2026 is out of the blocks with January already behind us and there finally appear to be some signs that the economy is turning the corner. We are here to help you take advantage of what will hopefully be a more favourable year of business.
Lots to discuss in this Newsletter with a few significant tax changes/issues arising, so let’s get right to it!
Potential GST Consequences for those offering short term accommodation
If you have a property that you are, or you are considering renting out on a short-term basis or using Airbnb or similar type platform, you need to be aware of breaching the GST income threshold of $60,000 per year.
This GST income threshold applies to not only your short-term rental activities but also any other GSTable business activities you might have. This means that if you are already registered for GST in the same entity that owns the property or the combined turnover will take you over $60K this could apply to you.
The consequences of unknowingly exceeding this threshold could be that the property being used to offer short-term accommodation can end up being pulled into the GST net.
Depending on how you came to own this property, this could lead to issues of you having no claim when the property is pulled into the GST net, yet having to pay out 15% of the market value to the IRD when the property is sold or even if you just stop using it as an Airbnb.
If this scenario could apply to you or you, give us a call discuss options and how to navigate this potentially dangerous situation.
Incorporated Societies to Re-Register under the Incorporated Society Act 2022 – Deadline 5 April 2026
Incorporated societies in New Zealand must meet specific criteria to re-register under the Incorporated Societies Act 2022 by the deadline of 5 April 2026.
Societies that fail to re-register by this date will cease to be legal entities.
If you are involved in an Incorporated Society that has not yet considered its options and made a decision on what to do, it would be worth sitting down with us so we can ascertain what would be the best fit for the society going forward.
The Society can then proceed with clarity knowing that is has weighed up all the options and taken the correct path based on its constitution.
Changes To Rules Regarding Overdrawn Current Accounts in Companies
In the past, the treatment has been that if a shareholder has an overdrawn current account in their company, then as long as interest was charged at the prescribed rate, the overdrawn current account posed no issue.
IRD have now proposed significant changes for overdrawn shareholder current accounts.
If an overdrawn current account, with a balance in excess of $50,000 is not be repaid within a set timeframe, i.e 12 months for new loans after 4 December 2025, then that balance could be treated as a deemed dividend and taxed accordingly- effectively taxing the amount of the overdrawn current account at the shareholders marginal tax rate instead of the current situation of just charging interest.
These changes have not yet been placed into law and stem from public consultation papers. This means that while they are not final, they do provide insight into where IRD is placing its attention. It’s important to note that should these rules be put into place, they will be respectively applied back to the 4 December 2025.
If you have an overdrawn current account in your company or are considering taking extra funds out of the company, please get in touch with us to discuss possible proactive solutions to counter these potential tax law changes.
Changes to Kiwisaver employer contributions
There are a few changes coming into effect for Kiwisaver.
The government contribution has dropped from 50 cents to 25 cents for each dollar you contribute to Kiwi-Saver. The maximum annual government contribution therefore is dropping from $521.43 to $260.72.
The default Kiwi-Saver contribution rate will increase from 1 April 2026. The default rate will now be set at 3.5% for employers and employees. This will increase again to 4% on 1 April 2027.
Employees can apply for a temporary rate reduction from 1 February 2026 if they want to carry on contributing at 3% from 1 April 2026.
The temporary rate reduction can be for a 3-month (92 days) to 12-month period. This can be applied for as many times as you like.
Employers can choose to match the temporary rate reduction.
Employers, please ensure you factor this into your cost to company calculations!