Budget 2026 introduces tax changes aimed at encouraging business investment and simplifying compliance, including a shift to in-year payments for research and development tax credits.
Revenue Minister Simon Watts announced the changes alongside the Government's Budget 2026 announcements. The Research and Development Tax Incentive will be changed to introduce in-year payments instead of requiring businesses to wait until the end of the tax year.
"Instead of making businesses wait until the end of the tax year, the RDTI is being changed to introduce in-year payments so businesses can get the tax credit sooner," Watts said. "This will support ongoing research activities by removing a key cash flow barrier."
The Budget also reduces the cap on non-administrative internal software eligible for R&D tax credits from $25 million to $3 million. The Commissioner of Inland Revenue will gain discretion to accept and amend late RDTI filings, and mining businesses will be able to claim a wider range of R&D expenditure.
For overseas investments, the Foreign Investment Fund de minimis threshold rises from $50,000 to $100,000. A new calculation method for FIF tax on unlisted shares, introduced in Budget 2025 for recent migrants, is being extended to all New Zealand taxpayers, ensuring tax is paid only on realised gains and actual dividends.
Other changes include simplified fringe benefit tax rules for company vehicles, removing the requirement for detailed logbooks. Six months after liquidation or deregistration, outstanding shareholder loans will be taxed as income.
The Budget allocates $15 million per annum for Inland Revenue debt compliance activities. Approximately $3 billion in overdue tax has been collected in the year to date.