The Investment Boost tax incentive, enabling businesses to deduct 20% of a new asset’s value (on top of standard depreciation and the existing low-value asset write off for purchases under $1,000), should result in positive impacts to cashflow and stimulate investment by business owners in the tools and assets that can help advance their business.
Treasury officials confirmed that the range of eligible assets the incentive can be applied to has been kept as broad as possible so more businesses can benefit, investing in the tools, machinery, vehicles and technology that will help them grow.
With many SMEs feeling the pressure from inflation and other rising costs, just a quarter of the SMEs MYOB polled in January said they planned to increase their spend on innovation and improving their business operations in 2025, while 50% said their investment would stay the same.
“Business expectations will have been tempered going into this Budget, but this tax incentive will be music to the ears of local business owners looking to invest in assets that will help to accelerate their recovery and spur their productivity,” says MYOB’s Chief Customer Officer, Dean Chadwick.
“This announcement comes at a critical time for businesses, and the Investment Boost will give local SMEs and mid-sized businesses both the certainty they need to invest and the cashflow support that’s vital for growth.
“The positive flow-on effects of this policy have been seen in other countries where similar policies are in place. Ultimately, when businesses invest, the multiplier effect (of buying from other businesses) benefits the whole economy in turn.”
Growing foreign relations, trade prospects and foreign investment
The Growth Budget also demonstrates an ongoing commitment by the coalition Government to grow international relationships and secure more trade agreements, with a total of $83.75m allocated over four years to deepening engagement with key Asian and South East Asian markets.
“This will be welcome news for the 25% of SMEs and 67% of mid-sized businesses in New Zealand that already export their goods and services overseas. In fact, improving relations with foreign governments with a focus on trade agreements was the number one policy action leaders of mid-sized businesses believed would positively impact their organisation’s success over the next five years, so this commitment answers the call and should help to open more doors to new markets.”
Continuing the theme of boosting the economy through improved international ties, Budget 2025 also includes $85m to set up Invest NZ as a dedicated agency to connect foreign investors with New Zealand businesses. Included in the focus of Invest NZ - which starts operating from July 1st - is promoting investment in advanced sectors with growth potential and attracting new capital for innovative New Zealand businesses.
“Business growth doesn’t happen without investment and with a finite investment pool available domestically, it’s pleasing to see the Government expanding horizons for ambitious and innovative New Zealand businesses through Invest NZ,” says Dean. “Mid-sized businesses looking for more capital to help propel their growth to another level, will be particularly buoyed by the prospects this could bring.”
Balancing act with KiwiSaver changes
Business operators will be balancing the opportunities Budget 2025 brings to boost their performance and success, with an increase to employment costs on the way courtesy of changes to KiwiSaver eligibility and minimum contribution thresholds. Today’s announcements see the minimum eligibility age changed to include 16-17 year-olds, while the minimum contribution will increase to 4% for employees and employers, by 2028.
“Ensuring New Zealand businesses are operating in an environment where their growth is supported, innovation is encouraged and investment is incentivised, will be key to the future of the economy if we want it to be truly firing on all cylinders – particularly in a time where high costs remain,” says Dean.
“We are encouraged by some of today’s announcements and look forward to backing local businesses as they move to capitalise on the opportunities Budget 2025 has delivered.”
ENDS
For more information, please contact:
Rosie Miller
NZ PR Specialist
E: rosie.miller@myob.com