Changes coming for income tax

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Title: Income Tax Webinar

Subtitle: Changes coming in 2026

Audio

Kia ora everyone and welcome to this webinar.

My name is Vicki Cronin and with me today is Helen Mitchell.

We are External Relationship Managers at Inland Revenue.

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Nau mai

Haere mai

Welcome

Title: Topics

• Property
• Imputation credit account mismatches
• Investment Boost
• Crypto-Asset Reporting Framework
• Trusts

Audio

For this webinar we are focusing on the income tax changes. The topics we’ll cover are property, imputation credit account mismatches, Investment Boost, the Crypto-Asset Reporting Framework, and trusts.

Please note: The information in this presentation is current as at the 24th of February 2026 and may be subject to change.

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Title: Interest limitation

Subtitle: Full deductibility reinstated

• From 1 April 2025, interest on loans for residential investment property is fully deductible.
• March 2025 was the final month with limited interest deductions.
• For March balance dates, the interest limitation rules do not apply from the 2026 income year.
• 2026 income tax returns will no longer include “interest limitation” fields; you won’t be asked to provide those figures.
• Interest previously denied under the phaseout remains non deductible and cannot be reassessed.
• The reinstatement applies to interest incurred on or after 1 April 2025.

Audio

The interest limitation rules for residential property have been phased out.

From 1 April 2025, interest on loans for residential investment property is fully deductible. March 2025 was the final month with limited interest deductions.

For property owners with a March balance date, the interest limitation rules do not apply from the 2026 income year.

The 2026 tax return will no longer ask for interest limitation details, making things simpler.

It’s important to remember that any interest previously denied under the phase-out remains non-deductible and can’t be reassessed.

These changes should make compliance more straightforward and offer greater certainty for property owners.

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Title: Property return filing

Subtitle: Updates to tax returns for easier filing

• myIR will sequence property attachments (e.g., IR3R Rental Income Schedule, IR833 Brightline property sale information) before the income tax return.
• A new field will be added to the IR3R to capture the rental income type, if both types of rental income are selected under the Build your return section.
• Rental income and expenses from IR3R will prepopulate into the appropriate boxes in myIR.
• The share of net brightline profit (excluding losses) from IR833 will prepopulate into the corresponding income tax return box.
• You will still be able to update the prep-populated fields in the return.

Audio

To reduce manual data entry, improve accuracy and efficiency, and ensure consistency between attachments and income returns, we’re introducing several property-related changes in myIR.

myIR will sequence property attachments like the IR3R Rental Income Schedule and IR833 Bright-line property sale information before the income tax return.

A new field will be added to the IR3R to capture the rental income type. This field will only show if both types of rental income, so that’s Income and expenses from residential property and other rental income, are selected under the Build your return section.

Rental income and expenses will now prepopulate in the relevant box in myIR, based on the information in the IR3R, depending on whether the residential rental deduction rules apply.

The share of net profit from the IR833 - Brightline property sale information will also prepopulate into the Net bright-line profit (excluding losses) box in the income tax return.

An information label will display for prepopulated information – this will show what attachment the information was pulled from.

You will still be able to update the prep-populated fields in the return if you need to change the figures.

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Title: Imputation credit account (ICA) mismatches

Subtitle: Disclaimer added

• A disclaimer will be added at the start of the return about the limitations of prepopulated data and the need to review the data or amend where it is not correct and the field is editable.

Subtitle: Opening balance

• If there is no closing balance in the prior year, the prepopulated value will be editable. If you update the prepopulated value, you will be asked to provide an explanation in an additional free text field.

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Changes will be made to Imputation Returns in myIR.

A disclaimer will be added at the start of the return about the limitations of prepopulated data and the need to review the data or amend where it is not correct and the field is editable.

Generally, the Opening Balance field is locked. If there is no closing balance in the prior year, the prepopulated value will be editable. If you update the prepopulated value, you will be asked to provide an explanation in an additional free text field.

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Title: Imputation credit account (ICA) mismatches

Subtitle: RWT Interest Received

The field will also pre-populate any NRT Copyright Royalties and NRT Other Royalties amounts. Currently pre-populates:

• IPS Interest
• NRT Interest
• Reserve Scheme Non-Resident Interest
• Reserve Scheme Resident Interest

Subtitle: Imputation credits attached to dividends received

This field will now also pre-populate any Māori Authority credits. Currently pre-populates:

• DWT Dividends
• NRT Dividends
• RWT Dividends treated as interest

Audio

There will also be changes to the information pre-populated in some of the fields in the Imputation Returns in myIR.

The RWT Interest Received field will now also include any NRT Copyright Royalties and NRT Other Royalties amounts.

The ‘Imputation credits attached to dividend received’ field will now also include any Māori Authority credits.

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Title: Imputation credit account (ICA) mismatches

Subtitle: Other Credits

This field will now also pre-populate any RWT Māori Authority Distribution income and RLWT (Resident Land Withholding Tax) amounts.

Subtitle: Imputation credits attached to dividends paid

Change is to now prepopulate this field with any amounts of:

• DWT Dividends
• RWT Dividends treated as interest
• NRWT Non-resident dividends
• This will be the total imputation credits for each of these returns.

Audio

The ‘Other Credits’ field will pre-populate to include any RWT Māori Authority Distribution income and RLWT, that’s Resident Land Withholding Tax amounts.

Finally, the Imputation credits attached to dividends paid field which currently doesn't pre-populate will pre-populate the total imputation credits for each of any DWT, RWT, & NRWT amounts.

I will now hand you over to Helen.

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Title: Investment Boost

Subtitle: Overview

• For assets new or new to New Zealand acquired or constructed on/after 22 May 2025, businesses can claim an additional 20% deduction.
• This is accelerated depreciation: claim 20% upfront, then depreciate the remaining 80% as usual.
• The total deductions over the asset’s life are unchanged; the timing shifts to increase year one relief.
• No separate notification is required; include Investment Boost in the income tax return and financial statements/IR10 alongside depreciation loss.

Audio

Thanks, Vicki.

The next change, we’ll cover relates to Investment Boost.

Investment Boost was introduced on 22 May 2025. It allows businesses to claim 20% deductions for the costs of new (or new to New Zealand) business assets that they bought - or finished constructing - on or after 22 May 2025.

It is a form of accelerated depreciation, so businesses claim 20% of the cost of new assets as an expense, then claim depreciation as usual on the remaining 80%. It does not change the total value of deductions they claim over the life of an asset. It just allows them to claim a greater deduction in the 1st year. 

Businesses don’t need to notify us if they claim Investment Boost. But they do need to include it in their return, and financial statements or IR10, with any other depreciation loss they claim.

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Title: Investment Boost

Image: Screenshot of the IR10 Financial Statements Summary showing the new key point ‘Total value of Investment Boost asset(s) being claimed’ (box 60)

Subtitle: New key point added

• A new key point ‘Total value of Investment Boost asset(s) being claimed’ will be added to the Financial Statements Summary (IR10).
• Use the new key point to enter the total value of assets they claimed Investment Boost for in the tax year.
• Do not include amounts related to private use in the total value.
• Continue to include the amount of Investment Boost claimed in the depreciation fields.

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From the 2026 tax year onwards, there will be a new key point on the Financial Statements Summary (IR10): Total value of the asset or assets for which Investment Boost is being claimed.

Businesses need to enter the total value of assets they claimed Investment Boost for during the tax year.

Amounts related to private use are excluded from this total.

Businesses will also need to continue to include the amount of Investment Boost claimed in the depreciation fields.

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Title: Investment Boost

Subtitle: Change in building use

• If a building’s use as a dwelling increases by 25% or more (e.g., converting the top storey of a commercial building into apartments), a repayment of part of the Investment Boost deduction may be required.

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If a building’s use as a dwelling increases by 25% or more—such as converting part of a commercial building into apartments—there may be a requirement to repay part of the Investment Boost deduction.

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Title: Crypto-Asset Reporting Framework

• We have adopted the Crypto-Asset Reporting Framework (CARF) developed by the OECD.
• This international exchange framework introduces information reporting requirements for Reporting Crypto-Asset Service Providers (RCASPs) such as crypto exchanges, trading platform operators and brokers.
• The information will focus on crypto-assets, which can be transferred and held outside of banks and other traditional financial intermediaries.
• We will share information received from New Zealand-based RCASPs with other tax authorities that follow the OECD framework if the information is about users who live in their country.
• We will receive information from other tax authorities about income earned by New Zealand tax residents using RCASPs in their jurisdiction.

Subtitle: What we will use the information for

• We will use the information to check that crypto-asset related income earned by New Zealand tax residents is included in their income tax returns. 

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The following slides outline the Crypto-Asset Reporting Framework, or CARF, which New Zealand has adopted to increase the visibility of activities in the crypto-asset sector.

The CARF framework was developed by the OECD and is an international exchange framework that introduces information reporting requirements for Reporting Crypto-Asset Service Providers (RCASPs)—some examples include crypto exchanges, trading platform operators, and brokers.

The reporting will focus on crypto-assets, which can be transferred and held outside of banks and other traditional financial intermediaries.

Under the framework, we will share information we receive from New Zealand-based RCASPs with other tax authorities that have also adopted the OECD framework, when the information relates to crypto-asset users living in their country.

In return, we’ll receive information from overseas tax authorities about income earned by New Zealand tax residents using RCASPs in their jurisdictions.

This information will help us check that crypto-asset related income earned by New Zealand tax residents is correctly included in their income tax returns.

Its important to note here that the adoption of this framework does not change any of the existing tax obligations crypto-asset users have in terms of

• calculating income from their crypto-asset activity
• including their crypto-asset related income in their tax returns
• and paying income tax.

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Title: Crypto-Asset Reporting Framework

Subtitle: Actions for RCASPs

Starting from 1 April 2026, New Zealand-based RCASPs are required to:

• collect identifying information about crypto-asset users and details about their tax residency
• report detailed information about users’ relevant transactions.

The first reporting period covers transactions from 1 April 2026 to 31 March 2027, with the first report due by 30 June 2027.

Subtitle: Actions for users

• Crypto-asset users need to provide their RCASP with identifying information, including such things as their name, address, IRD number and tax residency.
• Penalties may apply if users fail to provide the required identifying information or give false information.

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Starting from 1 April 2026, New Zealand-based RCASPs, will have new obligations under the Crypto-Asset Reporting Framework.

They’ll need to collect identifying information about their crypto-asset users and report on relevant transactions made through their platforms.

Relevant transactions include:

• Exchanges between crypto-assets and fiat currencies.
• Exchanges between different crypto-assets.
• Transfers of crypto-assets, including reportable retail payment transactions.

The first reporting period covers transactions from 1 April 2026 to 31 March 2027, with the first report due by 30 June 2027.

There are also actions for users. Crypto-asset users need to provide their RCASP with identifying details such as their name, address, IRD number, and tax residency. We are creating a new factsheet for crypto-asset users that you will be able to use to help answer enquiries from this customer group.

This information is essential to ensure accurate reporting under the framework. Therefore penalties may apply if users fail to provide the required information or provide false details.

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Title: Trusts disclosures

Subtitle: Legislative provisions repealed

• The change repeals the specific legislative provisions for trust disclosures.
• Applies from the 2026–27 income year and later.
• Inland Revenue will continue to collect trust information under its general information collection powers for the 2025-26 year.

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Specific legislative provisions for trust disclosures are being repealed, this will apply from the 2026–27 income year onwards.

Inland Revenue will continue collecting the same information but under its general information collection powers for the 2025-26 Income year.

The information that we will collect will be reviewed for the 2026-27 year.

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Title: Additional Income Tax Changes

Subtitle: Overview

Income return errors

• Validation and return error rule updates
• Excess imputation credits key point added to IR3NR paper return

Tax pooling pilot

• Trial to use tax pooling to pay old income tax debt

Investment Boost

• Asset transfers between associates
• Asset transfers in certain circumstances
• Low value asset threshold
• Secondhand exclusion

Audio

There are some further changes that may be of interest, I’ll cover these briefly:

Income return errors
New validation rules for IR7 returns filed via Gateway Services prevent incorrect attachments (IR7P/7L) from being submitted, reducing errors and improving processing times.

Income return errors
The paper IR3NR returns now include a key point for excess imputation credits, ensuring accurate reporting and reducing the risk of miscalculation.

Tax pooling pilot
A proposed pilot would aim to extend tax pooling to pay tax for the 2023 and 2024 income years. It is similar to the COVID extension process, and an updated spreadsheet will be provided. Applications would open from 1 April 2026 and close 1 October 2026.

In the investment Boost space

Asset transfers between associates
When a depreciable asset is purchased from an associated person or entity, future depreciation will be based on the asset’s original cost—not the purchase price. The original cost is calculated before any Investment Boost deduction claimed.

Asset transfers in certain circumstances
If an asset is acquired and treated as having claimed depreciation losses, it will also be treated as having claimed any Investment Boost deduction. Businesses should understand the implications for tax planning.

Low value asset threshold
The 20% Investment Boost deduction must be excluded when determining whether an asset qualifies under the low-value asset threshold. The threshold is based on the asset’s original cost.

Secondhand exclusion
Clarifies which assets are eligible for Investment Boost deductions. Businesses should review eligibility criteria to ensure compliance.

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Title: Additional Income Tax Changes

Subtitle: Overview

Corporate/minor beneficiary rule – IR6B

• The Corp/Minor Beneficiary tick box has been moved to earlier in the paper IR6B form.

Income derived from residential sale of excess electricity

• Income from selling excess electricity from a residential supply will be exempt from income tax in some circumstances.

Short selling with foreign shares

• Clarifies tax treatment for short selling foreign shares.

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Corporate/minor beneficiary rule – IR6B
The Corp/Minor Beneficiary tick box has been moved to earlier in the paper IR6B form.

Income derived from residential sale of excess electricity
Income from selling excess electricity from a residential supply will be exempt from income tax in some circumstances. If it is exempt, related expenses cannot be claimed as tax deductions.

Short selling with foreign shares
This clarifies tax treatment for short selling foreign shares. Provides clearer rules for establishing a tax position.

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Inland Revenue

Te Tari Taake

Ngā mihi maioha

Audio

That brings us to the end of our Income Tax webinar.

If you want to find out more about other webinars available for April Release 2026, go to www.ird.govt.nz/aprilrelease

Thank you for watching.