Labour to scrap Investment Boost if elected under new plan for small businesses
Labour will scrap National’s Investment Boost if elected – under a new plan focused on small businesses.
Investment Boost was the centrepiece of Budget 2025 and was widely promoted by the Government as an important means of attracting new investment to New Zealand. It applies to domestic and foreign investors.
National has described the move as a “$5 billion tax grab”, a reference to the rough amount Labour would have left over by ditching Investment Boost. Nicola Willis, National’s finance spokeswoman, accused Labour of ripping the money away from small businesses to fund other policies.
“Scrapping National’s $6.6b Investment Boost to fund a $1.56b fig leaf means business owners lose the incentive to invest in genuinely transformative, productivity-enhancing equipment,” Willis said in a statement.
“It is nothing more than a $5b tax grab dressed up as a business policy.”
Investment Boost allows businesses to immediately deduct 20% of the cost of a new asset, before depreciating the rest over time. There is no cap on the value of the asset that this can be claimed on.
However, under Labour’s proposal, the focus is instead on assets under $10,000.
Labour would lift the asset write-off threshold from $1000 to $10,000 for businesses with an annual turnover under $10 million.
It says this shifts the focus to assets that small businesses need, like tools, equipment, ovens, computers and other machinery.
The party says this will replace Investment Boost, which it described as “untargeted” and “unlikely to change many investment decisions”.
The policy is silent on assets worth more than $10,000 or for businesses with turnovers higher than $10m.
According to Budget 2025 documents, Investment Boost was expected to cost about $6.6b over four years.
The entirety of Labour’s new small business policy costs $1.56b, leaving money left over from the replaced Investment Boost.
Labour leader Chris Hipkins revealed the party’s small business policies this morning – saying these owners were taking the risks, putting in the hours, employing locally and keeping communities running.
“But under National, they’re being squeezed by rising costs and falling demand.”
The plan includes:
- Big businesses required to pay small suppliers within 15 days on invoices of $25,000 or less – and publish how quickly they pay their suppliers.
- Lift the asset write-off from $1000 to $10,000 for businesses with annual turnover below $10m, so small businesses can immediately deduct the cost of new equipment from their tax bill.
- Raise the GST registration threshold from $60,000 to $80,000, meaning around 35,000 of the smallest operators will no longer have to register for GST.
Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.