New Zealand omnibus tax bill proposes FBT, investment and multinational changes

Employer and investment measures

The Government Bill is before a select committee and its measures remain proposals. Inland Revenue published supporting policy papers on 8 October, but that information release did not change the bill’s legislative stage. For employers, proposed sections RD 28B and RD 28C would create categories for valuing private use of employer-provided motor vehicles, including branding conditions for certain categories. The framework is intended to apply from 1 April 2027, with transitional protection for some existing vehicles.^[1][2][3][4]

The bill would broaden access to the revenue-account method for foreign investment funds and increase the relevant FIF exemption threshold in Income Tax Act 2007 section EX 65 from NZ$50,000 to NZ$100,000 from the 2026–27 income year. It also proposes functional-currency and quarantined financial-arrangement rules designed to reduce taxation of unrealised foreign-exchange movements for eligible taxpayers.^[1][3]

Banks, R&D and cross-border services

For foreign-owned banks, clauses 80 and 81 would amend the thin-capitalisation rules. The proposed capital-ratio threshold would generally be 0.12 for systemically important banks and 0.11 for other foreign-owned registered banks for periods beginning on or after 1 April 2027, with a later buffer adjustment from 2 December 2028.^[1][3]

Research-intensive groups could obtain quarterly advances against expected Research and Development Tax Incentive credits from the 2027–28 income year. Advances would be constrained by eligible expenditure, labour-tax payments and the Commissioner’s approved amount, with an annual ceiling of 80% of the expected credit and a year-end reconciliation.^[1][3]

The non-resident contractor withholding threshold would rise from NZ$15,000 to NZ$75,000 from 1 April 2027 and would be assessed by reference to payments from a single payer. A broader New Zealand source rule is proposed for technical, management and similar service fees taxable under a double tax agreement, replacing the current India-specific formulation in section YD 4(17D)(b).^[1][3]

Pillar Two compliance

Other MNE-relevant provisions would remove a separate New Zealand top-up tax return where no top-up liability exists, permit a designated group representative to file for liable New Zealand entities, and treat the GloBE information return as an assessment for limitation-period purposes. Groups should follow the select-committee process because none of these provisions is enacted.^[1][3]