Labour has promised to lift the GST registration threshold from $60,000 to $80,000 and pay for it by cutting back the Government’s Investment Boost tax break, in a small business package unveiled at a Wellington service station on Thursday 6 August.
The package, called the Small Business Action Plan – A Fair Go, has three parts. Large businesses would be required to pay small suppliers within 15 days on invoices of $25,000 or less, and to publish how quickly they pay. The instant asset write-off would rise from $1,000 to $10,000 for businesses with annual turnover under $10 million, so equipment can be deducted from a tax bill in the year it is bought rather than written down over several years. And around 35,000 of the country’s smallest operators would drop out of the GST system altogether.
Labour put the cost at $1.56 billion over four years and said it would be funded by refocusing Investment Boost, the 20 percent upfront deduction on new business assets that was the centrepiece of the coalition’s 2025 Budget. Finance and economy spokesperson Barbara Edmonds told reporters that businesses wanting to use Investment Boost under the current rules would have until 30 June 2027 to do so, and that grandparenting arrangements would apply because some assets depreciate over many years. If Labour wins November’s election, the higher asset write-off would start in July 2027 and the new GST threshold in July 2028.
“Giving a company chief executive a tax rebate when they go and buy a new BMW isn’t going to grow the economy. Supporting small businesses will,” Labour leader Chris Hipkins told interest.co.nz.
In the party’s written release, small business spokesperson Dan Rosewarne said running a small business should mean building something of your own, “not spending your evenings chasing overdue invoices and filling in forms”. He said the changes were aimed at “a tradie waiting months for a corporate to pay an invoice, a café owner replacing an oven, or a mechanic upgrading equipment”. Hipkins said small businesses contributed around 42 percent of GDP and were being squeezed by rising costs and falling demand.
The GST change is the piece with the longest history behind it. The $60,000 threshold has not moved since 2009. Businesses and sole traders below it can choose whether to register, but once turnover passes the line they must add GST to their prices and pass it to Inland Revenue, while also being able to claim back the GST on their own supplies.
Deloitte GST expert Alan Bullot told RNZ that New Zealand sat middle of the pack internationally at $60,000, and that if the threshold had kept pace with wage inflation it would be closer to $130,000. He said a higher threshold would mostly help people earning through their own labour rather than businesses buying and selling goods, but warned that it would not remove the underlying problem.
“There will certainly be a number of small businesses that I think would like this,” Bullot said. “There will be a number of small businesses that may just be on the other end of this, which will go, ‘Well, I make $81,000 a year, I’m feeling really hard done by’. It won’t solve the problem, it will just move the problem.”
He also pointed to an inconsistency that a higher threshold would widen. Ride-share and food-delivery drivers are already inside the GST net from the first dollar under the platform economy rules, no matter how little they earn. Bullot said Inland Revenue has long argued the opposite case, on the grounds that the original justification was compliance cost in an era before cloud accounting software, and that some officials would rather see the threshold come down.
The threshold does change behaviour. In a 2024 survey by the contractor accounting platform Hnry, 36 percent of respondents said they limited what they earned to stay under the GST boundary. Wellington personal trainer Carl Rein told Hnry he could not absorb the tax or pass it on. “At the moment, it’s just not worth it, so I have to manage my workload to stay under, which causes uncertainty towards the end of the year,” he said.
The fight now is over what pays for it. Investment Boost, introduced from 22 May 2025, lets a business immediately deduct 20 percent of the cost of a new asset and still depreciate the remaining 80 percent over time. Treasury put the gross fiscal cost at $6.6 billion across the forecast period and estimated the policy would lift GDP by 1 percent, wages by 1.5 percent and the capital stock by 1.6 percent over 20 years.
National’s finance spokesperson Nicola Willis called the swap a raid. “Scrapping National’s $6.6 billion Investment Boost to fund a $1.56 billion fig leaf means business owners lose the incentive to invest in genuinely transformative, productivity-enhancing equipment. It is nothing more than a $5 billion tax grab dressed up as a business policy,” she said. Willis argued small firms might manage “a laptop or two” under Labour’s write-off but would struggle to buy a ute, a commercial coffee machine or manufacturing gear. Earlier this year she had asked Labour for bipartisan agreement to keep Investment Boost in place across governments.
BusinessNZ landed in the middle. Chief executive Katherine Rich welcomed the GST move, noting the threshold has sat unchanged for 17 years and is now below Australia’s equivalent of $75,000, and said all parties should adopt it. She also backed a higher asset write-off. But she said BusinessNZ would be “very opposed” to narrowing Investment Boost to pay for it, arguing larger firms account for the bulk of capital investment in New Zealand.
Rich was cooler on the payment rule. She said cash flow is the single biggest killer of small businesses and that BusinessNZ shares the objective, but the organisation has not supported a mandatory payment period. A mandatory scheme was legislated in the Business Payments Practices Act 2023, later repealed, and BusinessNZ was asked to help design a voluntary Business Payments Code instead. “A single, economy-wide payment rule of around two weeks doesn’t account for how different sectors actually operate,” she said, adding there is no agreed definition of a big business and a badly drawn threshold could capture medium-sized firms facing the same cash flow squeeze. Her wider point was that New Zealand has no mechanism to index tax thresholds to inflation, which is why the GST line sat still for so long in the first place.
New Zealanders vote in November. Our voting tool lets you compare where the parties stand on tax and the economy.
Would a higher GST threshold change how you run your business, or would you rather keep the broad investment write-off? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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