MEDIA RELEASE (NZ)

Budget 2026 attempts to strike a difficult balance between supporting economic growth and setting New Zealand on a pathway towards a fiscal surplus, says Chartered Accountants Australia and New Zealand.

“Rather than deliver a ‘zero-budget’ to restore fiscal surplus faster, the Government has taken the middle path of continuing to borrow to support economic growth,” said CA ANZ Chief Executive Officer Ainslie van Onselen.

“The question is whether future governments can sustain this Budget’s four-year pathway to lift New Zealand out of a structural deficit and billions of dollars of debt servicing costs each year. The answer to that question is critical – returning to surplus will give future generations more options, particularly in the event of economic shocks and natural disasters.”

CA ANZ had outlined four commitments that it wanted to see from Government to strengthen New Zealand’s economy in the long term and was pleased to see two of them fulfilled – Fringe Benefit Tax simplification and increased tax certainty for charities and not-for-profits.

The one major commitment missing from the Budget was a commitment to address long term retirement setting challenges.

“Interest on borrowings is the fifth highest area of Government expenditure after welfare, National Superannuation, health and education. This fact alone should drive an openness to addressing the long-term challenges of unsustainable retirement settings and tax base fragility,” said New Zealand Country Head, Peter Vial FCA.

“In her Budget speech, the Finance Minister rightly called out that the cost of NZ Super will rise by $1.8 billion in the next year alone. This Budget was a missed opportunity to tackle retirement settings, for example by indexing NZ Super to CPI rather than wage growth.

“This is an opportunity cost budget, as the cost of our debt servicing denies New Zealand other opportunities for investment and growth. The Government will spend more than $10 billion in 2026/2027 on debt servicing costs before it can make inroads into reducing its debt,” concluded Mr Vial.

Notable Tax Changes

“This was never going to be a tax reform budget, but we’re pleased to see three positive moves - to simplify Fringe Benefit Tax, increase tax certainty for charities and simplify tax rules for many small investors with interests in Foreign Investment Funds (FIFs)”, said CA ANZ Tax Leader John Cuthbertson FCA.

“FBT simplification for the private use of motor vehicles is broadly revenue neutral. The requirement to maintain detailed logbooks will be removed with the introduction of a “close enough is good enough” approach. The policy intent is to significantly reduce compliance costs for business.

“New Zealand’s thousands of not-for-profits will be pleased that membership subscriptions and levies will remain non-taxable, although this will likely require legislation to confirm current treatment adopted by most NFPs.

“The Government has limited its exposure here, by capping eligible donations at $100,000, with a maximum tax credit for individuals limited to $33,333. This is also seen as an integrity measure in relation to some donor-controlled charities.

“While a more substantive review of the FIF rules is off the table at this stage, it is pleasing to see that the FIF de minimis threshold has finally been raised from $50,000 to $100,000. This simplifies tax time for many small investors, taking them out of a regime which taxes unrealised gains and is compliance heavy.

“As with the prior two Budgets, this Budget allocates a further $15m per annum or $60m over four years to further enhance and expand Inland Revenue’s tax debt compliance activities. Unlike prior years, a more modest 3:1 return on investment is expected on this additional funding,” concluded Mr Cuthbertson.