Using Your Home For Business? You Can Claim a Portion of Household Expenses

Inland Revenue has released its updated 2026 home-office square metre rate, increasing it from $55.60 to $57.30 per square metre.

While the increase is relatively modest, it’s a timely reminder for New Zealand business owners to review whether they’re claiming their home office expenses correctly before lodging their tax return.

You can claim a portion of your household expenses, such as

• Rent or mortgage interest
• Power and utilities
• Internet costs
• Rates
• Insurance

The portion you can claim relates to the area of your home that you use for business.

In order to claim the expenses, there must be a connection between the use of your home and the business income being generated.

Claiming home office expenses can cut your tax bill – but only if you do it right.

Get it wrong, and you risk over-claiming (which could trigger IRD scrutiny) or missing out on deductions you’re entitled to.

Here are 9 rules and tips to help you get it right and maximise your claim.

1. What are Home Office Expenses?

Home office expenses are costs incurred when part of your home is used for business purposes.

If you’re a business owner and work from home, you may be able to claim a portion of your household expenses as a business expense.

2. What Expenses Can You Claim?

Costs where there’s a clear connection between your home use and business income.

Examples include:

• Rent or mortgage interest
• Rates and insurance
• Power, internet, and other utilities
• Depreciation on capital items (e.g., computers, office furniture)

3. How Much Can You Claim?

The claimable amount is based on the proportion of your home used for business.

Typically, you must set aside a specific area for business use (e.g., an office or storage space). If no dedicated space is set aside, apportionment should consider both the area used and the time spent working from home.

• Private or domestic expenses cannot be claimed.
• To ensure compliance, keep detailed records of expenses and calculations to support your claim.

4. What You Cannot Claim

If an expense doesn’t directly contribute to business income, it can’t be claimed.

Examples include:

• Personal or private expenses (e.g., full home rent, groceries, non-business utilities).
• Mixed-use expenses (unless properly apportioned).

5. How to Split Home Office Expenses

To claim home office expenses correctly, you must split costs between business and personal use. There are two methods:

Method 1: Actual Expenses Method

This method calculates deductions based on the proportion of your home used for business.

• You can claim a portion of utilities, mortgage interest, rates, rent, and other home-related costs.
• The percentage is based on both the area used for business and the time spent working from home.
• Detailed record-keeping is required, as you must track actual costs and apply a fair and reasonable apportionment.
• Best for: Those who prefer greater precision and are willing to keep detailed records.

Method 2: Square Metre Rate Method

This simpler method allows you to calculate deductions using a fixed rate per square metre of your home office.

• The rate is set by the Commissioner of Inland Revenue each year, and is based on the average cost of utilities per square metre.
• Mortgage interest, rates, or rent are not included in this rate, but you can claim them separately by applying the business-use percentage.
• If this option is used, you cannot claim any other expenses or depreciation costs in relation to the business use of your home.
• Less record-keeping required—you don’t need to track utility costs individually.
• Best for: Those who prefer simplicity and want to minimise compliance effort.

Which Method Should You Use?

Both methods have their advantages, and the best option depends on your business setup and preference for simplicity vs. precision.

If you’re unsure which one works best for you:

• I’ve created a free Excel calculator to help you quickly work out your home office expenses.
• You’ll find the download link at the end of this article.

6. GST Considerations

If you’re GST-registered, you can claim the GST portion of home office expenses in your GST returns.

Key considerations:

• GST can only be claimed on GST-inclusive expenses
• Adjustments may be required if business use changes over time

7. Record Keeping: Proof is Everything!

Accurate records is a must to support your claims. Keep:

• Invoices and receipts for all expenses
• Expense calculations showing how you determined business use
• Supporting documents in case of an IRD review

Documentation will be crucial if your claims are ever reviewed by Inland Revenue.

8. Review and Adjust Your Claims Regularly

Your home office setup may change over time, and so should your tax claim.

• If you move homes, update your calculations
• If your business use increases or decreases, adjust the claim accordingly

Keeping your claim up to date ensures you maximise deductions without over-claiming. Regularly review your home office setup and expenses, including reassessing the business use percentage if your work situation changes.

9. Can Salary Earners Claim Home Office Expenses?

Unfortunately, generally not. For employees, home office expenses are not tax-deductible due to the employment limitation in Section DA 2 of the Income Tax Act.

However, there’s an exception: If your employer reimburses you for home office costs, it may be tax-free under certain conditions.

Talk to your employer about reimbursement options.

Conclusion

Claiming home office expenses is a great way to reduce your tax bill, but accuracy is key.

By following these 9 rules and tips, you can maximise your deductions while staying IRD-compliant.

The post Home Office Tax Claims: New 2026 IRD Rates Released – What You Need to Know appeared first on Finex Chartered Certified Accountants.

If your business has a 31 March balance date, the standard deadline to file your income tax return with Inland Revenue is 7 July.

Many business owners don’t realise there are ways to obtain more time.

Here are the 3 main ways to get an extension, including what to do if you’ve missed your deadline.

1. Apply directly to Inland Revenue

You can apply to Inland Revenue before the 7 July deadline through myIR, by phone, or by post.

You’ll need a valid reason, such as:

• Serious illness
• Waiting on essential information from a third party
• An adverse weather event or other exceptional circumstance

2. Use a registered tax agent (the easiest option)

If you’re linked to a registered tax agent, you’ll generally receive an Extension of Time (EOT) to file your return, subject to meeting Inland Revenue’s eligibility requirements.

For many taxpayers, this extends the filing deadline until 31 March of the following year.

That’s an additional 9 months to file your return.

If you currently don’t work with a registered tax agent, you can apply here.

3. Change your year-end balance date

If a 31 March year-end isn’t genuinely suitable for your business, you can apply to Inland Revenue to change your balance date.

If approved, your filing deadline will generally move to the 7th day of the fourth month following your new balance date.

This option is relatively uncommon, but exists as an option.

Its usually only appropriate where there are genuine commercial reasons for changing your balance date, not simply to obtain a later filing deadline.

What happens if you miss the deadline?

If you don’t file on time and don’t have an approved extension, Inland Revenue may impose late filing penalties.

However, if the delay was caused by circumstances entirely outside your control, you may be able to apply to have those penalties remitted. whether you’re eligible for an Extension of Time, it’s worth finding out before assuming you’re already late.

The post Three Ways to Extend your 7 July Income Tax Filing Deadline appeared first on Finex Chartered Certified Accountants.

Every year around this time, thousands of New Zealand business owners panic because they believe they have until 7 July to file their income tax return.

• Their records are not ready.
• Their bookkeeping is behind.

And they start worrying about whether Inland Revenue will hit them with penalties.

The truth?

Many business owners don’t actually need to file by 7 July.

In fact, even Business.govt.nz recently reminded business owners that income tax returns need to be filed by 7 July (see the screenshot below).

But what many business owners don’t realise is that this deadline doesn’t apply to everyone.

In this article, I’ll explain one of New Zealand’s most overlooked tax concessions and how, in many cases, it can give eligible business owners almost nine extra months to file their tax return.

What is the Standard 7 July Deadline?

For most people who prepare and file their own income tax return, the standard filing deadline is 7 July following the end of the tax year.

For example, if your tax year ends on 31 March, your income tax return is generally due by 7 July.

That is why, around this time each year, you’ll often see reminders from Inland Revenue, Business.govt.nz and accountants encouraging taxpayers to get their returns filed.

And those reminders are important.

If 7 July is your filing deadline and you miss it, you may face late filing penalties, Inland Revenue correspondence, and unnecessary stress.

But this is where many business owners become confused.

The 7 July deadline is not everyone’s deadline.

What is an Extension of Time (EOT)?

An Extension of Time (EOT) is a concession that allows eligible taxpayers additional time to file their income tax return.

In many cases, if you are linked to a registered tax agent, your filing deadline can be extended from 7 July to 31 March of the following year.

That is almost nine extra months.

This isn’t a trick.

It isn’t an aggressive tax strategy.

It isn’t exploiting a gap in the law.

It is simply part of how New Zealand’s tax system works.

Surprisingly, many business owners don’t discover this until they’ve spent a lot of time, money and stress rushing to meet the 7 July deadline.

Why Does Inland Revenue Allow This?

Some people assume the Extension of Time exists simply to let taxpayers file late.

That’s not its purpose.

The concession recognises that registered tax agents prepare tax returns for many clients and need sufficient time to ensure those returns are accurate and complete.

Rather than encouraging late filing, it helps improve the quality of tax returns by allowing accounting records to be properly finalised before they’re lodged.

In other words:

The purpose of an Extension of Time isn’t to delay your tax return. It’s to improve it.

Why does this matter?

Because rushing your tax return can cost you money, and increases the chances of mistakes.

When business owners rush to file, they often miss things.

For example, they may:

• Forget deductible business expenses.
• Fail to reconcile their GST properly.
• Overlook shareholder current accounts or loan balances.
• Miss home office or motor vehicle claims.
• Lodge returns based on incomplete bookkeeping.

Sometimes those mistakes result in amendments later.

Sometimes they result in paying more tax than necessary.

An Extension of Time gives you breathing room to ensure your records are complete before lodging your return.

That means:

• More time to get your records organised.
• More time to make sure you’re claiming everything you’re legally entitled to.
• More time to discuss tax planning with your accountant.
• More time to reduce unnecessary errors.

But Here’s My Most Important Warning

An Extension of Time to file is not an extension of time to pay.

This is the part many business owners misunderstand.

Just because your tax return may not be due until 31 March does not automatically mean your tax payments are also deferred until then.

Depending on your circumstances, you may still have:

• Provisional tax.
• Terminal tax.
• GST obligations.
• PAYE obligations.
• Other Inland Revenue payment dates that fall well before your return is due.

Don’t confuse your filing deadline with your payment deadline.

They are two completely different things.

I’ve spoken with business owners who assumed they didn’t need to think about tax until March because that’s when their return was due.

Unfortunately, that misunderstanding can become a very expensive mistake.

Should you wait until March to file?

Not necessarily.

Having extra time doesn’t mean you should use all of it.

The best-run businesses keep their accounting records up to date throughout the year.

They know their numbers.

They understand their cash flow.

And they avoid unpleasant surprises.

Think of an Extension of Time as a safety net, not a strategy.

Used properly, it helps you prepare a better, more accurate tax return.

Used poorly, it simply delays the problem.

The Takeaway

The 7 July tax deadline is real. But it doesn’t apply to everyone.

If you’re linked to a registered tax agent and meet Inland Revenue’s eligibility requirements, you may have almost nine extra months to file your income tax return.

That flexibility can be incredibly valuable.

But remember the one distinction that matters most:

More time to file does not mean more time to pay.

Understanding that difference could save you unnecessary penalties, interest, and a great deal of stress.

If you’re unsure whether the 7 July deadline applies to you, or whether you’re eligible for an Extension of Time, it’s worth finding out before assuming you’re already late.

The post NZ’s Best-Kept Tax Secret for Business Owners: The 7 July Deadline Isn’t Always Your Deadline appeared first on Finex Chartered Certified Accountants.

The IRD has just released its new kilometre rates for the 2026 income year, and you’ll be able to claim more than you could last year.

The new rates are relevant to you whether you’re:

• An employee being reimbursed for work-related travel
• A business owner
• Self-employed
• A contractor
• A rental property owner using your vehicle for deductible travel

The rates have increased across all vehicle categories, including petrol, diesel, hybrid and electric vehicles.

What’s Changed?

Here’s how the Tier 1 rates compare with last year:

The biggest winner this year is electric vehicles.

• The Tier 1 rate has increased 14 cents, an increase of almost 13%.
• The Tier 2 rate increased 4 cents from, an increase of more than 21%.

To put that into perspective, if you travel 10,000 business kilometres in an electric vehicle, that’s an additional $1,400 deduction compared to last year.

Not life-changing money, but certainly worth claiming correctly.

What Are The IRD Kilometre Rates?

The kilometre rate method allows eligible taxpayers to claim a set amount per business kilometre travelled instead of tracking actual vehicle expenses such as:

• Fuel
• Insurance
• Registration
• Repairs and maintenance
• Depreciation

For many sole traders, self-employed contractors and rental property owners, this is the simplest way to claim vehicle expenses.

Who Can Use The Kilometre Rate Method?

The kilometre rate method is commonly used by:

• Sole traders
• Self-employed contractors
• Rental property owners
• Partnerships
• Some shareholder-employees
• Employers reimbursing employees who use their personal vehicles for work

However, not everyone qualifies.

If a vehicle is owned by a company, the actual cost method is often more appropriate.

The right answer depends on your circumstances.

2026 Is A Big Year For Vehicle Tax Rules

The new kilometre rates aren’t the only vehicle-related tax development this year.

Budget 2026 also announced proposed reforms to the Fringe Benefit Tax (FBT) rules for work vehicles.

The proposals aim to simplify compliance by introducing clearer vehicle categories and reducing some of the record-keeping requirements currently faced by employers.

While these changes are not yet law, they signal a broader move towards simplifying vehicle tax compliance.

For business owners, that’s a positive step.

Want To Learn More About Vehicle Expense Claims?

The new kilometre rates are only one part of the picture.

If you’re unsure whether you should use kilometre rates or the actual cost method, or want to understand what vehicle expenses are deductible in New Zealand, I’ve covered that in detail in my article:

Claiming Car Expenses: What IRD Lets You Deduct (and What It Doesn’t)

In that guide, you’ll learn:

• What vehicle expenses you can claim
• What you can’t claim
• The difference between kilometre rates and actual costs
• Common mistakes that trigger IRD scrutiny
• How to maximise your vehicle deductions legally

Claiming Car Expenses: What IRD Lets You Deduct (and What It Doesn’t)

The post New 2026 IRD KM Rates. Here’s How Much More You Can Claim appeared first on Finex Chartered Certified Accountants.

Last month, my team saved a client thousands of dollars without claiming a single extra expense.

IRD charged a four-figure late payment penalty, plus interest.

Most taxpayers would have simply paid it.

Instead, we reviewed the circumstances, prepared a case, and negotiated with IRD on the client’s behalf.

The result?

• Penalty remitted.

Now before everyone rushes off to ask IRD to waive their penalties, it’s important to understand that not every case qualifies.

There are rules.

For example:

• The underlying tax generally needs to be be paid first.
• Your compliance history matters.
• The reason for the late payment matters.
• The way the request is presented matters.

Many taxpayers don’t realise that IRD has discretion in certain situations.

The problem is that most people either don’t know the rules or don’t know how to make a compelling case.

In this article, I’ll walk you through

• 6 ways that may improve your chances of having an IRD penalty removed.
• 3 common myths about IRD penalty remissions
• Why having the right adviser in your corner can make all the difference

1. Show You Had A Reasonable Cause

One of the most common grounds for penalty remission is being able to demonstrate that circumstances outside your control caused the issue.

Examples may include:

• Serious illness
• An accident
• A natural disaster
• Significant emotional distress
• Other unexpected events that prevented you from meeting your tax obligations

The key point is that IRD generally wants to see that the failure wasn’t simply due to negligence or a deliberate decision not to comply.

You also need to show that the circumstances directly contributed to the late filing or late payment.

The stronger the evidence, the stronger your case.

2. Fix The Problem As Soon As Possible

Many taxpayers make the mistake of ignoring the issue and hoping it will go away.

That approach rarely ends well.

If you’ve missed a filing deadline or payment date, take action immediately.

This may include:

• Filing outstanding returns
• Paying outstanding tax
• Contacting IRD promptly
• Gathering supporting evidence

When IRD reviews remission requests, they often look at what happened after the mistake occurred.

Did you act quickly to correct the issue?

Or did you leave it unresolved for months?

Taking prompt action demonstrates good faith and can strengthen your position.

3. Pay The Core Tax First

This is one of the most important points and one that many taxpayers overlook.

In many situations, IRD is unlikely to consider penalty relief while the underlying tax remains unpaid.

Think about it from IRD’s perspective.

Their primary concern is collecting the tax that is actually owed.

The penalty is secondary.

One of the first questions I ask clients seeking penalty remission is:

“Has the tax itself been paid?”

If the answer is no, that’s often the first issue that needs to be addressed.

In our client’s case, ensuring the underlying tax obligation was dealt with formed an important part of the overall strategy.

4. Demonstrate A Strong Compliance History

Not all taxpayers are viewed the same way.

Someone who has consistently filed returns and paid tax on time for years will generally be in a stronger position than someone with a long history of non-compliance.

A good compliance history helps demonstrate that you take your tax obligations seriously and that the issue is unlikely to happen again.

Factors that may help include:

• A history of filing returns on time
• A history of paying tax on time
• No previous penalty issues
• A good overall relationship with IRD

Your track record matters.

The stronger it is, the easier it becomes to argue that the current issue is an exception rather than the norm.

5. Show It Was A Genuine One-Off Mistake

A strong compliance history helps.

But it’s not enough on its own.

You also need to show that the specific incident was a genuine oversight rather than part of an ongoing pattern.

In our client’s case, the missed provisional tax payment wasn’t part of a recurring problem.

It was a genuine one-off mistake.

That distinction matters.

IRD is generally more willing to consider relief where the circumstances suggest:

• An honest oversight
• An administrative error
• A misunderstanding that has since been corrected
• An isolated lapse in an otherwise good compliance record

The easier it is to demonstrate that the issue is unlikely to happen again, the stronger your position becomes.

6. Make A Properly Supported Submission

This is where many remission requests succeed or fail.

Most taxpayers focus on what happened.

IRD also wants to understand why it happened and whether there is a valid basis for relief.

A strong submission should include:

• A clear explanation of the circumstances
• Relevant supporting evidence
• The steps taken to correct the issue
• The steps taken to prevent it from happening again

Supporting documents might include:

• Medical certificates
• Hospital records
• Insurance documents
• Evidence of exceptional circumstances
• Correspondence relating to the issue

Simply saying “I forgot” or “I couldn’t afford it” is unlikely to be enough.

The facts matter.

The evidence matters.

And the way the case is presented matters.

Common Myths About IRD Penalty Remissions

Myth #1: If I Can’t Afford To Pay, IRD Will Waive The Penalty

Not necessarily. Financial hardship alone is generally not a valid reason for penalty remission. While IRD has various debt relief options available in certain circumstances, penalty remission is assessed under specific criteria.

Myth #2: My Accountant Made The Mistake, So IRD Must Remove The Penalty

Not necessarily. The fact that an adviser made an error does not automatically mean a penalty will be remitted. Each case is assessed on its own facts.

Myth #3: Every Penalty Can Be Challenged

Different penalties have different rules. For example, late payment penalties are treated differently from shortfall penalties. The options available depend on the type of penalty involved and the circumstances surrounding it.

Why Having An Adviser In Your Corner Matters

One of the biggest benefits of working with an experienced tax adviser is having someone who understands both the legislation and the practical realities of dealing with IRD.

An adviser can help:

• Assess whether you have a realistic chance of success
• Identify the strongest grounds for remission
• Prepare supporting documentation
• Communicate with IRD on your behalf
• Present the facts in a way that addresses IRD’s requirements

Not every case will succeed.

No adviser can guarantee that.

But having someone who understands the rules and the process can significantly improve your chances.

If you’ve received an IRD penalty, don’t automatically assume the decision is final.

Some penalties can be remitted.

Others cannot.

The key is understanding your options before simply paying the bill and moving on.

Every situation is different, and professional advice should always be tailored to your specific circumstances.

Need Help?

Have you received an IRD penalty and want to know whether it can be challenged or remitted?

Book a call, and my team and I will review your situation, explain your options, and let you know whether there may be grounds to approach IRD.

The post IRD Charged You A Penalty? 6 Ways You Can Get It Removed appeared first on Finex Chartered Certified Accountants.

If your business owes IRD money, I’ve got some bad news.

Budget 2026 has just given Inland Revenue another $15 million a year to strengthen compliance and debt collection activities.

And the Government expects that investment to generate roughly $3 of additional tax revenue for every $1 spent.

That’s a pretty clear sign of where the focus is heading.

The Government wants IRD collecting more of the tax that’s already owed.

So if your business has overdue GST, PAYE, Income Tax or Provisional Tax, now is not the time to bury your head in the sand.

Here’s what I’d recommend business owners do immediately.

1. Find Out Exactly What You Owe

You can’t solve a problem you haven’t measured.

One of the first things I recommend is logging into myIR and reviewing your position.

Look at:

• GST balances
• PAYE balances
• Income tax balances
• Provisional tax obligations
• Interest and penalties

Many business owners know they owe IRD money.

Far fewer know exactly how much.

Start there.

2. Make Sure All Your Tax Returns Are Filed

This is one of the biggest mistakes I see.

Some business owners avoid filing because they can’t afford to pay.

That’s usually the wrong approach.

In many cases, filing the return and dealing with the payment issue separately puts you in a better position than failing to file altogether.

Even if you can’t pay immediately, keeping your filing obligations up to date demonstrates that you’re engaging with the process.

3. Don’t Ignore Letters, Emails or Phone Calls from IRD

Ignoring IRD rarely makes things better. In fact, it often makes things worse.

Many business owners tell themselves: “I’ll deal with it next month.”

Then next month becomes six months. Then six months becomes two years.

If IRD contacts you, respond. Even if you don’t have an immediate solution, communication is usually better than silence.

4. Consider a Payment Arrangement

If you genuinely can’t pay the full amount immediately, a payment arrangement may be an option.

The key word is “early”.

It’s generally much easier to discuss repayment options before the situation becomes critical.

Waiting until enforcement action begins limits your options.

If cashflow is tight, have the conversation sooner rather than later.

5. Get Your Cashflow Under Control

Tax debt is often a symptom rather than the real problem.

The real problem is usually cashflow.

Ask yourself:

• Are you setting aside GST?
• Are you budgeting for provisional tax?
• Are you paying yourself before paying your tax obligations?
• Are you regularly reviewing cashflow forecasts?

Many businesses don’t have a tax problem.

They have a cashflow management problem.

Fixing the underlying issue is often more important than dealing with the debt itself.

You can sometimes easily unlock significant cashflow in your business with some simple fixes.

6. Act Early

One of the biggest mistakes business owners make is waiting too long.

Tax debt problems rarely solve themselves.

Interest continues to accrue, penalties may apply, and the longer the issue remains unresolved, the fewer options you may have.

The earlier you take action, the easier it usually is to get the situation under control.

 7. Talk to Your Accountant

Many business owners wait too long before asking for help.

By the time they speak to their accountant, the debt has grown, penalties have accumulated and the available options are often more limited.

A good accountant can help you:

• Understand exactly what you owe
• Review your cashflow position
• Identify the underlying cause of the debt
• Discuss repayment options
• Help communicate with IRD where appropriate
• Put systems in place to prevent the problem from happening again

The earlier you have the conversation, the more options you usually have.

Remember, most tax debt problems don’t appear overnight.

They build up over time.

And in many cases, they can be addressed before they become a much bigger issue.

My Thoughts

The Government has made its intentions clear.

It wants IRD collecting more of the tax that’s already owed.

If you owe GST, PAYE, Income Tax or Provisional Tax, now is a good time to understand your position, engage with IRD and take action before the problem becomes bigger.

Ignoring tax debt has never been a great strategy. Budget 2026 suggests it’s about to become an even worse one.

If you need help dealing with IRD debt or understanding your options, reach out for a confidential discussion.

The post Owe IRD Money? Here are 7 Things NZ Business Owners Should Do Immediately appeared first on Finex Chartered Certified Accountants.

After 25 years of standing still, the Government has proposed doubling the Foreign Investment Fund (FIF) threshold from $50,000 to $100,000.

If you’ve invested in overseas shares through Hatch, Sharesies, Interactive Brokers or overseas ETFs, Budget 2026 probably gave you something to smile about.

For many investors, that’s potentially the biggest tax simplification announcement in years.

• Social media lit up almost immediately.
• Investors started talking about paying less tax.
• Others assumed the FIF rules no longer applied to them. Some even wondered whether they still needed to worry about FIF at all.

But before you celebrate, there’s something important you need to know.

• If you’re currently preparing a tax return for the year ended 31 March 2026, the old $50,000 threshold still applies.
• And despite the headlines, the proposed $100,000 threshold isn’t actually law yet.

In other words, the announcement is good news.

Just not necessarily for the tax return you’re filing right now.

Let’s look at what Budget 2026 actually announced, who stands to benefit, and the mistake investors should avoid making over the coming months.

First, What Is FIF?

If you’re new to overseas investing, you may not have come across FIF before.

FIF stands for Foreign Investment Fund.

In simple terms, the FIF rules can apply when the total cost of certain overseas investments exceeds $50,000.

Once you cross that threshold, you may need to calculate taxable income each year under special FIF calculation methods, even if you haven’t sold your investments.

For many investors, FIF is one of the most misunderstood and frustrating areas of New Zealand tax law. Because it creates tax liabilities when there is no cashflow to fund it.

If you’d like a detailed explanation of how the rules work, I’ve already covered them in a separate article:

The $50,000 Foreign Investment Funds (FIF) Rule Every NZ Investor Should Know

For now, let’s focus on what Budget 2026 proposes to change.

Why Investors Are Excited

One of the standout tax announcements in Budget 2026 was the proposal to increase the FIF de minimis threshold from $50,000 to $100,000.

If enacted, investors with overseas investments costing less than $100,000 would generally remain outside the FIF regime.

That’s a significant change.

The current threshold has remained at $50,000 since 2000. That’s 25 years without adjustment despite inflation, the rise of online investing and the growing popularity of overseas ETFs.

Think about how much has changed since then.

Back in 2000:

• Online investing barely existed.
• Sharesies didn’t exist.
• Hatch didn’t exist.
• ETFs weren’t nearly as popular.
• Investing overseas was far less common.
• $50,000 had considerably more purchasing power.

Fast forward 25 years and the investing landscape looks completely different.

Today, it’s normal for everyday Kiwis to hold overseas shares and global ETFs as part of their long-term wealth-building strategy.

Many tax professionals have argued for years that the threshold had become outdated.

Budget 2026 may finally address that.

The Catch Most Investors Are Missing

This is where things get interesting.

I’ve already seen social media posts and comments suggesting:

• “The threshold is now $100,000.”
• “FIF won’t apply to me anymore.”
• “The old rules are gone.”

Not so fast.

If you’re currently still working on preparing and filing your tax return for the year ended 31 March 2026 or earlier years, the existing $50,000 threshold still applies.

That’s because the proposed change does not automatically rewrite the rules for prior years.

Let’s look at a simple example.

Example

Imagine you invested $75,000 into overseas shares through Hatch during the year ended 31 March 2026.

You read the Budget announcement and assume the new $100,000 threshold applies.

Unfortunately, that’s not how it works.

For the year ended 31 March 2026, the relevant threshold remains $50,000.

That means you may still need to consider whether the FIF rules apply under the current law.

This is the mistake many investors could make if they only read the headline and not the detail.

The Proposed $100,000 Threshold Isn’t Law Yet

Another important point is that Budget announcements are not automatically law.

What was announced in Budget 2026 is currently a proposal.

The legislation still needs to go through the parliamentary process before becoming law.

That means:

• A Bill must be introduced.
• Parliament must consider it.
• The usual legislative stages must be completed.
• Royal Assent must be received.

Only then does the proposal become enacted legislation.

The Government has proposed that the increased threshold would apply from 1 April 2026 if enacted.

However, until the legislation is passed, investors should treat the increase as a proposed change rather than a confirmed rule.

That’s an important distinction.

Why This Could Still Be Great News

Despite the caution above, I think this is one of the most practical tax proposals announced in Budget 2026.

Here’s why.

1. Fewer Investors Will Be Caught by FIF

Many investors currently sitting between $50,000 and $100,000 of overseas investments may no longer need to deal with FIF calculations.

That’s a meaningful simplification.

2. Lower Compliance Costs

Crossing the FIF threshold often means additional complexity.

Some investors seek professional advice. Others purchase specialist tax reports.

If fewer investors are subject to FIF, compliance costs could reduce significantly.

3. Less Complexity for Everyday Investors

The FIF rules are not easy for the average investor to understand.

Removing thousands of smaller investors from the regime would make overseas investing much easier to navigate.

4. The Threshold Finally Reflects Modern Investing

Perhaps most importantly, the proposal recognises reality.

The world has changed.

Investing overseas is no longer something only wealthy investors do.

It’s now a normal part of building a diversified portfolio.

The tax rules should reflect that.

Who Could Benefit Most?

If enacted, the proposed increase could benefit:

• Hatch investors
• Sharesies investors
• ETF investors
• Young professionals building wealth
• Migrants with overseas investments
• DIY investors managing their own portfolios

For many people, it could mean fewer calculations, less paperwork and lower compliance costs.

What Doesn’t Change?

Even if the proposal becomes law, it’s important to understand what stays the same.

The FIF regime is not being abolished.

Investors with overseas investments above the new threshold may still need to apply FIF rules.

The various FIF calculation methods would remain.

Disclosure obligations may still apply.

This is a threshold change, not the removal of the FIF system.

Should You Be Worried?

Not worried.

But you should be careful.

If you’re currently preparing your tax return for the year ended 31 March 2026, don’t assume the $100,000 threshold automatically applies.

The existing $50,000 threshold still matters.

At the same time, the proposed increase is worth paying attention to because it could significantly simplify things for many investors going forward.

My Thoughts

The proposed increase from $50,000 to $100,000 is undoubtedly welcome news for many Kiwi investors.

But don’t let the headlines fool you.

If you’re currently still preparing or yet to file your tax return for the year ended 31 March 2026 or earlier years, the existing $50,000 threshold still applies.

And until the legislation is passed, the proposed increase remains exactly that, a proposal.

The good news?

If enacted, this could become one of the most practical and investor-friendly tax changes we’ve seen in years.

After 25 years, the FIF threshold may finally be catching up with the way modern Kiwis invest.

The post Invest in Overseas Shares Through Hatch or Sharesies? The $100,000 FIF Threshold Is Big News, But There’s a Catch appeared first on Finex Chartered Certified Accountants.

One day there is suddenly extra money sitting in your bank account, sometimes hundreds or even thousands of dollars you were not expecting.

It’s because the IRD has given you a tax refund.

For many people, it feels like free money.

But I hate to be the one to burst your bubble, a tax refund is not really “free money”.

Let’s break down one of the biggest tax myths.

In most cases, a tax refund simply means you paid too much tax during the year.

In other words?

It’s usually your own money coming back to you.

Sometimes this happens because you were entitled to tax credits or deductions.

Other times, it happens because your employer paid too much tax from your income in the first place.

But those are not the only reasons why you might receive tax refunds from IRD.

Over the years, I’ve seen the same refund patterns repeat again and again.

In this article, I’ll cover:

• 10 common reasons why people get tax refunds from IRD in New Zealand
• Why refunds happen; and
• What you should check before spending the money

1. You Used the Wrong Tax Code

Your tax code tells your employer how much PAYE tax to deduct from your wages.

If the wrong code was used, too much tax may have been deducted during the year.

This often happens when:

• changing jobs
• having multiple jobs
• returning to work
• moving between employee and contractor roles
• payroll makes an error

The result?

IRD reconciles everything later and sends the excess tax back to you.

2. You Only Worked Part of the Year

New Zealand’s PAYE system assumes you will continue earning at the same rate for the full year.

But if you:

• started working partway through the year
• took time off work
• went on parental leave
• stopped working temporarily
• changed from full-time to part-time

you may have ended up paying more tax than necessary.

That can lead to a refund at year end.

3. Your Employer Deducted Too Much PAYE

Payroll mistakes happen more often than people think.

Sometimes employers:

• apply the wrong tax code
• process bonuses incorrectly
• over-deduct PAYE
• incorrectly tax lump sum payments

Many employees never notice during the year because they simply assume payroll is correct.

Then IRD completes the end-of-year square-up and refunds the excess tax.

4. You Made Donations to Charity

A lot of people forget this one.

If you donated money to approved charities or donee organisations in New Zealand, you may be entitled to a donation tax credit.

In simple terms, IRD may refund part of the tax you already paid.

This is especially common for:

• school donations
• charity fundraising
• church, mosque, temple, synagogue donations
• regular monthly giving

But you usually need to keep your donation receipts and claim the credit properly.

5. You Contributed to KiwiSaver

Some people confuse the government KiwiSaver contribution with a tax refund, but it still feels like “free money” to many Kiwis.

If you contribute enough to KiwiSaver during the year, the government may add a contribution to your account.

Many people only discover this later when checking their KiwiSaver balance.

It is not technically an IRD refund in the traditional sense, but it is still a valuable benefit many people overlook.

6. You Overpaid Provisional Tax

This is very common among business owners and self-employed people.

Many people estimate their income higher than it actually ends up being.

As a result, they pay more provisional tax than necessary during the year.

Then once the final tax return is completed, IRD refunds the difference.

This often happens when:

• business income drops
• expenses increase
• profits were overestimated
• business slows unexpectedly

7. Your Income Dropped During the Year

This can create overpaid tax without people realising it.

For example:

• you reduced your working hours
• your business income dropped
• you lost a job
• you moved to lower-paid work

Sometimes the tax already deducted earlier in the year ends up being too high relative to your final annual income.

That can create a refund position.

8. You Claimed Deductible Expenses

Certain people may be able to claim tax deductions for expenses related to earning income.

This is more common for:

• self-employed people
• contractors
• business owners
• commission earners

Examples may include:

• home office expenses
• accounting fees
• motor vehicle expenses
• professional subscriptions
• tools or equipment

These deductions reduce taxable income, which can sometimes lead to a refund if too much tax was already paid during the year.

9. IRD Reconciled Your Income Automatically

Sometimes people receive refunds simply because IRD’s automatic square-up process identified they paid too much tax.

Many salary and wage earners never file a tax return themselves.

Instead, IRD automatically reviews the income information provided by employers, banks, and other institutions.

If too much tax was deducted overall, IRD may automatically issue a refund.

For some people, the refund arrives completely unexpectedly.

10. You Received Working for Families as a Lump Sum

Some families choose to receive their Working for Families payments as a lump sum at the end of the tax year instead of weekly or fortnightly payments.

In some cases, this can feel like a “tax refund” because a large amount of money suddenly arrives from IRD.

This usually happens after IRD confirms your final family income for the year and calculates your entitlement.

Some people prefer this option because:

• it avoids the risk of overpayments during the year
• there is less chance of having to repay IRD later
• they prefer receiving a larger amount in one go

For many families, it can be a helpful financial boost once the year is finalised.

But it is important to remember this is not always a traditional tax refund. Often, it is simply Working for Families entitlements being paid after income has been confirmed.

Before You Spend the Refund…

A tax refund feels great.

But before you spend the money immediately, it is worth checking:

• why you received the refund
• whether your tax situation has now been corrected
• whether the same issue could happen again next year

Sometimes a refund is perfectly normal.

Other times, it may signal:

• the wrong tax code
• payroll issues
• incorrect withholding rates
• poor tax planning

Understanding the reason behind the refund matters.

Because the worst case scenario is ending up in the completely opposite situation next year, getting hit with a surprise tax bill instead.

My Personal Thoughts

Most people assume tax refunds are always a “bonus”.

But in reality, a refund usually means you gave IRD too much money earlier than necessary.

In some situations, that is completely fin.

And if you were not expecting it, it can definitely feel like a bonus or forced savings plan.

But ideally, your tax should be reasonably accurate throughout the year so you are not:

• massively overpaying
• or massively underpaying

The goal is predictability.

Not surprises.

The post 10 Reasons Why You Might Get a Tax Refund from IRD This Year appeared first on Finex Chartered Certified Accountants.

Nobody likes getting a surprise tax bill from IRD.

One day everything feels fine. Then suddenly there is an email, a letter, or a notification in myIR saying you owe thousands in tax you were not expecting.

And the frustrating part?

In many cases, the tax bill was completely predictable.

The worst part is many people only discover the problem when it is already too late to properly plan for it. By then, the money has often already been spent, cashflow becomes tight, and the stress starts building.

Over the years, I’ve seen the same patterns repeat again and again. Salary earners, contractors, business owners, investors, and rental property owners often assume their tax is “sorted”, until they discover it is not.

In this article, I’ll cover:

• The 7 most common reasons people end up with surprise IRD tax bills in New Zealand
• The 5 things you can do to avoid them.
• How to respond if you already have a surprise tax bill

1. Having Multiple Sources of Income

This is one of the biggest causes of surprise tax bills.

Many people assume PAYE handles everything automatically. But once you start earning income from multiple places, things can get messy very quickly.

Examples include:

• a salary plus contracting income
• rental property income
• Airbnb income
• side hustles
• freelance work
• investment income
• overseas income

Often, little or no tax is deducted from the extra income during the year.

So while the money is coming in, the tax obligation is quietly building in the background.

Then at tax return time, the person suddenly discovers they owe IRD thousands.

For example, if someone earns:

• $95,000 salary
• $20,000 contracting income
• $10,000 rental profit

They assume the PAYE from their salary covers everything.

It does not.

The extra income can push them into higher tax brackets and create a much larger tax bill than expected.

2. Using the Wrong Tax Code

A tax code mistake can quietly create a large tax bill over time.

Your tax code tells your employer how much tax to deduct from your pay. There are several tax codes and it’s important to choose the one that’s right for you. The code you use depends on the type and amount of your main income.

Common situations include:

• having two jobs
• changing jobs during the year
• moving from employee to contractor
• using the wrong secondary tax code
• payroll applying the wrong code

The result is simple.

Not enough tax gets deducted during the year.

Then IRD reconciles everything later and sends the bill.

A lot of people try to avoid secondary tax rates because they look “too high”. But the real issue is whether enough total tax is being paid overall.

3. Working for Families Overpayments

This catches many families by surprise every year.

Working for Families payments are usually based on estimated annual income.

But if your actual income ends up higher than expected, some of the payments may need to be paid back.

Common triggers include:

• bonuses
• overtime
• rental income
• business profits increasing
• a partner returning to work
• side income
• investment income

The difficult part is the money has usually already been spent by the time the IRD repayment notice arrives.

That is why the bill feels like such a shock.

4. The ‘Mum-and-Dad’ Property Investor Surprise

Many new rental property owners assume:

“If the property is negative cashflow, there should be no tax.”

Unfortunately, tax does not work off your bank balance.

It works off tax rules.

For example:

• mortgage principal repayments are not tax deductible
• interest limitation rules may apply
• some repairs may need to be capitalised
• bright-line tax may apply
• bookkeeping mistakes can create problems

So it is completely possible for a property to feel “cashflow negative” while still generating taxable income.

This is one of the biggest misunderstandings I see amongst new property investors.

5. Not Putting Tax Aside During the Year

This is extremely common among contractors and self-employed people.

When money hits the bank account, it feels like income.ht answers to the key questions, and to ensure that you’re on the right track.

But part of that money actually belongs to IRD.

The problem is many people spend the money first and think about tax later.

Then when the tax return gets prepared, reality hits.

I often see people say things like:

• “I thought my accountant would reduce it”
• “I didn’t realise it would be that much”
• “I thought I would deal with it later”

A simple habit like putting aside tax weekly or monthly can prevent massive stress later.

6. GST Confusion

GST causes major cashflow problems for many business owners.

One of the biggest mistakes is assuming the money in the bank account is all profit.

It is not.

Some of it belongs to IRD.

Common GST mistakes include:

• not setting GST money aside
• mixing personal and business spending
• registering late
• claiming GST incorrectly
• spending GST money accidentally

A business can appear profitable until GST, PAYE, and income tax all hit at the same time.

That is when the pressure starts.

7. The Provisional Tax Shock

This is where many business owners panic.

The first year of business often feels manageable because tax is usually paid after year end.

But once your income reaches certain levels, provisional tax kicks in.

Now you may need to pay:

• last year’s tax
• plus instalments toward the current year

This creates what many people call the “double tax year”.

Technically it is not double tax.

But from a cashflow perspective, it can absolutely feel like it.

And if nobody warned you early, the bill can be overwhelming.

5 Ways To Avoid a Surprise IRD Tax Bill

Most surprise tax bills are not actually surprises.

Usually the warning signs appear months earlier.

Here are a few simple ways to stay ahead.

1. Review your tax situation regularly. Especially if:

• your income changes
• you start a side hustle
• you buy a rental property
• you become self-employed
• you start earning investment income

2. Put money aside for tax. This is one of the simplest habits that can save enormous stress later.

3. Keep your bookkeeping up to date. Bad records often lead to bad tax outcomes.

4. Check your tax codes and rates. Especially if you have multiple jobs or investment income.

5. Get advice early. Most tax problems become harder and more expensive once they snowball.

What If You Already Have a Surprise Tax Bill?

First, do not ignore it.

That usually makes things worse.

Instead:

• review the assessment carefully
• understand where the bill came from
• contact IRD early if you cannot pay in full
• consider a payment arrangement if needed
• Talk to your accountant if you have one

In many cases, IRD is more willing to work with people who communicate early instead of avoiding the issue.

My Personal Thoughts

Most people I’ve worked with do not intentionally get their tax wrong.

Usually they simply misunderstand how the system works.

The problem is New Zealand’s tax system becomes much more complicated once you have:

• multiple income streams
• investments
• rental properties
• contracting income
• business income

And unfortunately, IRD does not care whether the bill shocked you or not.

The tax is still due.

The good news is most surprise tax bills are avoidable with better planning, better systems, and earlier advice. If you are unsure whether you are heading toward a surprise IRD tax bill, getting clarity early can save a lot of stress later.

The post 7 Common Reasons Why People Get Surprise IRD Tax Bills in NZ, and How You Can Avoid Them appeared first on Finex Chartered Certified Accountants.

Recently, a client paid me an extraordinary $8,500 to fix a simple GST mistake that could have been easily avoided.

Here’s how you can avoid making the same mistake when registering for GST with the IRD.

The 3 Registration Questions IRD Asks You (and How to Get These Right)

When you register for GST, the IRD asks you 3 key questions.

If you get these wrong, you can get your setup wrong and this can create major cashflow and tax problems later.

Here’s a simple guide to help you get this right.

1. Don’t Choose the Wrong Accounting Basis

There are three GST accounting basis options you can choose when registering. These are:

1. Payments basis
2. Invoice basis; or
3. Hybrid basis

For most small businesses starting out, the Payments basis usually works best because you only pay GST after receiving payment from customers.

Why this works best?

Because choosing other than the Payments basis can distort your cashflow.

You end up paying GST on invoices that customers haven’t even paid you yet.

That becomes stressful very quickly when:

• customers pay late
• cashflow is tight
• large invoices remain unpaid

Once your annual turnover exceeds $2 million, you generally need to move to either the Invoice or Hybrid basis.

Tip: Ask your accountant to confirm which GST basis you should be using and whether it suits your business size and industry.

2. Selecting the Wrong GST Filing Frequency

The second key question IRD asks is

‘How often will you file your GST return?’

Again, you get 3 choices:

• Monthly
• Two-monthly; or
• Six-monthly

Many business owners automatically choose six-monthly because it sounds easier as you only need to file twice an year.

But in practice, it often creates bigger problems later.

Why is this a problem?

Because GST slowly builds up in your bank account and many new business owners accidentally spend this money that actually belongs to the IRD.

Then when the GST bill arrives, the cash isn’t there.

For most small businesses, I generally recommend two-monthly filing, because it strikes a good balance between between:

• admin
• discipline; and
• cashflow management

Monthly filing can sometimes work well if:

• you want to stay ultra-current
• you prefer tighter financial control; or
• you regularly receive GST refunds

Tip: If your annual revenue exceeds $500,000, you generally cannot file six-monthly. Even if you can, think carefully before selecting it.

3. Misaligned GST Filing Periods

This is a small detail many business owners overlook. And it can create unnecessary extra headaches and accounting costs later.

If you file GST six-monthly, your filing periods should ideally align with:

• March; and
• September

If you randomly choose other periods during registration, your GST periods may not line up properly with the standard NZ financial year-end.

Why is this a problem?

Because this creates:

• extra reconciliation work
• timing differences
• confusion at year-end
• additional accounting costs

Tip: When registering or changing filing frequency, ask the IRD to align your GST periods with March and September for smoother year-end reporting.

The Takeaway for NZ Business Owners

Registering for GST with the IRD is relatively easy.

But choosing the correct setup options is where many new business owners get caught out, because they often get it wrong.

A small amount of planning upfront can save thousands later.

Its usually best to have a chat with an accountant to ensure you’re selecting the right answers to the key questions, and to ensure that you’re on the right track.

Want to Learn More?

If you’d like to learn more, I dive deeper and talk about my

Top 10 GST Registration Mistakes (and How To Avoid Them)

The post Registering Your NZ Business for GST with the IRD? Read This Before You Apply appeared first on Finex Chartered Certified Accountants.