Govt Passes Tax Bill to Boost Business, Speed Up Disaster Relief

“This legislation is part of our broader focus on creating an environment where businesses can grow, innovate, and succeed,” Minister Watts said.

The Government has taken a significant step towards strengthening New Zealand’s economic landscape with the passage of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Bill, which received its third reading in Parliament today. Revenue Minister Simon Watts says the new legislation is designed to stimulate growth, support entrepreneurship, and build a more resilient economy through targeted tax reforms and smarter policy settings.

“This legislation is part of our broader focus on creating an environment where businesses can grow, innovate, and succeed,” Minister Watts said. “Whether it’s a start-up looking to attract talent or a community rebuilding after a natural disaster, this Bill introduces practical changes that will have a real impact.”

Key Business Benefits: Support for Start-Ups and SMEs

A standout feature of the new legislation is the enhancement of employee share schemes, which are widely used by start-ups to attract and retain staff in lieu of high salaries.

“Start-ups frequently struggle with cashflow, which makes it difficult for them to compete with larger, more established companies when it comes to recruiting skilled workers,” Minister Watts explained. “By raising the thresholds for exempt employee share schemes, we’re recognising the impact of inflation and future-proofing this important tool for talent acquisition.”

Employee share schemes allow businesses to offer shares or options to employees as part of their compensation. The updated tax rules will reduce the tax burden on these schemes, making them more attractive for both employers and employees.

“This change will help New Zealand’s early-stage companies attract top-tier talent, enabling them to expand and innovate more effectively. That’s good for jobs, good for productivity, and ultimately good for our economy,” Watts said.

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Faster Emergency Tax Relief

In a country prone to natural disasters, being able to respond quickly and effectively is vital. The Bill introduces a faster mechanism for providing tax relief in the aftermath of emergencies like earthquakes and floods.

“In future emergency events, we’ll be able to activate tax relief more rapidly using an Order in Council, rather than waiting on a lengthy legislative process,” said Watts. “This means people and businesses impacted by disasters can get the help they need when they need it most.”

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Education Reforms: Final-Year Fees-Free Scheme

Another major shift included in the legislation is the replacement of the first-year fees-free scheme with a final-year fees-free initiative. This new approach aims to encourage students to complete their qualifications and enter the workforce with the skills the economy needs.

“We want to reward perseverance and ensure more students cross the finish line,” said Watts. “A more skilled workforce is critical to lifting productivity and supporting innovation.”

To implement this change, the Bill enables data sharing between Inland Revenue and the Tertiary Education Commission, allowing more accurate eligibility assessments and timely fee payments.

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Other Measures Introduced

The Act includes a suite of additional measures aimed at reducing compliance costs, honouring Kiwi heritage, and expanding access to financial tools. These include:

• Reduced tax compliance burdens to make it easier for individuals and businesses to pay tax.

• Exempting the Auckland Future Fund from tax, recognising its strategic importance.

• Granting the New Zealand Memorial Museum – Le Quesnoy permanent overseas donee status, placing it on par with charities operating within New Zealand. This allows donors to claim tax credits.

• Allowing youth under 16 to enrol in KiwiSaver with only one guardian’s signature, increasing access to long-term savings for young people.

• Facilitating pension transfers from selected countries, such as the UK, to New Zealand-approved schemes.

• Permitting retrospective registration for the Approved Issuer Levy (AIL) in specific circumstances, helping businesses secure capital more easily.

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A Forward-Looking Tax Package

The Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act is now awaiting Royal assent. Minister Watts described the package as “a forward-looking suite of changes that align with our broader goals of driving economic growth, supporting innovation, and building resilience.”

“This is more than just a tax bill—it’s a set of smart, targeted reforms that reflect the realities businesses and communities face today,” he said. “Whether it’s helping a small business scale up, a student complete their degree, or a family recover from a flood, this legislation makes a real difference.”

The changes are expected to come into effect progressively once the Act is signed into law.