Budget 2026: What small businesses need to know
Budget 2026 did not deliver a long list of major changes for small businesses, but there are still a few tax and compliance updates worth knowing about.
For many business owners, the main takeaway is that the Government is focusing on practical tax changes, compliance, infrastructure investment, and targeted support rather than big headline announcements for small business.
Below are the key points that may matter to you.
Research and Development tax changes
There are proposed changes to the Research and Development Tax Incentive, including the introduction of in-year payments.
This means eligible businesses may be able to access R&D tax credits sooner, rather than waiting until the end of the tax year. For start-ups and businesses investing in innovation, this could help with cashflow and make it easier to keep research projects moving.
There are also proposed changes to some internal software expenditure rules, with the cap on non-administrative internal software R&D expenditure reducing from $25 million to $3 million.
Foreign Investment Fund changes
Budget 2026 includes proposed changes to the Foreign Investment Fund rules.
One of the key changes is an increase to the FIF de minimis threshold for overseas investments, from $50,000 to $100,000. This may reduce compliance for smaller investors with overseas shares or managed funds.
The Budget also extends a newer method for taxing certain unlisted foreign shares, so tax is more closely linked to realised gains and actual dividends.
If you hold overseas investments personally, through a trust, or as part of your wider financial planning, it is worth checking whether these changes could affect you.
Fringe Benefit Tax and motor vehicles
Fringe Benefit Tax can be a frustrating area for businesses, especially where company vehicles are involved.
Budget 2026 includes proposed changes to simplify FBT for motor vehicles. The aim is to reduce the need for detailed logbooks and move towards a more practical approach for recording vehicle use.
This could make life easier for businesses that provide vehicles to employees or directors, but the details will still matter. It is worth reviewing your current vehicle arrangements before assuming the changes will reduce your FBT obligations.
Shareholder loans and company removals
Another important change relates to loans from companies to shareholders.
Under the proposed rules, if a company is liquidated or removed from the Companies Register, any outstanding loans it previously made to shareholders may be treated as taxable income after six months.
This is a reminder that shareholder current accounts and director loans should not be ignored, especially if a company is being wound up or is no longer trading.
If your company has shareholder loans sitting on the balance sheet, it is worth reviewing them before taking any steps to close the company.
Inland Revenue compliance activity
Budget 2026 also includes additional funding for Inland Revenue debt and compliance activity.
This means businesses should expect Inland Revenue to keep focusing on unpaid tax, overdue returns, and non-compliance.
If your business has tax debt or outstanding filings, it is better to deal with these early rather than waiting for Inland Revenue to follow up. Payment arrangements and tax pooling options may be available depending on your situation.
Charities and not-for-profits
There are also proposed changes for charities and not-for-profit organisations.
One helpful change is an increase in the amount of net income a not-for-profit organisation can earn without paying tax, from $1,000 to $10,000.
Other proposed changes relate to donation tax credits, including a cap on eligible donations and options for donation tax credit refunds to be received during the year in some situations.
If you are involved with a charity, club, society, or not-for-profit, it may be worth checking whether these changes affect your reporting or tax position.
What should business owners do now?
While Budget 2026 was not packed with major small-business announcements, there are still some practical areas to keep an eye on.
You may want to review:
Whether your business is eligible for R&D tax incentives
Any overseas investments that may fall under the FIF rules
Company vehicles and FBT treatment
Shareholder or director loan balances
Any tax debt or overdue Inland Revenue obligations
Tax rules for charities or not-for-profit organisations you are involved with
Most of these changes are not things business owners need to panic about, but they are worth being aware of.
Need help understanding what applies to you?
Every business is different, and not every Budget announcement will affect you.
If you are unsure whether any of these changes apply to your business, investments, company structure, or not-for-profit organisation, get in touch with the Hunter Withers team.
We can help you understand what matters, what does not, and what action you may need to take.