INVESTMENT BOOST: A NEW INCENTIVE FOR BUSINESS INVESTMENT

This $1.7 billion initiative aims to stimulate economic activity by offering immediate tax relief to
businesses investing in capital assets such as machinery, equipment, and commercial vehicles.

Key features:

• 20% immediate deduction on the cost of new eligible assets, in addition to standard depreciation.
• Applies to assets acquired from 22 May 2025, with no limit on the number or value of assets.
• Eligible for assets purchased domestically or internationally.
• Available for new commercial or industrial buildings for which depreciation is not available.
• Includes assets that form part of construction projects that commenced before the 22 May 2025.

Exclusions:

• Land (though some land improvements like fencing may qualify)
• Previously used assets in NZ
• Trading stock
• Residential buildings or dwellings
• Patents and other fixed-life intangible assets
• Assets already fully expensed (e.g., low value assets under $1,000)

Eligibility:

• Any business that operates and pays tax in New Zealand – including foreign-owned entities operating in New Zealand – can take advantage of this deduction.

This Investment Boost initiative will be legislated via the Taxation (Budget Measures) Bill (No 2).

KIWISAVER

Higher Contribution Rates

• From 1 April 2026, the default rate increases to 3.5%
• From 1 April 2028, it increases again to 4%
• Employees may opt down temporarily to 3% and still receive employer matching at the default rate.

Changes to Government Contributions

• From 1 July 2025, contributions will extend to 16- and 17-year-olds
• Employer matching starts for this age group from 1 April 2026

Higher-income earners:

• The annual government contribution will be reduced to 25 cents per $1 contributed
• Capped at $260.72
• No contributions will be paid to those earning over $180,000 (from 1 July 2025)

OTHER TAX RELATED MEASURES

Thin Capitalisation Rules

• $65 million to reform thin capitalisation rules
• Aims to allow foreign investors to deduct more debt interest on infrastructure projects

Inland Revenue Funding Boost

• $35 million annually to enhance tax compliance and collection
• Expected to recover an additional $280 million in tax revenue

Employee Share Scheme Reform

• $10 million to support changes in current tax rules
• Focus is on deferring the taxing point of employee share schemes involving unlisted companies.
• Tax will be deferred until employees can meaningfully liquidate their shares to meet the tax obligations