From 1 April 2026, unlisted NZ companies can elect to designate ESS shares as 'employee deferred shares', deferring an employee's tax until the earliest liquidity event (company listing, or shares sold, transferred or cancelled). Tax is then due 20 days after the liquidity event date on the market value less any consideration paid, ending the old 'tax without cash' problem where staff owed tax on paper gains at grant.
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NZ startups can defer employee share scheme tax until a liquidity event from 1 April 2026
Why this matters for founders
Founders issuing equity to hire and retain talent should review ESS documents now and formally elect into the deferral regime when granting shares, notifying IRD and the employee at issue, so recruits aren't hit with tax bills before there is cash to pay them.
Source: Inland Revenue (IRD)
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