2025 NZ Tax Recap for Businesses

Key tax developments in 2025 and what to look forward to in 2026

2025 has been a busy year for tax developments in New Zealand, much to the delight of tax enthusiasts like me. At the headline level, these range from measures aimed at attracting investment, increasing productivity, increasing savings, supporting compliance, and beefing up Inland Revenue’s compliance activities.

Below is a recap of the key tax developments. I know everyone is time poor, so I have tried to keep the updates brief but still give you enough information to decide which ones need further consideration and/or has the most impact to your business. If you are still not sure after reading, I’d suggest you talk to your friendly tax advisors!

Links to further reading are provided at the end for those inclined to delve into the details.

Disclaimer: The below is not a full list of all New Zealand tax developments in 2025 – I’ve taken the liberty of picking out the ones that I think are most relevant to New Zealand businesses.

Investment Boost

Investment boost was the headline tax measure in the 2025 Budget. It gives taxpayers an option to take an upfront 20% deduction for new or “new-to-NZ” depreciable assets (including non-residential buildings) acquired and available for use from 22 May 2025.

Using a company as an example, you can think of this as an immediate $56 ‘cash-back’ from the government for every $1,000 spent on new assets (here’s the math, $1,000 x 20% x 28%).

A few things worth noting:

• Investment boost can be applied on an asset-by-asset basis, it’s not an all or nothing option.
• There are some quirks in the calculation of tax depreciation for assets you chose to apply investment boost to, and some systems cannot easily be set-up to account for these quirks.
• For most assets, the benefit will be timing, so I’d recommend a cost benefit analysis if you are thinking of applying investment boost across all/some new assets, e.g. is the cost of updating systems worth getting the benefit of the accelerated deduction, do you just apply it for high value assets?

Increased Inland Revenue (IRD) Funding 

As part of the 2025 Budget, IRD received an increase in its permanent annual funding from the government. Pretty straight-forward. Here’s where you need to pay attention: for every $1 of additional funding received, the government is expecting a return of $8 back.

IRD has been and will continue to be very active to find additional tax revenue to collect and this naturally translates to a lot more audit activity. Our recent experience has also shown IRD taking a harder stance, and in some cases, what looks to be an overreach of the current tax settings when investigating taxpayers to collect additional tax.

My advice (and I admit this is very self-serving), if you haven’t had your tax affairs reviewed by your tax advisors recently, start the conversation with them now to make sure you are prepared in case IRD comes knocking on your door. Even if you and/or your advisors do find something that is not quite right, it’s better to tell IRD before they find out to save you from having to pay penalties (in most cases) and have more options to manage cashflow and interest costs for any additional tax due.  

Kiwisaver Changes

From 1 April 2026, the minimum employee and employer Kiwisaver contribution rate will increase to 3.5% and to 4% from 1 April 2028. 
Although a 1% increase in the contribution rate over 2 years does not seem significant, businesses should still factor this in when doing their budgets and forecasts for the years ahead, especially for large employers.

Operationally, if you outsource your payroll, your payroll provider should take care of this change for you. For those doing payroll in-house, this is something that you need to plan for, e.g. if any systems changes are needed or changes need to be made to your calculation templates.

Looking ahead to 2026

FBT Proposals

IRD issued an Officials’ Issues Paper on ‘Fringe benefits tax – options for change’ in April this year with proposals to simply the FBT regime. Although well intended, these proposals made headlines for the wrong reasons, being dubbed by some commentators as IRD proposing a ‘ute tax’. In my humble opinion, this was an unfortunate and unnecessary distraction, but I digress.

Back to topic, the key proposals were:

• Have three categories of vehicles for FBT purposes, ranging from vehicles solely used for business, to somewhere in the middle, to vehicles that are predominantly available for private use. How much FBT you pay would depend on the category your vehicle fell under, for example, for vehicles solely used for business (with some very restricted personal use exemptions), no FBT would be payable.
• For unclassified benefits (being non-cash benefits that are not specifically identified in the FBT rules), either (1) have a threshold ($200 was proposed) and any unclassified benefits under the threshold is exempt; or (2) have a list of unclassified benefits that would be exempt.  

Many of us expected (maybe wished?) the proposed changes to the FBT regime would have been included in the ‘August tax bill’, but no. We’ll have to watch the space in 2026 if these proposals make any progress which may be hit and miss given next year is an election year and all the noise on a ‘ute tax’.

Capital Gains Tax

Speaking of election year, Labour will be campaigning on a narrow capital gains tax for next year’s election. They’ve announced that their CGT will only apply to property and will exclude the family home and farms. Again, watch the space, if/when more details on this policy will be released.

Pre-Christmas tax reminders
Conscious this is getting a bit long when I promised I’d be brief, but I wanted to finish off with some tax reminders for businesses before we all head off for our well-deserved break:

• 15 January 2026 is a provisional tax, GST, and PAYE payment date for many businesses. Plan ahead to make sure you have the cash to pay and have processes set-up to ensure the payments are made on time, e.g. checking your staff/team who authorises the payment are not on extended holidays past 15 Jan. If cash flow is tight, there are options available (e.g. tax finance solutions), and I’d suggest you look into these before you go on break.
• For businesses that have a 31 December yearend
  • 15 January 2026 is the terminal tax due date for your 31 December 2024 tax return. 
  • Wite-off any bad debts in your accounts (e.g. journal entries posted) by 31 December 2025 – this is required for you to get a deduction for tax.
  • If you haven’t yet, try to get your 31 December 2024 income tax return position finalised before the start of the New Year. This will make the preparation of your 31 December 2025 tax accounting calculations a lot cleaner and it’s one less thing you need to worry about heading into the holidays.

That’s a wrap for 2025! On behalf of the Andersen New Zealand team, wishing you all a Merry Christmas and Prosperous New Year. May your holidays be filled with fun and your tax planning be stress-free! 

Further Reading

Budget 2025
Taxation (Budget Measures) Act 2025 - Act commentary
Investment Boost - information sheet
https://www.ird.govt.nz/media-releases/2025/government-investment-pays-off-inland-revenue-achieves-1181-roi-on-compliance 
FBT options for change - consultation officials' issues paper
No change to FBT rules for double cab utes

Author - John Javier