Engine Room Chartered Accountants

Budget 2025 was delivered on 22 May 2025, with a strong focus on investment into NZ infrastructure. But what do the Budget announcements mean for your small business?

We've briefly outlined the highlights below. For a more in-depth explanation have a read of our Budget 2025 blog.

• New ‘Investment Boost’ initiative to drive growth
- businesses will be able to deduct 20% of the cost of a new asset in New Zealand or imported including commercial buildings (excluding land, residential buildings and used assets) acquired on or after 22 May 2025.

• An increase to the KiwiSaver contribution rate
- the default rate of employee and employer contributions for KiwiSaver will rise from 3% of salary and wages to 4%, in two steps. From 1 April 2026, the rate will rise to 3.5% and, from 1 April 2028, it will increase to 4%.

• Capital investment in NZ infrastructure
- $1 billion has been allocated for hospitals and other health facilities, over $700 million for new schools and $2.7 billion for the New Zealand Defence Force to boost capability. Over $460 million was also committed to upgrade New Zealand’s rail network to keep people and freight moving.

• Support for foreign investment
- The Government has set aside $65 million to encourage foreign investment in New Zealand infrastructure by increasing the amount of tax deductible debt.

• Science and innovation reforms
- funding support was announced for the transformation of Crown research institutes, establishment of a gene technology regulator, and the creation of Invest New Zealand as a one-stop shop for foreign direct investment.

• Funding for the Elevate New Zealand (NZ) Venture Fund
- encouraging venture capitalists to invest in the Kiwi technology start-up sector.

• Increased funding for Inland Revenue compliance
- an additional $35 million per year was announced for compliance activities by the Inland Revenue. This is expected to generate $280 million in extra tax revenue, indicating a focus on tax enforcement that businesses should be aware of.

If you’re concerned about the increases to KiwiSaver employer contributions, or keen to use the new Investment Boost 20% deduction for new asset purchases, do come and talk to us. We’ll be glad to answer your Budget 2025 questions.

Keep an eye out for updates from us with more details on any of the policies once further information is available.

https://www.engineroomca.co.nz/budget-2025-the-impact-for-your-small-business/

Reminder: Use of money interest rate change

Periodically, the IRD review the UOMI rates so they are aligned with market interest rates.

From 8th May 2025, the rates for underpayment and overpayment of tax will change to the following:

• Underpayment - 9.89% (decreased from 10.88%)

• Overpayment - 3.27% (decreased from 4.30%)