TAX & BUSINESS NEWSLETTER

MARCH 2026

Welcome to our March 2026 newsletter! This edition covers key developments from mid-February through to mid-March 2026, including economic updates, the emerging impact of the Iran–US–Israel conflict on New Zealand, critical ACC changes effective from 1 April, landmark employment law reforms now in effect, Health and Safety at Work amendments, important immigration pathway changes, and year-end tax planning advice.

BUSINESS AND ECONOMIC UPDATE

New Zealand's economy is showing signs of recovery as we move through March 2026, though the outlook remains mixed. The Reserve Bank of New Zealand (RBNZ) held the Official Cash Rate (OCR) at 2.25% in its February meeting, with Governor Anna Breman expressing confidence that inflation will return toward the 2% target over the next 12 months. However, annual CPI inflation rose to 3.1% in the December 2025 quarter, sitting above the RBNZ's 1– 3% target band.

Fourth-quarter 2025 GDP data released on 19 March showed the economy continued to grow, though with less momentum than hoped. Economists' forecasts for Q4 ranged from 0.2% to 0.4% growth, with the result delivering annual GDP growth of approximately 1.6% for 2025 – the first full year of per-capita growth since 2022. However, per-capita GDP remains 3% below its previous peak, indicating the recovery still has considerable ground to cover. Tourism- related sectors including transport, arts and recreation, retail trade and accommodation showed strong gains on the back of robust visitor arrivals, but construction activity continues to lag significantly. Labour productivity has improved, and the RBNZ estimates an output gap of -1.5% in Q4, suggesting some spare capacity remains in the economy despite tightening conditions.

New Zealand's outlook is also clouded by heightened global uncertainty arising from ongoing geopolitical conflict and war. These tensions are contributing to volatile energy prices, disrupted shipping routes, and fragile supply chains, which can feed into higher import costs, margin pressure for exporters, and increased financial market volatility. For an open, trade-dependent economy like New Zealand, prolonged conflict overseas risks dampening external demand, delaying investment decisions, and increasing the likelihood of sudden shifts in exchange rates and funding costs.

Business confidence softened slightly in February but remains at elevated levels. The ANZ Business Outlook survey showed confidence at 59.2, down from January's 64.1, but still historically high. A net 23% of firms reported activity up on the same time last year, and 82% of surveyed businesses plan to increase technology investment in 2026. Inflation expectations have risen to 2.93%, reinforcing market views that the next OCR move will likely be upward.

Westpac and other major forecasters now expect the RBNZ to begin raising the OCR in December 2026, with increases accelerating through 2027 as economic capacity tightens. The OCR is projected to reach 4% by end-2027 and peak around 4.25% in early 2028 as the RBNZ works to return monetary policy to neutral levels.

Challenges remain significant, particularly as the Iran conflict continues to disrupt global markets. Oil prices have almost doubled from the start of the year, creating sustained inflationary pressure that poses risks to both inflation control and economic activity. The duration of the Middle East conflict and resulting trade disruptions will be critical factors determining New Zealand's economic trajectory. High commodity prices are supporting the agricultural sector, but income gains have largely been used to pay down rural debt rather than drive broader consumption. With annual inflation at 3.1% – not starting from a comfortable baseline – and rising inflation expectations combining with tightening labour market conditions, interest rate increases appear increasingly likely in the second half of 2026. The extent of the oil shock's impact on medium-term inflation versus medium-term growth remains highly uncertain, adding complexity to the RBNZ's monetary policy decisions ahead.

Action: Monitor cash-flow positions closely, review pricing strategies in light of input cost pressures and geopolitical uncertainty, prepare for potential OCR increases from December 2026 onward, and consider locking in favorable financing terms before rates rise.

IMPACT OF IRAN–US–ISRAEL WAR ON NZ ECONOMY

The Iran–US–Israel conflict is emerging as a major external risk for New Zealand's economy. Disruption to shipping routes and higher global oil prices are already lifting fuel, freight and input costs for New Zealand households and businesses, adding to existing inflationary pressures. Scenario analysis by forecasters suggests that a sustained oil shock of this kind could raise New Zealand's inflation rate and modestly reduce GDP growth, particularly if the conflict and trade disruption prove long-lasting.

For an open, trade-dependent economy like New Zealand, the war also raises the risk of a broader global slowdown, weaker demand for our exports, and higher borrowing costs as central banks overseas respond to renewed inflation pressure. Businesses should factor this uncertainty into their planning, stress-test cash-flow projections, and consider how prolonged volatility in energy prices and global demand could affect their operations.

Action required: Review scenario planning and stress-test assumptions for fuel costs, supply chain resilience, and customer demand. Consider hedging strategies for energy and foreign exchange exposure where appropriate.

ACC CHANGES FROM 1 APRIL

ACC is introducing changes from 1 April 2026 that will increase costs for many employers. All payment plans will now incur interest at a rate linked to the floating mortgage rate, and late payments will trigger 1% per month compounding penalties. Businesses in the Experience Rating scheme face a flat 7.2% levy increase, and the No Claims Discount for smaller businesses and the self-employed is ending.

Action required: Pay ACC invoices within five weeks to avoid penalties, budget for higher levies and payment-plan interest, and look for opportunities to reduce levies through improved health and safety.

NEW EMPLOYMENT LAW

The Employment Relations Amendment Act took effect on 21 February 2026, significantly reshaping employment law. A new gateway test makes it easier for some workers to be classified as "specified contractors" rather than employees, and people earning over $200,000 a year can no longer raise unjustified dismissal personal grievances (subject to a transition period). The 30-day rule for new employees has been removed, remedies for personal grievances now place more emphasis on employee contribution, and the justification test under section 103A has been refined. For existing arrangements, the timing of proceedings remains crucial: proceedings started before the law change continue under the old test, while new proceedings after 21 February 2026 may result in workers being treated as specified contractors for the post-change period, even if they are treated as employees beforehand.

Action required: Review contractor arrangements to ensure compliance with the new gateway test, update employment agreements for high earners, and ensure HR processes, policies, and onboarding documents reflect the new law.

HEALTH AND SAFETY AT WORK BILL

The Government has introduced the Health and Safety at Work Amendment Bill, which passed its first reading on 12 February 2026 and will make considerable changes to the Health and Safety at Work Act 2015 once enacted. It introduces a new focus on "critical risk" – hazards likely to cause serious harm – and defines "small PCBUs" as those with fewer than 20 workers for at least nine months of the year. The Bill also creates "safe harbour" status for certain approved codes of practice (ACOPs), and clarifies that officers' duties relate to overseeing compliance, not their operational roles.

A recent WorkSafe prosecution involving an explosion and serious burns highlighted that having written procedures is not enough; businesses must monitor and enforce them in practice.

Action required: Identify your critical risks, check that procedures are actively implemented and supervised (not just documented), and confirm whether any safe-harbour ACOPs apply to your operations.

SKILLED MIGRANT CHANGES – AUGUST 2026

The Government has released further details about changes to the Skilled Migrant Category (SMC) that will take effect in late August 2026. New Trades and Technician and Skilled Work Experience pathways will apply, supported by three lists (Trades/Technician, Amber and Red) that determine which roles can use which pathway. Wage thresholds are being simplified so migrants only need to meet the relevant median wage that applied when they started their New Zealand skilled work experience, with a five-month grace period tied to visa start dates. English test validity is extended to five years for recognised registrations, a new registration category for accountants is added, and from 2027 some migrants will be able to get a further Accredited Employer Work Visa to complete required experience.

Action required: Employers relying on skilled migrants should map their current and planned roles against the new lists and wage rules, and consider how the updated pathways affect recruitment, retention, and residency plans.

IRD REVENUE ALERT – FAILURE TO PAY PAYE DEDUCTIONS

Inland Revenue issued Revenue Alert RA 26-01 on 16 March 2026, reminding employers that making PAYE deductions from employee wages and failing to pay them to IRD by the due date is a serious criminal offence carrying a maximum sentence of up to 5 years imprisonment and/or a fine of up to $50,000. The alert emphasises that directors who decide their company will not pay deductions to IRD may themselves be prosecuted for aiding and abetting the offence. The Commissioner considers this behaviour a significant risk to the integrity of the tax system and has signalled an intention to pursue prosecution action where this conduct is identified. Employers must pay PAYE, KiwiSaver, and student loan deductions to IRD by the applicable due date. Civil penalties may also apply in addition to criminal penalties.

Action required: Ensure all PAYE and employer deductions are paid to IRD on time. If your business is experiencing cash-flow difficulties that may affect your ability to meet PAYE obligations, contact us or IRD immediately to discuss options before missing payment deadlines. Employers who have failed to pay deductions should seek urgent professional advice and consider making a voluntary disclosure.

YEAR-END TAX PLANNING FOR 31 MARCH BALANCE DATE

With the 31 March year end approaching, now is an ideal time to review your tax position and consider legitimate planning opportunities that can optimise your 2026 tax outcome.

Key Year-End Considerations

Provisional tax review

Review your provisional tax payments to ensure they reflect your actual 2026 income. If your profit is significantly higher or lower than the prior year, your provisional tax instalments may not align with your actual liability. Under-payments will incur interest, while over-payments may tie up cash unnecessarily. Consider using tax pooling to manage any shortfalls or access refunds on overpaid provisional tax.

Maximising deductible expenses

Ensure all legitimate deductible expenses incurred by 31 March 2026 are captured, including:

• Bad debts written off before balance date (with appropriate documentation)

• Staff bonuses incurred by 31 March and paid by 2 June 2026

• Repair and maintenance expenditure committed and invoiced before year-end

• Professional fees, subscriptions, and other operating expenses

Shareholder current accounts

Review shareholder current accounts and drawings to avoid unintended tax consequences. Overdrawn shareholder current accounts may trigger deemed dividend treatment or fringe benefit tax if not properly managed. Ensure any shareholder salaries or drawings are appropriately documented and within commercial parameters.

Asset purchases and depreciation

If you are contemplating significant asset purchases around year-end, consider:

• Whether expenditure qualifies as repairs (immediately deductible) or capital improvements

(depreciated over time)

• Eligibility for depreciation, including any accelerated depreciation provisions

• The impact of any available first-year depreciation incentives on qualifying new assets

• Timing of purchase and commissioning to maximise current-year deductions

Loss utilisation

If your business has carried-forward tax losses, ensure these are correctly claimed and offset against 2026 income. Review any grouping or consolidation opportunities if you operate multiple entities.

Action required: Contact us before 31 March if your 2026 profit is materially different from expectations, or if you are considering significant asset purchases, restructures, dividend payments, or other transactions that may affect your tax position. Early advice can optimise your tax outcome and preserve cash flow.

MONITORING YOUR TAX POSITION THROUGH MYIR

Staying on top of your tax obligations requires regular monitoring of your myIR account. IRD increasingly communicates important notices, payment reminders, and compliance updates through myIR, and failing to check your account regularly can result in missed deadlines, unexpected penalties, or unaddressed queries. We recommend checking myIR at least monthly to review your current tax position, upcoming payment obligations, and any correspondence from IRD. If you notice discrepancies, outstanding returns, or unexpected assessments, contact us immediately so we can address issues before they escalate. Proactive monitoring helps you stay compliant, avoid unnecessary penalties, and maintain good standing with IRD.

Action required: Make it a routine practice to log into myIR monthly. If you have difficulty accessing your account or notice anything unexpected, contact us for assistance.

KEY TAX DATES SNAPSHOT 2025–2026

This is a high-level guide assuming 31 March balance date. Always check myIR for your exact dates.

Income Tax – 2026 Year

Provisional Tax (standard method, 31 March balance date)

GST (two-monthly filers, 31 March balance date)

FBT

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.