MEDIA RELEASE (NZ)

Chartered Accountants Australia and New Zealand (CA ANZ) say the Government needs to outline a pathway to fiscal security and greater productivity in this year’s Budget – including four commitments that will strengthen New Zealand’s economy in the long term.

“Given the fiscal constraints facing the Government and the already announced $300m reduction in operating allowance, no one is expecting a big-spending Budget. But that doesn’t mean it should lack ambition. The right spending and policy decisions can have a huge impact,” said CA ANZ NZ Country Head Peter Vial FCA.

“Economic certainty comes from long-term thinking. Businesses and households need policies that deliver sustained impact, so that they can effectively plan their own budgets in the long-term.

“Among the Budget details, we are looking for four commitments in May’s Budget - reviewing Investment Boost, moving on retirement settings, simplifying FBT and providing certainty for not-for-profits.”

Reviewing Investment Boost

CA ANZ wants to see the Government commit to an ongoing review of the real-world impact of the Investment Boost policy, which was the centrepiece of last year’s Budget.

“We supported Investment Boost when it was introduced and recognised its potential to lift productivity. However, as we highlighted last year, the policy is not targeted and lacks clear measures in terms of delivering productivity gains.”

“Investment Boost costs taxpayers an estimated $1.7 billion per year, so we need to know whether that spending is effective, and if not, what can be done to fine tune the policy so that it delivers investment into machinery and plant that can drive productivity improvements in our economy.

“In a tight fiscal environment, every dollar matters. New Zealand cannot afford to waste money or provide incentives where they are not needed.”

“Businesses value stability, so we don’t want policy flip-flops. We’ve been there before with commercial building depreciation. But to boost productivity we need smart, targeted settings backed by evidence. Robust data on the effectiveness of Investment Boost is critical.”

A credible signal on retirement settings

CA ANZ is also expecting signals that the Government is committed to addressing the long-term affordability of New Zealand’s retirement settings.

“Recent changes to KiwiSaver, projections by Treasury and the OECD’s recent report have sharpened the focus on the sustainability of retirement settings in New Zealand,” Mr Vial says.

“We are living longer and our population is ageing, which means we need to be proactive about how we fund retirement.

“The Prime Minister has said his party is open to reviewing settings. We know there is a Coalition agreement to negotiate around, but we believe there are practical, politically achievable options the Government could consider in this Budget – that don’t involve means testing or lifting the retirement age.”

“One option would be to index New Zealand Superannuation to the Consumer Price Index rather than wage growth. That would ensure payments keep pace with the cost of living, without automatically rising with productivity growth.”“This change would help manage long-term costs while still maintaining purchasing power for retirees.”

“There is also merit in exploring greater flexibility around the retirement age - allowing people to retire earlier or later at adjusted rates of NZ Super. That approach could be fiscally neutral and provide individuals with more choice.”

“Importantly, any changes should sit alongside measures that encourage stronger private saving, to ease pressure on the public purse over time.”

Mr Vial acknowledges the political realities of an election year and a coalition Government.

“We recognise these are complex issues, but a clear signal of intent would be a positive step. This issue cannot continue to be kicked down the road.”

Simplifying fringe benefit tax

Reducing compliance costs through simplification of fringe benefit tax (FBT) is another key expectation.

“The current FBT regime is a classic example of red tape that adds complexity without raising significant revenue. It plays an important role in maintaining the integrity of the tax system - ensuring income isn’t shifted into non-taxed remuneration - but it must be brought back into balance.”

CA ANZ expects progress in this area as part of broader tax reform.

“We are looking for a clear commitment in the Budget to simplify the FBT regime, in line with proposals we have made.

“Simplifying FBT will free up time for businesses and reduce compliance costs, while maintaining the fairness of the tax system.”

Providing certainty for not-for-profits

CA ANZ is also calling for legislative clarity on the tax treatment of not-for-profits, including the treatment of mutual associations’ member subscriptions.

“Tax on charities and not-for-profits (NFPs) might sound like a niche issue, but it is not,” Mr Vial says.

“New Zealand has more than 29,000 registered charities employing over 105,000 full-time staff — around 4 per cent of the workforce. There are a further estimated 115,000 not-for-profit organisations that are not registered charities.”

“These organisations deliver enormous value including across social services, sport, culture, religion and the environment — often operating on very tight budgets.”

Mr Vial says clearer, fairer tax settings are essential to support their work.

We would like to see a commitment to the following actions:

• Recognition that charities and NFPs do not primarily have a profit motive. Their function is to support the public good and/or their member base. This should be recognised when considering any tax changes.
• Enactment of legislation to confirm that membership subscriptions and levies are not taxable.
• Consistency of tax treatment for NFPs regardless of their organisational structure. Current anomalies exist simply due to accidents of history and past advocacy.
• Abandonment of the proposed minimum distribution rule for all donor-controlled charities. If there are issues with certain donor arrangements, they should be dealt with directly by the Charities Commission and if necessary, by the revocation of charitable status.
• Increase in the current exemption threshold for NFPs’ taxable income from $1,000 to $10,000.

“These changes would provide certainty and reduce administrative burden, while recognising the broader benefit not-for-profits deliver across New Zealand.”

A disciplined Budget still matters

Mr Vial says, while expectations for major new spending are low, the Budget remains a critical opportunity for the Government to set out its long-term fiscal and economic plan.

“A disciplined Budget can still be an effective Budget,” he says.

“What matters is that the Government outlines a credible path forward — grounded in evidence, focused on productivity, and mindful of long-term sustainability.”

“We support the Government’s focus on getting out of a structural fiscal deficit. That will ensure future generations have options and will strengthen our resilience to economic shocks and natural disasters. No one should need an example of what we’re talking about – just look at the current energy crisis.”

“Done well, Budget 2026 can provide the certainty and direction New Zealand needs — not just for today, but for the years ahead.”