Aotearoa New Zealand's Budget 2025 was delivered on 22 May by Finance Minister Nicola Willis. Budget 2025 introduces a new tax incentive - Investment Boost, changes to KiwiSaver and continued funding for Inland Revenue's compliance activities. Notably, the operating allowance has reduced from NZ$2.4 billion to $1.3 billion annually, the lowest in a decade.
Find more information about Budget 2025 and its initiatives on the Budget website. Continue reading for our breakdown of initiatives impacting Digital Service Providers (DSPs).
DSPANZ members will also receive our full spreadsheet breakdown, which is available in our Members
Only area.
Investment Boost
The government is introducing the Investment Boost, which will enable businesses to deduct 20 per cent of a new asset's value from that
year's taxable income on top of normal depreciation. Learn more about the Investment Boost, including how it works and what is
covers in the Inland
Revenue information sheet.
Changes to KiwiSaver
Budget 2025 makes several changes to KiwiSaver, including:
-
Increasing the default rate of employee and employer contributions from 3 per cent to 4 per cent in two steps over the next three years:
- From 1 April 2026, the rate will go to 3.5 per cent
- From 1 April 2028, the rate will go to 4 per cent.
- Enabling employees to opt down to the current 3 per cent rate temporarily.
- Extending the government contribution to 16 and 17-year-olds from 1 July 2025, with employer matching to kick in from 1 April 2026.
- Halving the annual government contribution to 25 cents for each dollar a member contributes.
- People earning over $180,000 a year will no longer receive government contributions from 1 July 2025.
Learn more about the KiwiSaver changes on the Budget website.
Tax and Compliance
Budget 2025 introduces a tax deferral scheme for Employee Share Schemes. This change will defer the taxing point for schemes involving shares in an unlisted company to a point at which the employee can access cash from the shares to meet their tax liability.
There are also changes to Working for Families, including:
- The abatement threshold will increase from $42,700 to $44,900.
- The abatement rate will change from 27 per cent to 27.5 per cent.
- Extending income testing to the first year of the Best Start Tax Credit.
There is continued funding to support Inland Revenue's tax compliance and debt management activities, which is expected to create returns in future years from increased tax revenue and decreased debt impairment.
Following the announcement from Revenue Minister Simon Watts on 20 May
that the Digital Services Tax Bill has been discharged from the government's legislative agenda, the associated forecasted revenue has been
removed. The government is expected to now focus on a global solution.
Supporting Innovation and Technology
The government is creating Invest New Zealand, an investment promotion agency that will work with multi-national corporations and foreign investors to attract people, businesses and capital. Invest New Zealand will focus on science, innovation, and technology.
The government is also establishing a Prime Minister's Science, Innovation and Technology Advisory Council, which will advise on ways to leverage science, innovation and technology for economic growth. The members appointed to the advisory council were announced in early May.
Read more about the changes to refocus the science, innovation and technology system on the Ministry
of Business, Innovation and Employment's website.
What does Budget 2025 mean for DSPs?
DSPs will be closely following the introduction of the Investment Boost as well as the changes to KiwiSaver to support these initiatives in software. DSPs can keep up to date on information from Inland Revenue through their website.
DSPANZ looks forward to working with our members and the government on these Budget initiatives.