We’ve gone through the 2026 New Zealand Budget to see how this effects you. This year the Government’s focus is very clear: getting the books back into surplus, investing in essential services and infrastructure, and making some targeted tax changes designed to reduce compliance and support investment.
For business owners, this is not a Budget full of major new cash injections or broad business tax cuts. In fact, many businesses may feel there was not a huge amount directed specifically at them. However, there are still some important changes worth paying attention to.
We have hand-picked the areas we think are most relevant to business owners, particularly where there may be opportunities to improve cashflow, reduce compliance, review business structures, or position your business for future work. As always, the key is not just knowing what has changed, but understanding how you can utilise those changes.
Key Takeaways
- The Budget overall: The 2026 Budget is focused on fiscal restraint, infrastructure and getting New Zealand back to surplus. Treasury forecasts suggest the economy is still recovering, although global uncertainty and fuel pressures continue to affect households and businesses.
- Infrastructure spending and regional opportunities: There are very few direct measures aimed at small business, but infrastructure spending may create opportunities for businesses in construction, trades, transport, engineering, professional services and supporting industries.
- Research and Development Tax Incentive (RDTI) changes: The RDTI is being adjusted, with proposed in-year payments to help eligible businesses access support sooner and improve cashflow.
- Foreign Investment Fund (FIF) changes: FIF rules are being made more flexible, including lifting the FIF threshold from $50,000 to $100,000 and expanding access to the Revenue Account Method.
- Fringe Benefit Tax (FBT) changes for vehicles: FBT rules for motor vehicles are being simplified, with a new category-based approach and different proposed rates for standard, hybrid and electric vehicles from 1 April 2027.
- Inland Revenue compliance funding: Inland Revenue is receiving further funding for debt compliance, which means tax debt management and timely communication with IRD remain very important.
- Company loans to shareholders: A proposed tax change could turn unpaid shareholder loans into taxable income, so review balances early to avoid an unexpected bill. If you are closing a company this may affect you.
- Charities, clubs and not-for-profits: There are useful changes for charities, clubs and not-for-profits, including increasing the effective tax-free threshold from $1,000 to $10,000 for smaller not-for-profits.
- Banking and finance: Budget 2026’s new prudential levy is not a direct small business tax, but it is a timely reminder to stress-test your cashflow before taking on finance, this is important if you are borrowing or planning a large investment.
Table of Contents
- The Budget
- Infrastructure spending and regional opportunities
- Research and Development Tax Incentive changes
- Foreign Investment Fund changes
- Fringe Benefit Tax changes for vehicles
- Inland Revenue compliance funding
- Company loans to shareholders
- Charities, clubs and not-for-profits
- Banking and finance
- What should business owners do now?
- Final Thoughts
1. The Budget 2026 Overview
The Government has described Budget 2026 as a responsible Budget designed to secure New Zealand’s future. The main theme is restraint: control spending, return to surplus, reduce debt as a share of GDP, and invest in core areas such as health, education, law and order, infrastructure, defence and housing. For businesses, the message is mixed.
On one hand, a stronger economy, lower inflation and a return to surplus would be positive for confidence over time. If interest rates continue to ease and household budgets become less stretched, that can support spending, investment and business growth.
On the other hand, there is no large-scale new business support package in this Budget. For many small businesses still dealing with tight margins, wage pressure, debt repayment, rising costs and uncertain demand, that may feel disappointing.
Our view is that business owners should treat this Budget as a signal to stay focused on the fundamentals: cashflow, profitability, productivity, debt management, staff planning and visibility in your market.
Opportunities are still there, but you may need to be more proactive about finding them.
Further reading: The budget at a glance
2. Infrastructure spending and regional opportunities
A significant part of Budget 2026 is focused on infrastructure. This includes investment in roads, rail, hospitals, schools, courthouses, police stations, defence assets and housing growth.
For business owners, this is one of the more practical areas to watch.
Infrastructure spending tends to create flow-on opportunities. The obvious beneficiaries are construction companies, trades, engineers, contractors and suppliers. But the impact can also reach wider than that, including accountants, lawyers, project managers, health and safety consultants, IT providers, transport operators, accommodation providers, hospitality businesses and local retailers.
The South Island did receive some funding, including state highway resilience work, land for schools in Queenstown and a new police station in Greymouth. However, some regional leaders have noted that the South Island may not have received as much as they had hoped, particularly given the role primary industries and tourism play in the national economy.
Our advice is to be ready. If your business could supply into government, council, infrastructure or construction-related work, now is the time to strengthen relationships, update capability statements, check your online presence, and make sure people know what you do.
Visibility matters. If opportunities are coming through tenders, referrals, local networks or larger contractors, you want your business to be easy to find and easy to choose.
3. Research and Development Tax Incentive changes
For businesses involved in innovation, product development, technology, science, manufacturing, engineering, software or process improvement, the changes to the Research and Development Tax Incentive are worth reviewing.
The key proposed change is the introduction of in-year payments. At the moment, businesses often have to wait until the end of the tax year before receiving their RDTI benefit. That can be difficult for start-ups and growing businesses that are spending money on development now but not seeing the tax credit until much later.
Under the proposed change, eligible businesses may be able to receive payments during the year, which could help improve cashflow and support ongoing research and development activity.
There are also proposed administrative changes to give Inland Revenue more flexibility to accept late RDTI filings and amend minor errors, which may help businesses that make genuine mistakes.
However, the cap for non-administrative internal software expenditure is proposed to reduce from $25 million to $3 million. This will not affect most small businesses, but it is important for larger technology businesses or businesses doing significant internal software development.
What this means for business owners:
- If you are already claiming the RDTI, review how the changes may affect your cashflow and claim process.
- If you are doing development work but have not looked at the RDTI before, it may be worth checking whether you qualify.
- Keep strong records. R&D claims require evidence, so document the problem you are trying to solve, the uncertainty involved, the work completed, staff time, costs and outcomes.
4. Foreign Investment Fund Changes
The Foreign Investment Fund rules are also changing. The FIF regime can affect people who hold overseas shares, ETFs or foreign investments. Many business owners and individuals have found the rules difficult to understand, particularly because tax can sometimes be payable even when no cash has been received.
Budget 2026 proposes lifting the FIF de minimis threshold from $50,000 to $100,000. This means fewer smaller investors will be caught by the FIF rules, reducing compliance costs and surprise tax bills.
The Government is also expanding access to the Revenue Account Method for unlisted foreign shares. This method generally taxes actual dividends and realised gains, rather than taxing deemed income each year.
For business owners, this may matter if you:
- hold direct overseas shares or ETFs;
- have investments outside New Zealand;
- have offshore business interests;
- are a founder or active investor in a business with overseas ownership or listing plans;
- are a migrant or returning New Zealander with assets overseas.
This is an area where the detail matters. The right tax treatment will depend on the type of investment, whether it is listed or unlisted, how much you have invested, and your broader tax position.
If you have offshore investments, this is a good time to review your portfolio and make sure your tax treatment is still appropriate.
5. Fringe Benefit Tax changes for vehicles
Fringe Benefit Tax on vehicles has long been an area that creates confusion for employers.
Budget 2026 proposes a simpler, category-based approach to FBT for motor vehicles. Rather than focusing on detailed day-by-day availability and logbooks, businesses would categorise vehicles based on the level of private use.
This should reduce paperwork and make it easier for employers to apply the rules consistently.
The proposed categories range from full private use vehicles through to pool vehicles with no private use. In some cases, vehicles used mainly for business with limited commuting may have a lower inclusion rate, or potentially no FBT, depending on how they are used.
The other notable change is the proposed rates for different vehicle types from 1 April 2027. Electric vehicles and hybrids are expected to have lower FBT rates than standard petrol or diesel vehicles.
This means business owners should think carefully before replacing or adding vehicles to the fleet.
Questions to ask include:
- How is each vehicle actually used?
- Is the vehicle mainly for business, private use, commuting or a mix?
- Does the vehicle need to be branded?
- Are there policies in place around private use?
- Would a hybrid or electric vehicle make sense from a total cost perspective?
- Could the FBT changes make an EV or hybrid more attractive for your business?
This is not just a tax decision. You still need to consider purchase price, financing, insurance, charging, range, running costs, staff needs and resale value. But for businesses with fleets or staff vehicles, the FBT changes are worth factoring into your planning.
6. Inland Revenue compliance funding
Budget 2026 includes a further $15 million per annum for Inland Revenue debt compliance activities.
That means IRD will continue to place pressure on overdue tax, outstanding returns and non-compliance.
This is an important reminder for business owners. If you are struggling to pay tax on time, do not ignore it. It is almost always better to communicate early, file returns on time, and arrange a payment plan where needed.
Leaving tax debt unmanaged can quickly create stress, penalties, interest and enforcement action.
If cashflow is tight, talk to us early. We can help you understand what is due, what options may be available, and how to avoid the situation getting worse.
7. Company loans to shareholders
Another tax integrity change relates to outstanding loans from companies to shareholders.
The proposal is that six months after a company has been liquidated, or otherwise removed from the Companies Register, any outstanding loans it previously made to shareholders would be taxed as income.
This is relevant for anyone winding up a company, restructuring, or carrying historical shareholder current account balances.
Before closing a company, it is important to review:
- shareholder current accounts;
- loans to shareholders;
- overdrawn balances;
- company assets and liabilities;
- tax obligations;
- whether any balances need to be repaid, cleared or restructured.
This is an area where it is much better to plan ahead than deal with an unexpected tax bill later.
8. Charities, clubs and not-for-profits
There are several proposed changes for charities and not-for-profit organisations.
The most useful change for smaller not-for-profits is the proposed increase in the effective tax-free threshold from $1,000 to $10,000. This should reduce compliance costs for many small clubs and community organisations.
The Budget also proposes ensuring membership subscriptions and levies received by not-for-profits remain non-taxable.
There are also changes proposed for donation tax credits, including a cap on eligible donations of $100,000 per year or the donor’s taxable income, whichever is lower.
If you are involved in a club, charity or not-for-profit, this is worth reviewing, especially if you are responsible for finances, reporting or donations.
9. Banking & finance
Budget 2026 introduces a new prudential levy on banks and other financial institutions to help cover the cost of regulation and supervision by the Reserve Bank.
This is not a direct tax on small businesses, but business owners should continue to keep an eye on borrowing costs, fees and access to finance.
If you are planning to borrow, refinance, invest in equipment, purchase vehicles, expand premises or take on a large project, make sure your numbers stack up under a few different scenarios.
A good cashflow forecast remains one of the most useful tools you can have.
10. What should business owners do now?
Budget 2026 may not deliver major direct relief for small businesses, but there are still opportunities for those who are prepared.
Our practical suggestions are:
- Review your vehicle arrangements before the FBT changes come in.
- Check whether your business could benefit from RDTI changes, especially if you are developing products, processes, technology or software.
- Review any offshore investments in light of the FIF changes.
- Keep tax debt under control and communicate early if cashflow is tight.
- Make sure shareholder loans and current accounts are reviewed before any company wind-up or restructure.
- If your business could benefit from infrastructure or construction-related work, focus on relationships, visibility and readiness.
- For charities, clubs and not-for-profits, review whether the proposed threshold and donation changes affect you.
11. Final Thoughts
The businesses that will make the most of the current environment are the ones that stay visible, keep their numbers up to date, understand their cashflow, and make informed decisions early.
If you are unsure how any of these Budget changes apply to you, please get in touch with our team at Accounting Solutions. We can talk through your situation, help you understand what matters for your business, and make sure you are positioned to make the most of any opportunities.
If you have any questions or concerns about how the 2026 Budget may affect your business, please contact us on 03 374 9393.