Inland Revenue initiated a consultation on 4 December 2025, proposing that shareholder loans not repaid within 12 months be treated as dividends.
New Zealand Inland Revenue launched a public consultation on 4 December 2025 on the taxation of company loans to shareholders.
The consultation proposes a new 12-month time limit, under which certain shareholder loans would be treated as dividends if not repaid within 12 months from the end of the income year in which they were made. The rule would apply only to new loans and only when total lending to shareholders reaches NZD 50,000 or more.
Current rules under review
Inland Revenue noted that while most companies manage shareholder loans responsibly, the existing rules can allow some loans to become unmanageable and potentially never repaid. Data for the 2024 tax year shows about 5,550 companies had outstanding loans to shareholders exceeding NZD 1 million each.
“When a shareholder borrows a large sum and does not repay it, current rules can result in lower tax compared with other shareholders receiving taxable dividends or employees earning income through wages,” Inland Revenue said. “The rules also often fail to collect tax on funds remaining with shareholders when a company is wound up.”
The consultation is set to conclude on 5 February 2026.
