NEW ZEALAND Trends and Developments Contributed by: Greg Neill, Fred Ward and Callum Burnett, Russell McVeagh
Bill (the “Bill”). Introduced in August 2025, the Bill is currently awaiting its second reading and is expected to be enacted before 31 March 2026. The proposals put forward in the Bill include a series of rules and regimes intended to facilitate mobility of global talent, attract skilled migrants and reduce com - pliance barriers for internationally active businesses and individuals. Key measures include: • A new “non‑resident visitor” regime that is aimed at easing the tax consequences for visitors to New Zealand and “digital nomads” who engage in remote work while in the country. The proposed rules would allow eligible individuals to under - take limited cross-border remote work while in New Zealand for nine months without creating personal tax residence or New Zealand income tax obligations for themselves or their non-resident employer. The regime includes eligibility criteria and conditions intended to define the scope of the concession, and is intended to encourage remote- working visitors to stay in New Zealand for longer. • A new calculation method for calculating foreign investment fund (FIF) income. New Zealand’s FIF regime brings New Zealand tax residents to tax annually on certain interests in foreign funds and companies, regardless of whether income has been realised from such investments. Motivated by an acknowledgement that such a regime can make New Zealand an unattractive destination to reset - tle, the proposed new calculation method would allow certain investments subject to the FIF rules to be taxed on a realisation basis. This new calcula - tion method would be available in specified cir - cumstances, including when an individual migrates to New Zealand or returns after an absence of at least five years. The proposal is intended to modify the application of the FIF rules for qualifying inter - ests acquired before the individual becomes a New Zealand tax resident. It is expected that a modified version of the proposal will also be available to United States citizens who are tax resident in New Zealand, who may struggle to obtain United States tax credits for taxes paid under the FIF regime on unrealised income. • A tax deferral regime for employee share plans or schemes offered by unlisted companies. Presently,
employees are generally subject to tax in New Zealand on the date their entitlements to benefit under a workplace plan vest. The new proposal aims to defer the taxing point from vesting to a future liquidity event, such as the sale of shares or the employer company publicly listing, or when the employee disposes of their rights to the shares. It is proposed the employer company (not the employee) would be entitled to elect whether or not to apply the regime. It would also defer the time at which the employer company is entitled to a deduction for the benefit provided to the employee (which generally aligns with the employee’s taxing date). Investment Boost tax deduction Another development that aimed to increase invest - ment in New Zealand is the introduction of the Invest - ment Boost, a depreciation acceleration regime apply - ing to qualifying capital assets acquired on or after 22 May 2025. Under this regime, businesses are able to claim an immediate deduction for 20% of the cost of eligible assets, with the remaining cost subject to standard depreciation rules. To qualify, the asset must be (1) new (or, as discussed below, new to the New Zealand tax base), (2) first available for the business to use on or after 22 May 2025, and (3) depreciable for tax purposes. Eligible assets also include new commercial and industrial buildings; however, residential rental buildings are exempt. The regime extends to second‑hand assets sourced from overseas, provided they have not previ - ously been used in New Zealand. Certain aspects of the regime currently remain unclear, and further guid - ance or legislative clarification is expected to confirm the scope and practical application of the rules. The Government anticipates that the Investment Boost will improve economic growth, lifting New Zealand’s GDP by approximately 1%, with associated wage and capital stock gains, over the next 20 years. Thin capitalisation reform to support infrastructure investment In May 2025, Inland Revenue released an officials’ issues paper examining whether New Zealand’s cur - rent thin capitalisation settings may be discouraging
391 CHAMBERS.COM
Powered by FlippingBook