Andersen New Zealand rating Budget 2025

Tough is the job of the government that must balance politics with reality. We think this budget has somewhat put politics aside, and allowed reality to set in. New Zealand has been struggling with rising debt, high inflation and a sombre business climate for some years now. Rightly, the focus of this budget has been GROWTH. 

Cuts to wasteful spending, greater incentives to boost investment domestically and attract foreign capital, introducing means testing to taxpayer funded payments; are some of the measures boldly taken in this budget. We feel these changes are a necessary move to return to fiscal discipline.

On the economic front, some key statistics:

• The economy is expected to grow at 2.9% in 2026 and 3% in 2027
• Unemployment is projected to rise to 5% in 2026 then 4.8% in 2027, higher than previous forecasts
• Wage growth has been revised down to 2.6% for 2026, while house prices are expected to increase significantly, with forecasts of 6.7% growth by 2027 and high growth continuing into 2029
• Revitalise the energy sector with a fund set up to co invest in certain energy projects

Key summary of the budget:

• $6.6 billion worth of incentives unveiled which allows businesses that invest in productive assets to deduct 20% of the new assets value from the years taxable income, in addition to adjusted tax depreciation 
• Easing thin capitalisation rules for foreign companies investing in infrastructure projects in New Zealand
• Relaxing the taxing point for employee share plans in a startup
• Raising Kiwisaver default rate to 4% and reducing Kiwisaver government top up by 50%
• Recovering student loan debt quickly and more efficiently
• Means testing taxpayer funded support payments like Best Start
• Universal unemployment benefits for 18 and 19 year olds who are not studying or undertaking a job will be discontinued

Prior to the budget, the government had already announced that the Digital Services Tax Bill was discharged, bringing an end to a flat 3% tax on digital services. 

This budget is the first in recent times that truly has made tangible changes for investment and business. It also has demonstrated the courage to call out wasteful spending and streamline taxpayer funded support payments. Overall, we rate this budget an A-. 

Next steps and how Andersen can help:

• Consider Investment Boost in your business which does not only apply to machinery but to new commercial and industrial buildings for which depreciation no longer applies. At Andersen, we are able to undertake this review and work out the value of the deduction to aid your investment decisions.
• If you are a startup planning an Employee Share Scheme, talk to us on how to plan a tax effective scheme.
• If you work with a foreign company that is considering investing in New Zealand infrastructure, we can assist with the new rules around Thin Capitalisation.

Contact the Andersen team or reach out to your usual Andersen contact.