Executive summary

On 26 August 2025, the New Zealand Government introduced the Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Bill (Bill). The Bill contains amendments aimed at boosting the New Zealand economy, helping businesses grow and easing tax obligations for new migrants and remote workers. A wide array of changes are proposed, including amendments to:

• The FIF regime, with the changes predominantly affecting new migrants
• Tax settings for "digital nomads," visitors and remote workers
• New Zealand tax obligations for foreign employers of digital nomads and remote workers to limit such obligations
• The timing of taxation for certain employee share schemes, intended to assist the start-up sector

The Bill now awaits its first reading in Parliament and referral to the Finance and Expenditure Select Committee for public submissions.

Detailed discussion

Changes to the FIF regime

The Bill proposes a new optional "revenue account method" that would allow eligible taxpayers to calculate the FIF income of certain foreign investments on a realization basis. Under the new method, New Zealand taxation would apply only to dividends received and a proportion of realized gains or losses on disposal.

These amendments are proposed to apply from 1 April 2025 to individuals who became tax resident in New Zealand on or after 1 April 2024. The person must have been non-resident for at least five years before becoming New Zealand tax resident. Transitional residents and family trusts may also be eligible in some cases.

The revenue account method would broadly be available in relation to:

• Unlisted shares in a foreign company that were acquired before the person became New Zealand tax resident
• All foreign shares where the person is concurrently liable for tax in another country on the disposal of the shares on the basis of their citizenship or a right to work and live in that country, provided New Zealand has a tax treaty with the other country

Several other eligibility criteria and requirements would apply, and specific rules would cover circumstances where the individual has multiple entry and exit points — including rules that would, in some cases, apply a deemed disposal.

The proposals are aimed at ensuring New Zealand's FIF rules do not act as a deterrent to migrants choosing to settle in New Zealand. The changes would provide welcome relief for some migrants, particularly those subject to citizenship-based taxation (such as citizens of the United States).

Digital nomads and remote workers

Several amendments are proposed to allow overseas visitors working remotely to stay longer in New Zealand before triggering certain tax obligations. The changes are proposed to apply to visitors arriving in New Zealand on or after 1 April 2026. Key aspects include the following:

• Eligible "non-resident visitors" would be deemed to be non-resident for New Zealand tax purposes for up to 275 days in any 18-month period.
• Visitors would be allowed to work for their offshore employers, but visitors would not be allowed to undertake work for New Zealand residents or work that requires physical presence in New Zealand and could not sell any goods or services to New Zealand customers.
• New Zealand tax residence would be on a prospective basis — eligible non-resident visitors who lawfully stay beyond the 275 days would be subject to the existing tax residence rules on the date they cease to be a non-resident. Retrospective residence would, however, arise for unlawful overstayers, to ensure tax settings support integrity in immigration laws.
• Certain employment and professional services income earned by visitors would be exempted where the services are performed for a non-resident.
• The new rules would limit the impact of a visitor's New Zealand presence for determining the tax residence of their foreign employer or associated entities (for example when a visitor is a company director). An eligible visitor's presence would therefore not trigger tax obligations under the "center of management" or "director control" rules of corporate tax residency, and a visitor's activities would be disregarded when determining whether a non-resident enterprise has a permanent establishment in New Zealand.

In an increasingly mobile working world, these reforms should help provide certainty for visitors and their employers.

Other changes

The Bill also proposes numerous other changes, including in relation to:

• Employee share schemes: From 1 April 2026, unlisted companies could elect to defer taxation on certain employee share scheme benefits until a "liquidity event," at which point the shares could be more easily valued and sold. Deferral would apply to both resulting income for the employee, and to the deduction claimed by the employer. This change is intended to help the start-up sector, including overseas companies, to attract and retain talent.
• Goods and Services Tax (GST) and unincorporated joint ventures: Members of a joint venture would be able to choose to individually account for GST on supplies made or received in the course of the venture, rather than having to separately register the venture for GST, which could impact overseas joint venture participants.
• Investment Boost: Several retrospective remedial amendments are proposed that would clarify the scope of the recently introduced Investment Boost accelerated tax depreciation deduction.

Implications

The Bill is expected to be enacted by 1 April 2026, although the proposals are subject to change during the Parliamentary process.

The changes will be welcome news for many. For eligible new migrants to New Zealand, the new revenue account method will relieve cashflow concerns imposed by the current FIF regime.

In addition, employers looking to allow flexible working arrangements for their staff will be pleased to see the new "non-resident visitor" rules. The growth in mobile working globally can at times trigger complex taxation consequences for employers, remote workers and business entities. New Zealand will be providing some additional flexibility in recognition of the modern ways of working, ensuring employers and visitors have clarity as to their New Zealand tax obligations.