New Zealand's Inland Revenue clarifies GST rules for fund managers; key changes and impact on KiwiSaver

Inland Revenue has clarified its position on GST application for fund managers, impacting KiwiSaver providers and other funds in New Zealand. This interpretation statement ends a long-standing debate and reverses a 2022 government proposal to apply GST to all fund management fees, including KiwiSaver.

The new guidance largely reverts to a 2017 position, exempting core fund management services from GST but making outsourced administrative services taxable. The change will be effective from April 1, 2026, to allow fund managers time to adapt.

The debate centers around how to apply GST to fund management fees, given the mixed nature of services provided. Retirement scheme management is currently GST-exempt, but approaches to non-KiwiSaver funds varied. Some managers applied GST to 10% of fees, reflecting an estimated split between exempt financial services and taxable financial advice. Others applied GST to 100% of fees, enabling them to claim GST on all their costs.


The 2022 government proposal to apply GST to all fund management fees, including KiwiSaver, faced significant public and industry backlash. This proposal was projected to increase government revenue by $225 million annually from 2026, likely increasing investor fees. Financial Markets Authority modeling also predicted a $103 billion reduction in KiwiSaver funds by 2070.

The new Inland Revenue interpretation statement clarifies that fees for services provided directly to investors are not subject to GST. However, outsourced administrative services will be taxable. The GST status of third-party investment management services depends on the specific terms and oversight of the appointment.

This new guidance is similar to a 2017 draft proposal. It avoids the projected $225 million annual GST increase from the 2022 proposal.

Fund managers now need to analyze the implications of this decision for their specific operations. The effective date of April 1, 2026, allows time for necessary adjustments.

Separately, taxpayers can legally minimize their tax burden through various strategies. Understanding tax codes, eligibility for credits like Working for Families Tax Credits and Independent Earner Tax Credit, and salary sacrifice options can reduce tax liability. Tax-efficient investment strategies, charitable donations with tax credits, and claiming business expenses are also available.

Parents and individuals earning between $24,000 and $48,000 should verify their eligibility for applicable tax credits. Utilizing salary sacrifice for benefits, investing in tax-efficient vehicles like KiwiSaver and Pie funds, and claiming tax credits for charitable donations can further reduce tax.

Business owners have additional tax reduction options, including claiming home office expenses, vehicle running costs, and GST on business purchases. Salary splitting within a family business and utilizing appropriate structures for property investment can also offer tax advantages.