Tax after the election: Change, certainty and what business needs

The result points to continuity, but the detail will depend on coalition negotiations

The election was exceptionally close. Preliminary results point to the National, ACT and New Zealand First bloc holding a narrow parliamentary majority, although we will not know the final shape of the Government until special votes are counted and coalition negotiations are complete. On the current numbers, a centre-right coalition looks more likely. For businesses, the more useful question is what this could mean for tax settings and when you may need to respond. Below is our take on the main areas to watch.

Business investment: two different approaches

Both major parties agree that New Zealand needs more business investment and stronger productivity. Where they differ is how to get there. The current Investment Boost gives businesses an immediate deduction equal to 20% of the cost of qualifying new assets. Subject to coalition negotiations, we would expect a National-led government to retain it.

Labour’s approach was more targeted towards smaller businesses. It proposed removing Investment Boost and increasing the low-value asset write-off threshold from $1,000 to $10,000 for businesses with annual revenue below $10 million, from 1 July 2027. Labour also proposed increasing the compulsory GST registration threshold from $60,000 to $80,000 and reviewing provisional tax and filing deadlines.

Why does this matter? Investment Boost generally provides more value for larger or capital-intensive projects. A $10,000 write-off threshold would instead make it simpler for smaller businesses to claim faster deductions for everyday equipment purchases. If you are planning to buy plant, vehicles, technology or software, you should avoid changing course based on campaign announcements alone. Keep the options in your forecasts, but wait for the coalition agreement and confirmed legislation before making tax-driven decisions.

KiwiSaver: higher contributions remain likely

KiwiSaver is another area where the parties differ more on design than direction. National proposed increasing default employer contributions to 6% by 2032, making employer contributions compulsory from 1 July 2028, and extending compulsory contributions to paid parental leave and employees aged over 65. ACT took a different approach. Rather than increasing compulsory contribution rates, it proposed removing tax on qualifying investment earnings within KiwiSaver funds. ACT also proposed ending the annual Government Contribution for members receiving employer contributions, with the tax exemption intended to provide the replacement benefit. New Zealand First proposed a longer-term increase to 10% and wider compulsory enrolment.

Labour proposed making employer contributions compulsory from 1 July 2028 and progressively increasing them to 6% by 2032, including where an employee reduces or pauses their own contributions. It also proposed setting the default employee contribution rate at 4%, while removing the minimum employee rate to give employees greater flexibility.

The practical point for employers is that retirement savings policy is likely to remain active, whatever the final coalition agreement says. Higher compulsory employer contributions would affect payroll systems, employment costs, remuneration packages and future budgets. Large employers and businesses using total-remuneration arrangements should pay particular attention to the transition rules and start modelling the possible cost now.

Personal tax thresholds: watch for timing and payroll changes

Personal income tax thresholds may also come back onto the agenda. National did not publish a full replacement rate structure, although the former Minister of Finance indicated that further inflation-linked threshold adjustments were possible. Labour did not announce any personal income tax threshold changes during the campaign.

For employers, this is mainly a payroll implementation issue. Any change will need confirmed legislation, a clear effective date and enough time for payroll providers and in-house teams to test their systems before the first affected pay period. If you manage payroll internally, it is worth checking now how quickly your system or calculation templates can be updated.

Tax should support business decisions, not disrupt them

Tax changes can support investment, innovation and retirement savings, and targeted measures can reduce compliance costs. The problem is not change itself. The bigger issue is repeated reversals, which can delay spending, complicate forecasts and make boards more cautious about committing capital.

New Zealand’s experience with R&D tax incentives is a useful example. A 15% R&D tax credit was introduced for the 2008/09 income year and then repealed from 2009/10 following a change of government. Inland Revenue’s guidance illustrated the effect using a two-year R&D project: expenditure qualified in the first year but not the second. This does not prove that every business was materially disrupted, but it shows the uncertainty that a short-lived regime can create for businesses investing in multi-year programmes.

In contrast, current Research and Development Tax Incentive provides a good example of continuity. Introduced in 2019, the 15% credit has survived a change of government and has been refined rather than repealed. By July 2026, it had supported more than $10 billion of business R&D activity. The first independent evaluation estimated that each $1 of support generated about $1.40 of additional business R&D investment. In our view, that durability is important because it gives businesses more confidence to plan long-term innovation projects and include the incentive in their investment decisions.

That does not mean tax policy should never change. Governments need to respond to fiscal, economic and social priorities. However, greater cross-party alignment on a small number of core settings, such as R&D support, depreciation and investment incentives, KiwiSaver and tax administration, would reduce unnecessary disruption. Scheduled reviews, sensible transition periods and clear start dates would be far more helpful to businesses than wholesale repeal and replacement after each election.

What businesses should do now

For now, we would suggest businesses take four practical steps: monitor the final result and coalition agreement; identify planned capital expenditure that may be affected by the available deduction; model the payroll and budget impact of possible KiwiSaver changes; and check that payroll systems can accommodate future threshold adjustments. Once the Government confirms its tax work programme, you can move from scenario planning to implementation.

The election may have been close, but the need for a stable, investment-focused tax system is clear. The best outcome for businesses would be tax policy that supports growth while giving you enough certainty to make long-term decisions. We will keep watching the detail and provide further updates as the coalition agreement and tax work programme are confirmed.