Labour's New Small Business Tax Package: What It Actually Means For You

I'll admit it, when this landed in my feed, I got a little bit excited. I was in the middle of heading into lunch when I saw the alert, and I ended up standing there on my phone for a few minutes going through the detail before I could even sit down. That's not normal behaviour for me on a Tuesday, but when a political party actually comes out with something practical for small business owners, it's worth taking a look.

So let's break down exactly what Labour has announced, straight from their website (labour.org.nz/smallbusinessactionplan), and what it could mean for you if it actually comes into law.

A quick but important caveat before we dive in: this is a policy announcement, not legislation. For any of this to happen, Labour needs to win the upcoming election in November, and depending on the result, they may need to form a coalition with another party who may not agree with all of it. So treat everything below as "here's what's been proposed," not "here's what's definitely happening."

The Low Value Asset Threshold Is Going Up to $10,000

This is something we've been banging on about for a while, so it was good to see it show up. Labour is proposing to lift the instant asset write-off threshold from $1,000 up to $10,000, effective from 1 July 2027. According to their numbers, around 500,000 businesses would be eligible.

This means if you buy a piece of equipment, a laptop, a tool, or anything under $10,000, you'd be able to write off the full cost against your tax bill straight away, instead of having to depreciate it over several years and keep it on an asset register.

For a lot of my clients, especially trades-based businesses, this is a big deal. Think about the tools that get thrown in the back of a ute, dragged around site, and don't last 12 months. Or the mobile phones and laptops that get replaced every year or two. Right now, all of that technically needs to sit on an asset register with formal depreciation schedules. Bumping the threshold to $10,000 cuts out admin and compliance out of running a small business, whilst bringing forward the tax savings.

There is a trade-off though, this does come at the cost of removing Investment Boost, which was reportedly costed at $1.56 billion over four years. So it's not simply "more good stuff for free" it's one incentive being swapped for another. My take: policy flip-flopping like this creates uncertainty for bigger capex decisions (think large infrastructure or construction projects), because businesses making big investment calls now don't know whether Investment Boost will still exist after the election. That uncertainty has a real cost too, even if it's harder to put a number on.

GST Registration Threshold Rising to $80,000

Currently, you need to register for GST once your turnover crosses $60,000. Labour is proposing to lift that to $80,000, effective from 1 July 2028.

This one matters more than people might think. A stat from Hnry (who work with a lot of sole traders) really stuck with me. Back in 2024, 36% of the business owners they surveyed said they deliberately kept their turnover under $60,000 just to avoid having to register for GST. That's a genuine handbrake on people growing their side hustle or business because of a tax threshold, not because of capacity or demand.

My view on this, for what it's worth: if you've got the ability to turn over more than $60,000 or $80,000, don't let the threshold hold you back. GST is honestly one of the simpler taxes we deal with, you charge it, you claim it back on your expenses, and you set enough aside so it doesn't catch you out. The businesses I see get tripped up aren't the ones registered for GST properly, they're the ones who didn't set money aside for it.

Big Businesses Will Be Forced to Pay Small Businesses Within 15 Days

This is the one I think is overdue. Under the proposal, larger companies would be required to pay small businesses within 15 working days for invoices under $25,000, and there would be a public register showing how quickly (or slowly) these bigger companies actually pay.

Here's how "big" and "small" are defined in the policy:

• A big business is one with revenue above $33 million (excluding GST) in each of the previous two financial years, and operating expenditure above $10 million (excluding wages, salaries, and intercompany payments).
• A small business is one with annual revenue below $10 million — which covers the overwhelming majority of the businesses I work with.

If a big business doesn't comply, it gets reported to MBIE and could face a fine. This is where I'm a little more skeptical about enforcement. It's great in principle, but if the penalty is just a slap on the wrist and it takes 12-18 months to catch up with anyone, some corporates may just factor that into their existing payment behaviour and carry on as usual. I'd like to see it work, because small businesses live and die on cash flow, and having to fund 60 or 90 days of unpaid invoices while a big company sits on your cash is tough on a small operation.

What This Means For You

None of this is locked in yet, it depends on the election outcome and any coalition negotiations that follow. But if you're a small business owner, here's what I'd take from it:

1. Don't restrict your growth because of a tax threshold. Whether it's the current $60,000 GST threshold or a future $80,000 one, if you've got the ability to earn more, commit to it. The admin isn't as scary as it feels once you're in it.

2. Keep track of your assets regardless of the threshold. Even if the write-off limit goes up, it's still worth knowing what you own, especially if you ever plan to sell the business. Assets that get fully expensed can create complications when it comes to valuing the business down the track.

3. Watch how this plays out, but don't wait around for it. Whatever happens with this policy, it's a good reminder that businesses need to build their own cash flow resilience rather than relying on legislation to fix late payment problems for them.

I'll keep an eye on this as it develops, and when other parties release their own small business policies, we'll break those down too so you can compare properly rather than just going off headlines.

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This article is based on insights from the Next Advisory podcast, where Luke and Phil help New Zealand business owners navigate economic challenges and build better businesses. Visit nextadvisory.nz to find out how we can help you.

Checkout more of our blog content at https://nextadvisory.nz/podcast