Budget 2026: What It Means for Your Small Business

Every Government Budget comes with a mix of changes that range from genuinely helpful to "well... that's another thing to keep track of."

The 2026 Budget is no exception.

The good news is there are a few changes that should reduce compliance, a few that could save some tax, and a couple that are worth getting ahead of before they become future-you's problem.

Here's the version without the 80-page legislation:

🚗 Fringe Benefit Tax (FBT)

If your business provides vehicles that employees (including business owners AKA shareholder-employees) can use privately, there's some good news.

What's changed?

The biggest change is that you no longer need to keep detailed vehicle logbooks to track private use.

Which is excellent news, because I don't think I've ever met someone who genuinely enjoys filling out FBT logbooks.

From 1 April 2026, there are also new FBT valuation rates that apply to the tax book value of vehicles if you claim the Investment Boost (more on that shortly).

There are another couple of useful tweaks too:

• You can now choose whether reimbursements of employee personal expenses are treated as PAYE income or as an unclassified fringe benefit.

• Gift cards can be treated as FBT or taxed under PAYE

• If you pay for a global insurance policy where employees receive the same (or very similar) cover, you can pool the value of that benefit instead of calculating it individually.

What should you do?

If you're still keeping FBT logbooks, have a chat with your accountant about whether you can finally retire them. It's also worth checking whether treating reimbursed personal expenses or gift cards under PAYE instead of FBT would simplify things.

🌍 Foreign Investment Fund (FIF) Rules

If you invest in overseas shares, you've probably discovered the FIF rules aren't exactly light bedtime reading.

The Budget includes a couple of welcome changes.

What's changed?

The de minimis threshold has doubled from $50,000 to $100,000.

That means if your overseas investments fall within that range, you may no longer need to calculate FIF income.

There's also a new Revenue Account Method available for unlisted foreign shares.

Instead of paying tax every year on an assumed 5% return (even if the investment hasn't exactly had its best year), you can choose to be taxed on:

• actual dividends received, plus

• 70% of any realised capital gains when the shares are sold.

For some investors, that could be a much better outcome.

What should you do?

If your overseas investments sit between $50,000 and $100,000, it's worth checking whether the FIF rules still apply. If you hold unlisted overseas shares, ask your accountant whether the Revenue Account Method is a better fit.

💼 Shareholder Current Accounts

If you've ever taken money out of your company before declaring a salary or dividend, you've probably created an overdrawn shareholder current account.

Perfectly common.

But it's also an area the Government is paying closer attention to.

What's changed?

If a company is liquidated or removed from the Companies Register, any outstanding shareholder loans will be treated as taxable income to the shareholder six months after the company is removed.

There are also proposals, first announced in December 2025, that would treat new shareholder loans over $50,000 as deemed dividends if they aren't repaid within 12 months.

What should you do?

Don't panic.

But if your shareholder current account has grown into something that makes you slightly nervous every time someone mentions it, it's worth making a plan with your accountant to tidy it up before it becomes an expensive surprise.

🚀 Investment Boost

The Investment Boost is sticking around.

If your business buys eligible new depreciable assets, you can claim an immediate 20% tax deduction in the year they're first used, on top of normal depreciation.

Residential buildings and fixed-life intangible property don't qualify.

What should you do?

If you've been thinking about replacing equipment or investing in new machinery, this is worth factoring into your cashflow planning. Tax shouldn't be the only reason you buy something... but if you're buying it anyway, you may as well claim what's available.

🔬 Research & Development and Charities

A couple of other changes worth mentioning:

• Businesses claiming the Research & Development Tax Incentive can now receive payments during the year, although the software cap has reduced to $3 million.

• For not-for-profit organisations, the tax-free income threshold has increased from $1,000 to $10,000.

💰 KiwiSaver Changes

From April 2026, minimum KiwiSaver contribution rates increased to 3.5%. They will increase to 4% in 2028.

What should you do?

Make sure your payroll software is updated and allow for the slightly higher employer contribution costs in next year's budget.

👀 IRD Will Be Busier

The Budget includes an additional $15 million per year for IRD debt compliance.

In other words, don't expect IRD to become less interested in unpaid tax.

What should you do?

Keep your returns up to date, pay tax on time where you can, and if you're behind, talk to IRD early. They're generally much easier to deal with before they have to chase you.

So... does any of this matter?

For some businesses, not much will change.

For others, there could be opportunities to simplify compliance or improve your tax position.

As always, the trick isn't trying to know every tax rule yourself. It's knowing which ones apply to your business and making sure you're taking advantage of them.

If you're wondering whether any of these changes affect you, get in touch. We'd much rather answer the question now than explain the tax bill later.