Business and Tax Updates May 2026: IBBZ Accounting

Summary:

As we reach the end of May 2026, many businesses and individuals are now well into the process of finalising financial statements and income tax returns for the year ended 31 March 2026. This remains a key period to ensure financial records are accurate, reconciliations are complete, and compliance obligations with Inland Revenue are properly managed.

With the new financial year now underway, it is important to review cashflow, confirm GST and payroll positions, and plan for upcoming provisional tax obligations. Early action and organised record keeping can help minimise delays, penalties, and interest costs.

Inland Revenue continues to increase its focus on overdue returns, unpaid tax balances, and ongoing compliance obligations. Businesses should ensure that tax filings, payment arrangements, and accounting records are kept up to date to avoid unnecessary enforcement action.

In this edition, we also highlight key announcements from Budget 2026 and other important updates relevant to New Zealand businesses and taxpayers.

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. Official Cash Rate (OCR) Remains at 2.25%

The Reserve Bank of New Zealand (RBNZ) kept the Official Cash Rate (OCR) unchanged at 2.25% in May 2026.

This means borrowing costs remain relatively stable for businesses in the short term. Future OCR changes will depend on inflation, consumer spending, employment levels, and overall economic conditions.

The next OCR review is scheduled for 08 July 2026.

Important Tax Updates

Budget 2026 Key Highlights on Taxation

1. Simplifying fringe benefit tax rules for private motor vehicle use to reduce compliance costs

• The initiative introduces a new category approach to help determine the private use of motor vehicles

• Under the fringe benefit tax (FBT) guide, FBT is payable is an employee is able to use a private motor vehicle, even if not used.

• A private vehicle can be made available from

  • An employer

  • Someone who owns the vehicle

  • Someone who leases or rents the vehicle

  • Someone who has the right under an agreement or arrangement

• The simplification to the FBT rules with an introduction of a category approach to determine the private use of motor vehicles will help reduce compliance costs as the requirement for detailed logbooks will be removed. 

2. Changes to tax rules to help retain talent and support increased foreign investment

• This initiative will revise the Foreign Investment Fund (FIF) rules to help lure and retain capital and talent in New Zealand.

• This will be done by:

  • Increasing the availability of the revenue account method for unlisted shares to taxpayers

  • Long awaited change is Increasing the FIF de minimis from $50,000 to $100,000

    • This means that NZ tax-residents and family trusts with a total cost of foreign investments of $100,000 or less will be exempt from complex FIF tax rules instead of $50,000.

• Making sure that the 10-year FIF exemptions continue to be applicable to corporate migration.

  • Maintains investment attractiveness

  • Prevents unintended tax costs

  • Encourages businesses to relocate to NZ 

3. Changes to tax rules for charities and not-for-profits that support the sector and maintain integrity

• The initiative changes of tax for charities and not-for-profits:

  • “Increasing the effective tax-free threshold for taxable not-for-profits to $10,000 of net income.”

    • Lower compliance costs

    • More money retained for community purposes

    • Reduces administrative burden

    • Helps small community groups

  • Allowing donors the option of transferring their donation tax credit directly to a charity, and

    • More funding goes directly to charities

    • Simpler for donors

    • Reduces unclaimed donation credits

  • Allowing not-for-profits to treat honoraria as salary or wages.

4. A new prudential levy on banks and other financial institutions to help cover the cost of regulation and supervision by the Reserve Bank

• The initiative will introduce an industry levy to cover the costs of the Reserve Bank of New Zealand’s regulation and supervision of deposit takers, insurers, and financial market infrastructure entities. The levy would allow the Reserve Bank of New Zealand to fully recover the costs of carrying out its statutory prudential regulation and supervision functions, while supporting a sustainable regulatory system funded by the industry.

  • This will make sure the cost of regulation is no longer borne on taxpayers, but by financial market players.The initiative will introduce an industry levy to cover the costs of the Reserve Bank of New Zealand’s