Macdonald was the main suspect in the murder of his brother-in-law Scott Guy but was acquitted at a high-profile trial in the High Court at Wellington in 2012.
In the report, Parole Board panel convenor Marion Frater said Macdonald remained an undue risk to the community because he had not addressed the personality factors behind his offending.
The board recommended ongoing intervention from psychologists and support for Macdonald, especially as he made the transition in to the community.
He had been trouble-free while in prison and described as a "polite and compliant" inmate, the report said.
"His parents, as always, remain supportive and are committed to assisting him both immediately following release and on an ongoing basis, particularly to maintain contact with his children," the report said.
The latest release plan for Macdonald included "stringent release conditions".
Macdonald has been participating in a release-to-work scheme and working six days a week from 6.30am to 6pm.
Macdonald and his former wife Anna Guy have signed a consent agreement concerning his contact with their children, which has been incorporated into a Family Court parenting order.
Macdonald was sentenced in September 2012 for a crime spree targeting neighbouring Feilding farms.
He pleaded guilty to six charges, including vandalism of a new house that Scott Guy and and his wife Kylee were building, the slaughter of 19 calves with hammer blows to their heads, the theft and killing of two trophy stags, emptying a neighbour's main milk vat of about 16,000 litres of milk worth tens of thousands of dollars, and burning down a 110-year-old whare.
The charges were not revealed to the murder trial jury, partly because they would have been prejudicial.
This week's decision was the third time Macdonald was denied parole.
Last year, the board said it was not satisfied Macdonald no longer remained an undue risk to the safety of the community.
Macdonald last year said areas of high risk, if he was released, would include contact with his ex-wife and her partner, adverse comments from members of the public, building trust with new relationships, contact with his co-offender and media harassment.
He said his proposed release conditions of living in the South Island, living under a curfew and electronic monitoring, would have alleviated his victims' and the public's concerns. He believed he would still be with his wife if he had not been convicted of these crimes.
Five key points:
* The board once again said Macdonald's "significant personality disturbance" made him an undue risk to the community.
* Macdonald's psychological counselling hadn't addressed the underpinning factors of his offending.
* He has been a "polite and compliant" inmate.
* He is working full-time outside the prison.
* Macdonald and ex-wife Anna Guy have signed a "consent agreement" in relation to his children.
