Business and Tax Updates January 2026: IBBZ Accounting

Summary:

With the year now underway, it is a good opportunity to review your GST, payroll, provisional tax, and cash-flow position, and to ensure your systems and records are up to date. Taking a proactive approach early in the year can help avoid pressure later and support more effective planning.

January has also brought several important updates from Inland Revenue and other regulatory bodies. In this edition, we highlight key tax, business, and compliance developments to help you stay informed and well-prepared for the months ahead.

We also encourage you to visit our YouTube channel, Tax Accountant, where we share ongoing tax updates, compliance tips, and insights to help you manage your personal and business finances with confidence.

At IBBZ Accounting, we are committed to helping you stay compliant and plan with confidence. Our team is always here to support you throughout the financial year.

Thank you for your continued trust in our services. 

Key Business Updates

1. OCR, Inflation & Economic Outlook Update

The Reserve Bank of New Zealand (RBNZ) has maintained the Official Cash Rate (OCR) at 2.25%, reflecting a cautious approach as inflation pressures remain under close watch. While interest rates are currently stable, recent inflation data has shown resilience, leading market participants to consider the possibility of OCR increases later in 2026, even though the easing cycle appears to have concluded.

Current OCR: 2.25%
Next OCR review: 27 February 2026

Recent economic indicators also point to a gradual improvement in business conditions across New Zealand, supported by stabilising interest rates and improving confidence. While cost pressures persist in some areas, businesses are increasingly focusing on forward planning, budgeting, and operational efficiency as conditions normalise.

What This Means for Businesses

• Borrowing costs are stable for now, but future rate increases cannot be ruled out

• Inflation may continue to pressure costs, margins, and pricing decisions

• Increased emphasis on cash-flow forecasting, financial planning, and budgeting

• Opportunity to review business structures, systems, and processes ahead of the new financial year

Monitoring OCR announcements and economic signals remains important for businesses with lending, investment, or growth plans. 

2. Election Year & Policy Environment

With 2026 being an election year, businesses are operating in a period of policy transition and heightened consultation. While no immediate regulatory or tax changes have been announced, election years typically involve discussion around cost-of-living measures, business regulation, and tax settings.

For now, the focus for businesses remains on stability and planning, with any material policy changes likely to be signalled well in advance.

What This Means

• Maintain flexibility in medium-term planning

• Monitor policy announcements, particularly around tax and employment

• Use this period to review structures, systems, and compliance readiness

Important Tax Updates

1. IRD Use of Money Interest (UOMI) rate change – Effective 16 January 2026

Inland Revenue has announced updated Use of Money Interest (UOMI) rates that apply from 16 January 2026. These rates affect interest charged on tax underpayments and interest paid on tax overpayments and are reviewed regularly to reflect market interest movements.

Updated UOMI Rates

• Underpayment interest rate: 8.97 % per annum (previously 9.89 %)

• Overpayment interest rate: 2.25 % per annum (previously 3.27 %)

These adjusted rates will apply from the date subsequent to the standard provisional tax payment due in January, aligning IRD’s interest regime with underlying market conditions.

What This Means for Taxpayers

Use of Money Interest (UOMI) is charged when tax liabilities are not settled by their due date or paid in excess of liability. UOMI accrues daily and is calculated on the outstanding balance until full settlement.

• Underpayment interest: Applies where tax is not paid on time.

• Overpayment interest: Applies to refundable amounts held by IRD.

Interest is calculated daily, does not compound, and is separate from any late payment penalties.

These rates are relevant to all major tax types, including income tax, provisional tax, GST, PAYE, FBT, and withholding taxes.

2. IRD: KiwiSaver Contribution Rate Changes - Effective 01 April 2026

Inland Revenue has confirmed changes to the KiwiSaver contribution framework that will take effect from 1 April 2026, reflecting measures introduced in the Budget 2025.

Key changes: 

• Default contribution rate increase: The minimum KiwiSaver contribution rate for both employees and employers will increase from 3% to 3.5% from 1 April 2026.

• Temporary rate reduction: From 1 February 2026, KiwiSaver members can apply (via myIR) for a temporary rate reduction that allows contributions to remain at 3% despite the higher default. This reduction takes effect from the first payday on or after 1 April 2026 and can last from 3 months to 12 months. Employers may match the reduced rate.

• Employer obligations: Employers must adjust contributions to match approved temporary rate reductions when notified, and otherwise apply the higher 3.5% rate from April.

These changes are part of a broader KiwiSaver update that aims to encourage long-term saving while providing members with flexibility around contribution affordability. 

3. Crypto-Asset Reporting – New IRD Rules from 1 April 2026

From 1 April 2026, New Zealand will introduce new crypto-asset reporting obligations aligned with the OECD’s Crypto-Asset Reporting Framework (CARF). These changes significantly enhance Inland Revenue’s ability to collect and exchange information on crypto-asset transactions.

What’s changing?

Crypto-asset service providers (including exchanges and custodial platforms) will be required to report user and transaction data to Inland Revenue. This information may also be shared with overseas tax authorities 

Who is affected?

• Individuals and businesses investing or trading in crypto-assets

• Users of overseas crypto platforms

• Any taxpayer receiving crypto-related income (trading, staking, mining, or disposals)
  

What does this mean for you?

• Inland Revenue will have greater visibility over crypto activity.

• Crypto income must be accurately declared in tax returns.

• Data mismatches may lead to reviews or audits.

In summary:

Ensure your crypto transactions are well documented and that prior income has been correctly reported. Early review can help reduce future compliance risk as IRD’s monitoring increases from April 2026. 

4. IRD Focus on Overdue Employer & GST Obligations

In January 2026, Inland Revenue confirmed an increased compliance focus on overdue employer (PAYE) and GST returns and debt.

IRD is actively contacting businesses with outstanding obligations and expects taxpayers to: 

• File all overdue returns promptly

• Pay amounts owing in full, or

• Put instalment arrangements in place where payment is not immediately possible

 Failure to engage with IRD may result in:

• In-person visits to discuss outstanding debt

• Direct deductions from bank accounts

• Further enforcement action, including bankruptcy or liquidation proceedings

Key takeaway for businesses:

If you have overdue GST or employer tax, early engagement with IRD and bringing accounts up to date can help avoid penalties and more serious enforcement measures.