Greenlane CA Newsletter January 2026
Newsletters & Updates
Daran Nair
Director | CA, MBA
TAX NEWSLETTER
JANUARY-FEBRUARY 2026
Welcome to the first edition of our 2026 newsletter. As we begin the new year, it is crucial to stay informed about the latest business and tax developments in New Zealand. This issue covers the economic outlook for 2026, a detailed analysis of the opposition Labour Party's proposed Capital Gains Tax, significant employment law reforms, and key tax updates to help you navigate the months ahead.
ECONOMIC OUTLOOK FOR 2026: A YEAR OF CAUTIOUS OPTIMISM
Forecasters are expressing cautious optimism for the New Zealand economy in 2026, with most predicting a return to more robust growth after a subdued 2025. Economists from Westpac are anticipating GDP growth of around 3%, supported by lower interest rates and more balanced growth across sectors [1]. Similarly, Infometrics points to strong export prices, lower interest rates, and increased government infrastructure spending as key drivers for a better year ahead.
BMI, a Fitch Solutions company, forecasts 2% growth, citing the Reserve Bank of New Zealand's anticipated rate cuts and major infrastructure projects like Auckland's City Rail Link and the Waikato Expressway as significant contributors. However, potential risks remain, including global trade tensions and a slower-than-expected recovery in China, New Zealand's largest trading partner.
Economic Indicator | 2026 Forecast |
|---|---|
GDP Growth | 2% - 3% |
Interest Rates | Expected to be lower, with RBNZ cuts anticipated |
Inflation | Expected to ease, alleviating cost of living pressures |
Business Confidence | Renewed sense of optimism, with increased investment in technology |
While the general outlook is positive, the recovery may not be felt evenly across all sectors. For businesses, the key takeaway is to prepare for a period of steady growth while remaining mindful of the external risks.
SPECIAL FEATURE: LABOUR'S PROPOSED CAPITAL GAINS TAX
The opposition Labour Party's proposed Capital Gains Tax (CGT) remains a significant topic of discussion. If enacted, it would represent a major shift in New Zealand's tax landscape. The policy proposes a 28% tax on the net gain from the sale of residential investment and commercial properties, with the revenue ring-fenced to fund three free doctor's visits per year for all New Zealanders.
The proposed CGT would replace the current two-year bright-line test and would apply to gains made after July 1, 2027. A key distinction is that the CGT would have no time limit, unlike the bright-line test. The family home, farms, KiwiSaver, shares, and business assets would be exempt.
For a detailed analysis of the proposed CGT, including a comparison with the bright-line test, revenue projections, and implementation details, click here to view our comprehensive report.
KEY TAX UPDATES & ANNOUNCEMENTS
Several important tax changes have recently been announced or have come into effect. Businesses should take note of the following:
Investment Boost for New Assets
As part of Budget 2025, the "Investment Boost" allows businesses to claim an immediate 20% tax deduction on the cost of eligible new assets acquired from 22 May 2025. This is in addition to regular depreciation on the remaining 80% of the asset's value. This incentive is designed to encourage business investment in productive assets like machinery, tools, and commercial vehicles.
Bright-Line Test Reminder
As of 1 July 2024, the bright-line test period for residential property was reduced from ten years back to two years. This means that profit from the sale of a residential property is subject to income tax if the property is sold within two years of purchase, unless the main home exemption applies.
FBT Exclusion for Health & Safety Benefits
Inland Revenue has released an exposure draft (PUB00507) clarifying when the Fringe Benefit Tax (FBT) exclusion for health and safety benefits applies. The draft confirms that for the exclusion to apply, a benefit must be related to an employee's health and safety, be aimed at managing a risk under the Health and Safety at Work Act 2015,and meet the on-premises exclusion requirements. It notes that general wellness benefits are unlikely to qualify, but specific items like sunscreen for outdoor workers or prescription safety glasses may be exempt.
Proposed Changes to Shareholder Loans
IRD is seeking feedback on proposals to improve the taxation of loans made by companies to their shareholders. The proposals target situations where shareholders borrow large amounts and do not repay them, effectively accessing company funds tax-free. Key proposals include a new time limit for repayment, where new loans over $50,000 made after 4 December 2025 would be taxed as dividends if not repaid within 12 months after the end of the income year. The rules would also ensure any outstanding loans are taxed when a company is wound up.
Use of Money Interest (UOMI) Rates
Inland Revenue has adjusted the UOMI rates effective from 16 January 2026. The underpayment rate has decreased to 8.97% (from 9.89%), and the overpayment rate has decreased to 2.25% (from 3.27%).
EMPLOYMENT & KIWISAVER UPDATES
Significant changes are on the horizon for employment law and KiwiSaver, which will impact both employers and employees.
Minimum Wage Increase
The adult minimum wage is set to increase by 2% to $23.95 per hour from 1 April 2026. The starting-out and training minimum wage will also increase to $19.16 per hour.
Holidays Act Reform
The Government has announced its intention to repeal and replace the complex Holidays Act 2003 with a new 'Employment Leave Act'. Key proposed changes include an hours-based accrual system for annual and sick leave, and a clearer 'Otherwise Working Day' test for public holidays. A 24-month transition period is expected once the legislation is passed.
KiwiSaver Contribution Changes
From 1 April 2026, the minimum contribution rate for both employees and employers will increase from 3% to 3.5%. A further increase to 4% is planned for 1 April 2028. Additionally, from 1 July 2025, the Government contribution was halved to a maximum of $260.72 per year, and is no longer available to individuals earning over $180,000 per annum.
KEY TAX DATES: JANUARY & FEBRUARY 2026
Date | Obligation |
|---|---|
14 Jan | Provisional tax payment due (for March balance date) |
14 Jan | GST return and payment due (for period ending 30 Nov) |
19 Jan | FBT quarterly return and payment due (for period ending 31 Dec) |
27 Jan | GST return and payment due (for period ending 31 Dec) |
8 Feb | End-of-year income tax and Working for Families bills due |
19 Feb | Employer deductions payment due for January (small/medium employers) |
Please note this is not an exhaustive list. For a full list of key dates, please refer to the IRD website or contact us.
Disclaimer
This newsletter is published by Greenlane CA Limited for informational purposes only. The content provided herein is of a general nature and does not constitute professional tax, accounting, legal, or financial advice. While every effort has been made to ensure the accuracy and completeness of the information contained in this newsletter, Greenlane CA Limited makes no representations or warranties, express or implied, as to the accuracy, reliability, completeness, or currency of the information.
Readers should not act or refrain from acting based solely on the information in this newsletter without first seeking professional advice tailored to their specific circumstances. Tax laws and regulations are subject to change, and the application of these laws depends on the particular facts and circumstances of each case.
Greenlane CA Limited, its directors, employees, and agents accept no responsibility or liability for any loss, damage, cost, or expense (whether direct, indirect, consequential, or otherwise) incurred by any person as a result of relying on the information contained in this newsletter, or any errors or omissions therein, howsoever caused.
For advice specific to your situation, please contact Greenlane CA Limited directly.