During her hard-hitting speech, she said she felt she couldn't be compared to the other finalists, Onehunga rap crew SWIDT and veteran PNC, because she was a singer.
"This song is Brown Girl, it speaks so many things, it speaks racism, and being placed in a box. For me, I feel like if I was to accept this, I'm not being truthful (to my) song," she said.
"I feel like if you're putting a singer next to a hip-hop artist, it's not fair. I'm a singer, I'm not a rapper. I'm not a hip-hop artist.
"It feels like I've been placed in a category for brown people, that's what it feels like."
Instead, she chose to give the Tui award to SWIDT, a decision greeted by applause from the crowd, and called for the awards to add a new category for soul and R&B singers.
Recorded Music NZ CEO Damian Vaughan says the changes were made after consulting with artists, labels and managers with the aim of "reflecting our ever-changing and dynamic industry".
"It's important to be responsive to feedback from all corners of New Zealand, listen to those who make and release music, to constantly evolve the Music Awards, and to embrace the way people are consuming music today," he says.
Other changes will see the Best Male Solo Artist and Best Female Solo Artist categories merged into the new category of Best Solo Artist.
And the genre album categories - best rock album, best pop album, etc - and best Maori album will be renamed to "Best Artist" instead, to allow nominees to be put forward with either a full album or a minimum of five single tracks.
The main categories for 2017 are now as follows: Album of the Year, Single of the Year, Best Group, Best Solo Artist, Breakthrough Artist of the Year, Best Maori Artist, Best Rock Artist, Best Hip Hop Artist, Best Soul/RnB Artist, Best Electronic Artist, Best Roots Artist, Best Pop Artist, Best Alternative Artist, Best Worship Artist and Best Classical Artist.
