Below is a summary of the changes announced by the NZ Government on the 22nd May 2025 that will have an impact for businesses and their owners. Please contact your Graham Brown & Co client manager if you have any further queries specific to your situation.
Investment Boost – Immediate 20% deduction for NEW assets
Key Features
- The amount a person can deduct in the income year the asset is first available for use:
- 20% of the cost of the asset, plus
- the amount of the usual depreciation deduction that would otherwise apply but calculated as if the cost of the asset were reduced by 20%
- The asset must be used (or available for use) for the first time on or after 22nd May 2025
- The asset must be NEW to NZ – not previously used in New Zealand for any purpose, other than as trading stock
- NEW investment assets include:
- all depreciable property except residential buildings and Fixed Life Intangible Property (FLIP)
- improvements to depreciable property (other than to residential buildings and FLIP)
- primary sector land improvements
- assets acquired as petroleum development expenditure and mineral mining
- development expenditure (except rights, permits or privileges)
- new-build commercial and industrial buildings that would otherwise have a depreciation rate of 0%
- second-hand assets purchased from overseas
- listed horticultural plants
- Note for new investment assets that are not depreciable property, eg. development expenditure, the deduction would only be available for expenditure incurred from 22nd May 2025
- Some or all of the deduction may be recoverable if the asset is disposed of (or deemed to be disposed of) and the consideration is more than the asset’s adjusted tax value
- Deductions for primary sector land improvements would not be recoverable, as per the treatment under existing amortisation rules
- Assets used partly for business could be eligible, but the deduction will need to be apportioned
KiwiSaver Changes
From 1st July 2025:
- Eligibility for KiwiSaver government contribution extends to 16-17 years of age
- Only earners with taxable income of $180k or less will be eligible for government contribution, effective from start of tax credit year beginning 1st July 2025
- Government contribution halves to a maximum of $260.72, effective from start of tax credit year beginning 1st July 2025
From 1st February 2026:
- KiwiSaver members can apply for a temporary deduction rate reduction to 3% to take effect from 1st April 2026
From 1st April 2026:
- Eligibility for compulsory employer KiwiSaver contributions extends to 16 – 17 years of age
- Compulsory employee and employer KiwiSaver contribution rate increases to 3.5%
- KiwiSaver members can apply to stay at 3% for 92 days to 12 months; note in this case employers can reduce their contribution to match (employees can apply from 1st February 2026 to enable processing time ahead of the 1st April 2026 rate change)
From 1st April 2028:
- Compulsory employee and employer KiwiSaver contribution rate increases to 4.0%
Working for Families Changes
- Increase in abatement threshold from $42,700 to $44,900 and abatement rate from 27% to 27.5% effective 1st April 2026
- Best Start Tax Credit will be income tested in first year (as it already is for years 2 & 3) effective for children born on or after 1st April 2026