Taxation (Budget Measures) Act 2025
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Taxation (Budget Measures) Act 2025
Public Act |
2025 No 26 |
|
Date of assent |
29 May 2025 |
|
Commencement |
see section 2 |
Contents
The Parliament of New Zealand enacts as follows:
1 Title
This Act is the Taxation (Budget Measures) Act 2025.
2 Commencement
(1)
This Act comes into force on 30 May 2025, except as provided in this section.
(2)
Sections 4, 5, 6, 14(3) and (4), and 15 come into force on 22 May 2025.
(3)
Sections 9, 10, 11, 12, 13, 14(2) and (5), 25, and 28 come into force on 1 July 2025.
(4)
Sections 18, 19, 20(3), 23, and 26 come into force on 1 February 2026.
(6)
Sections 20(2) and (4), 22(2), and 24 come into force on 1 April 2028.
Section 2(1): editorial change made by the PCO, on 23 June 2025, under sections 86(1) and 87(m) of the Legislation Act 2019 (2019 No 58).
Part 1 Amendments to Income Tax Act 2007
3 Amendments to Income Tax Act 2007
This Part amends the Income Tax Act 2007.
4 New cross-heading and section CC 15 inserted
After section CC 14, insert:
New investment assets: change of use
CC 15 New investment assets: change of use
When this section applies
(1)
This section applies if a person that has deducted an amount for a new investment asset under section DI 5 (New investment asset deduction) subsequently changes the use of the asset such that the percentage of deductible use of the asset under subpart DA (General rules) would change, applying apportionment to the permissions and limitations applicable for section DI 5.
When this section does not apply: less than 25% change in deductible use
(2)
This section does not apply if, for the asset, the amount given by the following formula, expressed as a percentage, is less than 25%:
1 − (new use ÷ previous use).
Income
(3)
The person has, for the asset, an amount of income equal to the amount calculated by the following formula:
DI 5 deduction − (new use ÷ previous use × DI 5 deduction).
Definition of items in formulas in subsections (2) and (3)
(4)
In the formulas in subsections (2) and (3),—
(a)
new use is the new percentage of deductible use under subpart DA for the asset, applying apportionment to the permissions and limitations applicable for section DI 5, expressed as a decimal:
(b)
previous use is the previous percentage of deductible use under subpart DA for the asset, applying apportionment to the permissions and limitations applicable for section DI 5, expressed as a decimal:
(c)
DI 5 deduction is—
(i)
the amount of the deduction under section DI 5 for the previous use, if subparagraph (ii) does not apply:
(ii)
the amount given by the terms in the round brackets in the formula in subsection (3) the previous time this section applied to the asset, if this section previously applied to the asset.
Relationship with subject matter
(5)
For an item that is depreciable property, the amount of income under subsection (3) increases the item’s adjusted tax value for the purposes of section EE 48(1)(a) (Effect of disposal or event).
Example
Thomas buys a new yacht for $100,000 that he begins using in the 2025–26 income year. He reduces the base used for determining depreciation by $20,000. He determines that 90% business use is a reasonable basis for apportionment. He claims $18,000 as a deduction, which is 90% of $20,000. In the 2026–27 income year, he only uses the yacht 40% of the time for business. This is a reduction in business use from 90% to 40%. Had Thomas taken the Investment Boost deduction using the apportionment in the 2026–27 income year, he would have been entitled to claim just $8,000. Thomas must return income of $10,000 ($18,000 − $8,000) in the 2026–27 income year. The asset’s adjusted tax value is increased by $10,000 accordingly.
Defined in this Act: adjusted tax value, amount, deduction, depreciable property, income, new investment asset
5 New subpart DI inserted
After subpart DH, insert:
Subpart DI—New investment assets
DI 1 New investment assets
Purpose
(1)
The main purpose of this subpart is to allow a person a deduction in relation to expenditure on a new investment asset, effectively accelerating depreciation or amortisation, as applicable, for that asset.
Outline
(2)
In this subpart,—
(a)
section DI 2 provides rules for when this subpart applies and does not apply:
(b)
section DI 3 provides the meaning of new asset transferee:
(c)
section DI 4 provides the meaning of new investment asset:
(d)
section DI 5 allows deductions for expenditure on new investment assets:
(e)
section DI 6 provides relationships between this subpart and other provisions of the Act for a person allowed a deduction for a new investment asset and also for certain other people, for example, new asset transferees. Section DI 6 removes, where appropriate, the amount of a deduction for a new investment asset from the calculation of other deductions, tax cost bases, and associated calculations for the asset under relevant depreciation and amortisation provisions, so as to ensure that those other deductions are calculated post-new investment asset deduction. Section DI 6 contains examples of its application.
Defined in this Act: deduction, new asset transferee, new investment asset
DI 2 When this subpart applies and does not apply
When this subpart applies
(1)
This subpart applies for a person,—
(a)
for an asset acquired by them that is depreciable property, if—
(i)
the asset first becomes available for use in New Zealand by the person on or after 22 May 2025, other than as trading stock; and
(ii)
the asset has never previously been used or available for use in New Zealand for any purpose, other than as trading stock; and
(iii)
the person has chosen to apply this subpart to the asset in a return of income for the income year:
(b)
for an asset acquired by them that is not depreciable property, if—
(i)
the person incurs the expenditure in relation to the asset on or after 22 May 2025; and
(ii)
the person has chosen to apply this subpart to the asset in a return of income for the income year.
When this subpart does not apply
(2)
This subpart does not apply to expenditure the person incurs before 22 May 2025 in relation to an asset that is not depreciable property.
Defined in this Act: depreciable property, income year, New Zealand, return of income, trading stock
DI 3 Meaning of new asset transferee
New asset transferee means one of the following persons that acquires an asset to which another person (person A) previously chose to apply this subpart:
(a)
an associate of person A:
(b)
a company amalgamating with person A:
(c)
a person who is a party to a relationship agreement with person A or who is associated with a person who is a party to a relationship agreement with person A:
(d)
a person who is a transferee of person A’s estate in the circumstances described in section FC 1(1)(a) or (b) (Disposals to which this subpart applies).
Defined in this Act: associated person, company, relationship agreement
DI 4 Meaning of new investment asset
New investment asset—
(a)
means, for a person, an asset they acquire and own if the asset is—
(i)
depreciable property for which the person has a depreciation loss, including a zero amount of depreciation loss (for example, some commercial buildings):
(ii)
an improvement for which the person is allowed a deduction under section DO 4 (Improvements to farm land):
(iii)
a planting for which the person is allowed a deduction under section DO 5 (Expenditure on land: planting of listed horticultural plants):
(iv)
an improvement for which the person is allowed a deduction under section DO 12 (Improvements to aquacultural business):
(v)
an improvement for which the person is allowed a deduction under section DP 3 (Improvements to forestry land):
(vi)
an asset that is acquired with petroleum development expenditure:
(vii)
an asset that is acquired with mining development expenditure:
(viii)
an improvement to an asset of the type in subparagraph (i):
(b)
does not include an asset if and to the extent to which it is—
(i)
a dwelling:
(ii)
fixed life intangible property:
(iii)
a petroleum privilege or a petroleum permit:
(iv)
a mining right or a mining permit.
Defined in this Act: commercial building, depreciable property, depreciation loss, dwelling, fixed life intangible property, improvement, mining development expenditure, mining permit, petroleum development expenditure, petroleum permit
DI 5 New investment asset deduction
Deduction
(1)
For the income year in which an asset becomes a new investment asset, a person is allowed a deduction equal to the amount calculated by the following formula:
0.2 × (expenditure − contribution).
Definition of items in formula
(2)
In the formula,—
(a)
expenditure is the amount of expenditure the person incurs in acquiring the asset, excluding expenditure to which this subpart does not apply (see section DI 2(2)):
(b)
contribution is the total amount of the following:
(i)
capital contributions for the asset if section DB 64 (Capital contributions) applies:
(ii)
the payment amount that section DF 1(3) (Government grants to businesses) applies to, for the asset.
Link with subject matter
(3)
The person is allowed the deduction under this section despite section DF 1(2).
Link with subpart DA
(4)
Subsection (1) overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.
Defined in this Act: amount, capital contribution, capital limitation, deduction, general limitation, general permission, income year, new investment asset
DI 6 Relationship to cost, calculations, etc, in other provisions
For a person (person A) allowed a deduction under section DI 5 for a new investment asset, and for a person that is a new asset transferee in relation to person A and the asset,—
(a)
the asset’s adjusted tax value, base value, cost, or value, as applicable, is reduced by the amount of person A’s deduction for the purposes of quantifying the amount of depreciation loss under subpart EE (Depreciation) for the asset:
(b)
the relevant diminished value, expenditure, cost, value, or consideration, as applicable, is reduced by the amount of person A’s deduction for the purposes of quantifying the amount of a deduction under subparts DO (Farming and aquacultural business expenditure), DP (Forestry expenditure), DT (Petroleum mining expenditure), and DU (Mineral mining expenditure) for the asset.
Example 1
ABC company purchases a new investment asset for $10,000 on 1 October 2025 (Asset A). Asset A is depreciable property and has a DV rate of 10%. Asset A is used for 6 months in the income year ended 31 March 2026. The amount ABC company can deduct in the 2025–26 income year is the total of:
20% × $10,000 expenditure (section DI 5) = $2,000
10% × 6/12 × ($10,000 − $2,000) (section DI 6(a)) = $400.
The total deduction for Asset A in the 2025–26 income year is $2,400.
Example 2
ABC company transfers Asset A to an associate (associate B) at the end of the 2025–26 income year. Under a provision of this Act, associate B steps into the shoes of ABC company (for example, section FM 15(2)). The original acquisition cost of $10,000 is reduced for associate B, for depreciation purposes, to $9,600 by operation of section DI 6. Depreciation deductions of $400 are effectively transferred (see section FM 15(7)). Section DI 6(a) in effect also transfers the $2,000 new investment asset deduction claimed by ABC company to associate B for the purposes of the item new investment asset amount in section EE 48(1B) and (1C). When associate B disposes of Asset A for $9,600, associate B has clawback income of $2,000 under section EE 48.
Defined in this Act: adjusted tax value, amount, deduction, depreciation loss, diminished value, new asset transferee, new investment asset
6 Section EE 48 amended (Effect of disposal or event)
(1)
In section EE 48(1B), in the formula, replace “DB 64 item amount”
with “DB 64 item amount + new investment asset amount”
.
(2)
After section EE 48(1C)(c), insert:
(d)
new investment asset amount is the amount of the reduction for the item under section DI 6 (Relationship to cost, calculations, etc, in other provisions) for the person, if the item is a new investment asset.
(3)
In section EE 48, list of defined terms, insert “new investment asset”
.
7 Section MD 13 amended (Calculation of family credit abatement)
(1)
In section MD 13(3)(a)(i), replace “$42,700, 27 cents”
with “$44,900, 27.5 cents”
.
(2)
In section MD 13(3)(a)(ii), replace “$42,700, 27 cents”
with “$44,900, 27.5 cents”
.
(3)
Subsections (1) and (2) apply for the 2026–27 and later tax years.
8 Section MG 3 amended (Best Start credit abatement)
Replace section MG 3(2)(b)(i) with:
(i)
the days on which the dependent child is less than 1 year old, if the dependent child was born before 1 April 2026:
9 Section MK 1 amended (Tax credits for superannuation contributions)
(1)
In section MK 1(1),—
(a)
after “a tax credit”
, insert “for a tax credit year”
; and
(b)
replace “year described in subsection (3)”
with “tax credit year”
.
(2)
Repeal section MK 1(3).
(3)
After section MK 1(4), insert:
Meaning of tax credit year
(5)
In this subpart, tax credit year is a year that begins on 1 July and ends on 30 June for which a tax credit referred to in subsection (1) is calculated.
(4)
In section MK 1, list of defined terms,—
(a)
delete “employee”
, “employer”
, “employer contribution”
, and “pay”
; and
(b)
insert “tax credit year”
; and
(c)
replace “tax year”
with “year”
.
(5)
Subsections (1), (2), (3), and (4) apply for the tax credit year starting on 1 July 2025 and later years.
10 Section MK 2 amended (Eligibility requirements)
(1)
In section MK 2(1), in the words before the paragraphs, replace “year described in section MK 1(3)”
with “tax credit year”
.
(2)
In section MK 2(1)(a), replace “18”
with “16”
.
(3)
After section MK 2(1)(cb), insert:
(cc)
their taxable income, as determined under section MK 2B, must be $180,000 or less; and
(4)
In section MK 2, list of defined terms, insert “fund provider”
and “tax credit year”
.
(5)
Subsections (1), (2), (3), and (4) apply for the tax credit year starting on 1 July 2025 and later years.
11 New section MK 2B inserted (Taxable income)
(1)
After section MK 2, insert:
MK 2B Taxable income
Taxable income
(1)
For the purposes of section MK 2(1)(cc), a person’s taxable income for the tax credit year is their taxable income for the corresponding tax year.
Meaning of corresponding tax year
(2)
In this section, corresponding tax year means—
(a)
the tax year (the current year) that ends during the tax credit year if the person—
(i)
has filed their return of income for that tax year on or before the end of the tax credit year; or
(ii)
is not required to file a return of income for that tax year under section 33 of the Tax Administration Act 1994; or
(b)
in any other case, the tax year preceding the current year.
Defined in this Act: corresponding tax year, return of income, tax credit year, tax year, taxable income
(2)
Subsection (1) applies for the tax credit year starting on 1 July 2025 and later years.
12 Section MK 3 amended (Payment of tax credits)
(1)
Replace section MK 3(1), other than the heading, with:
(1)
This section applies—
(a)
when a member credit contribution is made to a KiwiSaver scheme or a complying superannuation fund by a person; and
(b)
the fund provider of the scheme or fund files a claim form under section 68C(3) or (4) of the Tax Administration Act 1994 for the person.
(2)
In section MK 3(2), replace “The Commissioner must pay a tax credit to the trustees of the scheme or fund (the fund provider) to which the person has contributed.”
with “Within 30 working days of the Commissioner being satisfied that the person meets the requirement in section MK 2(1)(cc), the Commissioner must pay a tax credit to the fund provider of the scheme or fund to which the person has contributed.”
(3)
Repeal section MK 3(4).
(4)
In section MK 3, list of defined terms,—
(a)
insert “working day”
; and
(b)
delete “employer contribution”
, “employer’s superannuation contribution”
, and “trustee”
.
(5)
Subsections (1), (2), (3), and (4) apply for the tax credit year starting on 1 July 2025 and later years.
13 Section MK 4 amended (Amount of tax credit)
(1)
In section MK 4(1), replace “year described in section MK 1(3)”
with “tax credit year”
.
(2)
(3)
In section MK 4(3)(a) and (b), replace “half”
with “quarter”
.
(4)
In section MK 4(4), in the formula, replace “$521.43”
with “$260.72”
.
(5)
In section MK 4(2), (3), (5), and (6), replace “year”
with “tax credit year”
in each place.
(6)
In section MK 4, list of defined terms,—
(a)
insert “pay”
and “tax credit year”
; and
(b)
delete “employee”
, “employer contribution”
, “first payment period”
, “salary or wages”
, and “second payment period”
.
(7)
Subsections (1), (2), (3), (4), (5), and (6) apply for calculating a tax credit for the tax credit year starting on 1 July 2025 and later years.
14 Section YA 1 amended (Definitions)
(1)
This section amends section YA 1.
(2)
Insert, in appropriate alphabetical order:
corresponding tax year is defined in section MK 2B(2) (Taxable income) for the purposes of that section
(3)
Insert, in appropriate alphabetical order:
new asset transferee is defined in section DI 3 (Meaning of new asset transferee)
(4)
Insert, in appropriate alphabetical order:
new investment asset is defined in section DI 4 (Meaning of new investment asset)
(5)
Insert, in appropriate alphabetical order:
tax credit year is defined in section MK 1(5) (Tax credits for superannuation contributions) for the purposes of subpart MK (Tax credits for KiwiSaver schemes and complying superannuation funds)
15 Schedule 21B amended (Expenditure or loss for research and development tax credits)
(1)
In schedule 21B, part A, clause 1, replace “Depreciation loss”
with “Depreciation loss and amounts deductible under section DI 5”
.
(2)
In schedule 21B, part A, clause 2, replace “and DB 50”
with “, DB 50, and DI 5”
.
16 Schedule 31 amended (Annualised equivalent amount for Part M)
(1)
Replace the first 4 rows of schedule 31, other than the headings, with:
| $ | |
| Amount does not exceed $44,900 | 44,900 |
| Amount exceeds $44,900 but does not exceed $45,500 | 45,500 |
(2)
Subsection (1) applies for the 2026–27 and later tax years.
Part 2 Amendments to other enactments
Amendments to KiwiSaver Act 2006
17 Amendments to KiwiSaver Act 2006
Sections 18 to 26 amend the KiwiSaver Act 2006.
18 Section 4 amended (Interpretation)
In section 4(1), insert, in appropriate alphabetical order:
rate reduction, for a person, means a period on or after 1 April 2026 for which the deduction of contributions is to be made from their salary or wages at the rate set out in section 64(1)(c) in accordance with subpart 3B of Part 3
19 Section 22 amended (Employees giving information to employers)
After section 22(1)(c)(i), insert:
(ia)
give or show to his or her employer a copy of a notice given by the Commissioner under section 101N that grants a rate reduction that has not yet ended; or
20 Section 64 amended (Contribution rate)
(1)
In section 64(1)(a) and (2), replace “3%”
with “3.5%”
.
(2)
Replace section 64(1)(a) and (ab) with:
(a)
4% of the employee’s gross salary or wages; or
(3)
After section 64(1)(b), insert:
(c)
3% of the employee’s gross salary or wages if the payment of salary or wages is calculated on or after 1 April 2026 and the employee has a rate reduction under subpart 3B.
(4)
In section 64(2), delete “3.5%,”
.
21 Section 101C amended (Employee’s requirements)
In section 101C(b), replace “18”
with “16”
.
22 Section 101D amended (Compulsory employer contribution amount: general rule)
(1)
Replace section 101D(4) with:
(4)
CEC rate is—
(a)
3% if the employee has been granted a rate reduction under subpart 3B and the employer chooses to apply this rate; or
(b)
3.5%.
(2)
In section 101D(4)(b), replace “3.5%”
with “4%”
.
23 New subpart 3B of Part 3 inserted
After section 101K, insert:
Subpart 3B—Rate reduction
Applications for rate reduction
101L How to apply for rate reduction
(1)
A person to whom subpart 1 of Part 3 applies may apply to the Commissioner for a rate reduction by any means that the Commissioner accepts.
(2)
The application must include the following:
(a)
the person’s name and address; and
(b)
the person’s tax file number; and
(c)
the period for which the rate reduction is required; and
(d)
any other information the Commissioner requires.
(3)
For the purposes of subsection (2)(c), the period for which the rate reduction is required must be no less than 92 days and no more than 1 year.
101M Grant of rate reduction
The Commissioner must grant a rate reduction for the period specified in the application if the application is made in accordance with section 101L.
101N Commissioner must give notice of grant of rate reduction
The Commissioner must, as soon as practicable after granting a rate reduction, give notice—
(a)
to the person who applied for the rate reduction—
(i)
that the rate reduction has been granted; and
(ii)
of the date on which the rate reduction will end; and
(b)
to each employer for whom the rate reduction will apply—
(i)
that a rate reduction has been granted for the person; and
(ii)
that the employer must make deductions of contributions from the salary or wages of the person at the rate set out in section 64(1)(c); and
(iii)
of the date on which the rate reduction will end.
101O Deductions at specified rate
If an employer is notified under section 101N for a person, the employer must make deductions of contributions from the salary or wages of the person at the rate set out in section 64(1)(c) with effect from the next payment of salary or wages that the employer calculates.
End of rate reduction
101P Commissioner must give notice before rate reduction ends
Before a rate reduction ends, the Commissioner must give notice of the date it ends to the person granted the rate reduction.
101Q Commissioner must give notice to employer of end of rate reduction
The Commissioner must give notice to each affected employer known to the Commissioner, as soon as practicable after the end of a rate reduction,—
(a)
of the date on which the rate reduction ended; and
(b)
that the employer must cease making deductions of contributions from the salary or wages of the person at the rate set out in section 64(1)(c).
101R Deductions at applicable rate
(1)
If an employer is notified under section 101Q about the end of a person’s rate reduction or under section 101S about the revocation of a person’s rate reduction, the employer must cease making deductions of contributions from the salary or wages of the person at the rate set out in section 64(1)(c) and must start making deductions at the contribution rate that applies under section 64.
(2)
Subsection (1) applies with effect from the next payment of salary or wages that the employer calculates after the date on which the employer receives the notice referred to in that subsection.
(3)
This section is subject to any new rate reduction that is granted under this subpart.
Revocations and refunds
101S Revocation of rate reduction
(1)
Subject to subsection (2), a person may at any time revoke their rate reduction for an employer by giving notice to the employer requiring the employer to cease making deductions of contributions from their salary or wages at the rate set out in section 64(1)(c) and to start making deductions at the applicable contribution rate under section 64(1)(a), (ab), (b), or (2).
(2)
No rate reduction may be used for an employer for less than 92 days unless the employer agrees.
101T Refund if person cannot comply
(1)
This section applies if a person—
(a)
has a rate reduction that has not yet ended; and
(b)
starts new employment but cannot comply with section 22(1)(c)(ia).
(2)
The employer may, at any time after the person complies with section 22(1)(c)(ia), refund to the person the amount determined under the following formula:
contributions deducted − rate reduction amount.
(3)
The items in the formula are defined in subsections (4) and (5).
(4)
Contributions deducted is the total amount of contributions deducted by the employer from the person’s salary or wages at a contribution rate other than the rate set out in section 64(1)(c).
(5)
Rate reduction amount is the amount the contributions deducted in subsection (4) would have totalled if the employer had deducted those contributions at the rate set out in section 64(1)(c).
(6)
The Commissioner may refund the amount determined under subsection (2) to the person if the money is held by the Commissioner.
(7)
This section is subject to section 91B.
24 Section 101S amended (Revocation of rate reduction)
In section 101S(1), delete “(ab),”
.
25 New section 244 inserted (Protection from non-compliance: Taxation (Budget Measures) Act 2025)
After section 243, insert:
244 Protection for non-compliance: Taxation (Budget Measures) Act 2025
Non-compliance with financial markets legislation, as defined in section 6(1) of the Financial Markets Conduct Act 2013, or the Fair Trading Act 1986 is ignored if the non-compliance results from the enactment of sections 9 to 13, 14(2) and (5), 18 to 24, 26, and 28 of the Taxation (Budget Measures) Act 2025 and—
(a)
the non-compliance does not continue on or after 1 November 2025; or
(b)
the non-compliance relates to a product disclosure statement or other disclosure document, as defined in section 6(1) of the Financial Markets Conduct Act 2013, and does not continue on or after 1 January 2026.
26 Schedule 1 amended (KiwiSaver scheme rules)
In schedule 1, after clause 15, insert:
15B Rate reduction
An employee member may, at any time, take a rate reduction in accordance with subpart 3B of Part 3.
Amendments to Tax Administration Act 1994
27 Amendments to Tax Administration Act 1994
Sections 28 to 30 amend the Tax Administration Act 1994.
28 Section 68C amended (Tax credit relating to KiwiSaver and complying superannuation fund members: member credit form)
(1)
In section 68C(2)(c), after “(c),”
, insert “(cc),”
.
(2)
Subsection (1) applies for the tax credit year starting on 1 July 2025 and later years.
29 Section 80KB amended (Contents of application)
(1)
In section 80KB(1)(c), in the words before the subparagraphs, replace “on the last day of the tax year”
with “on the last day of the tax year and that tax year is before the 2026–27 tax year”
.
(2)
In section 80KB(1)(f), replace “on the last day of the tax year”
with “on the last day of the tax year and that tax year is before the 2026–27 tax year”
.
(3)
In section 80KB(1)(g), replace “on the last day of the tax year”
with “on the last day of the tax year and that tax year is before the 2026–27 tax year”
.
30 Section 80KV amended (Statement of family scheme income)
In section 80KV(1), replace “on the last day of the tax year”
with “on the last day of the tax year and that tax year is before the 2026–27 tax year”
.
Legislative history
22 May 2025 |
Introduction (Bill 157–1), first reading, second reading, committee of the whole House, third reading |
|
29 May 2025 |
Royal assent |
This Act is administered by the Inland Revenue Department.
Versions
Taxation (Budget Measures) Act 2025
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