Budget 2025 Could Boost or Break Your Bottom Line

Budget 2025 isn’t just a tax update. It’s a roadmap for New Zealand’s business future. From asset deductions and KiwiSaver shake-ups to IRD enforcement and infrastructure incentives, the Government’s changes could shift how your business invests, operates, and grows.

Here’s what SMEs need. We break down what you need to know, why it matters, and exactly what actions to take, so you can stay ahead of the curve, avoid penalties, and turn policy into opportunity.

1. Investment Boost: Instant Deductions to Stimulate Growth

What:
The NZ$1.7 billion “Investment Boost” allows businesses to instantly deduct 20% of new productive asset costs, like tools, machinery, and commercial buildings, on top of regular depreciation.

Why:
This incentive is designed to lift capital investment, boost productivity, and stimulate long-term GDP and wage growth. It’s a time-sensitive move to accelerate economic recovery.

Action Plan:

• Review capital investment plans with your accountant
• Identify eligible assets
• Structure purchases before the financial year ends
• Consider leasing vs. buying for tax impact and cash flow

2. KiwiSaver Changes: Nudge Economics in Action

What:
Government contributions drop to 25c per $1 saved (max $261/year). High-income earners lose access. The minimum contribution rate will rise from 3% to 4% over three years, and 16–17-year-olds become eligible.

Why:
The aim is to boost private savings while reducing the Government’s fiscal burden. The changes are rooted in behavioural economics, nudging people to save more, with less government incentive.

Action Plan:

• Update payroll systems to reflect contribution changes
• Communicate clearly with staff. Transparency builds trust
• Offer voluntary employer contributions if viable
• Budget for increasing employment costs over the next 3 years

3. IRD Audits Ramp Up: Be Ready Before They Knock

What:
An extra NZ$35 million a year has been allocated to IRD to intensify audits. Key focus areas: property income, GST discrepancies, and undeclared crypto transactions.

Why:
The Government expects an $8 return for every $1 spent on enforcement. With better data analytics and matching systems, the IRD is sharpening its toolsand compliance errors won’t fly under the radar.

Action Plan:

• Conduct a mini internal audit on your 2024/25 records
• Review GST, crypto, and property transactions
• Use accounting software or hire a qualified bookkeeper
• Keep all documentation for deductions and claims in order
• Be proactive. Contact IRD if issues arise

4. Infrastructure Opportunities and Thin Capitalisation Reform

What:
More public infrastructure funding is on the way, and the Government is reviewing thin capitalisation rules that restrict interest deductions on foreign-backed infrastructure projects.

Why:
To attract offshore capital and unlock greater SME participation in infrastructure delivery. Two options were proposed: a targeted rule for infrastructure or a general rule for all third-party debt (seen as more flexible and cost-effective).

Action Plan:

• Register your business on GETS and industry platforms
• Network with lead contractors or consortia on upcoming projects
• Upskill your team with safety, compliance, or tender-specific certifications
• Stay informed. Track thin cap reform developments, especially if you’re eyeing growth

Navigate. Optimise. Grow.

The 2025 tax year is a pivotal one for New Zealand’s small business landscape. With sweeping Budget changes now in motion, the path forward demands more than just compliance. It calls for strategic, proactive moves that can unlock funding, reduce tax burdens, and futureproof your operations.

The Best Time to Act is Now.

In a year defined by reform, your ability to act early could be the difference between surviving and scaling. Whether it's maximising deductions, updating payroll systems, tightening compliance, or seizing new tender opportunities.

If you're stuck and don't know what to do, our team can help you map out a strategy tailored to your business goals before deadlines hit and opportunities pass.

Book your tax strategy session now. Let’s make 2025 the year your business moves smarter.