from 1 April 2028) while keeping the minimum employee contribution rate at 3%. The Bill would extend those scheduled rate increases to apply to employee members also, with an option for those members to reduce their contributions to 3% (in which case, employers would also be able to reduce their contributions to 3%).

Other noteworthy changes include:

• Residential solar – The introduction of a targeted income tax exemption under new section CW 61B, applying to income derived by a natural person from the residential supply of excess electricity, defined as electricity generated but not consumed at a dwelling and supplied to an electricity retailer. Eligible individuals include owner-occupiers, tenants, farm residents (for electricity generated at the residential part of a farm), and beneficiaries of trusts who reside in the dwelling. While the income will be exempt from tax and reporting obligations, natural persons will no longer be able to claim deductions for related expenses such as interest or depreciation.
• Trust disclosures and taxpayer Information – Repealing sections 59BA and 59BAB of the Tax Administration Act 1994 (TAA) which set minimum requirements for domestic trust disclosures, including the specific rules relating to financial statements. The Bill also proposes repealing section 17GB of the TAA, which is intended to improve taxpayer privacy as it would prevent the Inland Revenue from being able to collect information for the purpose of developing tax policy, for example, for research projects on high net wealth individuals. The Commissioner considers that they have existing statutory powers to obtain sufficient information without the need for these sections.
• NRCT on SaaS – An amendment to the definition of 'contract activity or service' in section YA 1 of the Income Tax Act 2007 to clarify that SaaS products are excluded from NRCT, unless the service involves infrastructure or personnel located in New Zealand. This resolves longstanding ambiguity around NRCT’s application to offshore-hosted software services and confirms that NRCT does not apply where the provider has no New Zealand presence.
• Crypto assets in PIE funds – Clarifying that income derived from validating crypto asset transactions is an eligible income type for PIEs, which corrects an issue which may have previously meant that funds investing in crypto assets may have been ineligible for PIE status. This change would also be applied retrospectively from 1 January 2009 and is intended to neutralise the tax treatment between asset classes.

A copy of the Bill and related commentary can be found here.

While the Tax Bill is largely positive, there are some notable omissions which represent missed opportunities, including a relaxation of the PIE rules and thin-capitalisation rules. Changes in these areas would have assisted with supporting much needed investment in New Zealand business and infrastructure.