Labour has confirmed it would scrap the coalition government's Investment Boost policy if elected, replacing it with a package aimed squarely at small businesses — including a higher instant asset write-off, a raised GST registration threshold, and mandatory payment-time rules for large firms.

The party's small business spokesperson, Dan Rosewarne, framed the package as a way to cut paperwork and admin. "Running a small business should mean building something of your own, not spending evenings chasing overdue invoices and filling in forms," he said. Labour leader Chris Hipkins said small business owners would "get paid sooner, get more support to invest in the equipment they need, and keep more of what they earn."

The headline tax change would lift the instant deduction threshold for small businesses buying equipment or tools from $1,000 to $10,000. In plain terms, that means a small business could immediately deduct the full cost of new equipment — say, a commercial oven or a set of power tools — from its taxable income in the year it buys them, rather than spreading that deduction across several years through depreciation. The existing Investment Boost — the coalition's broader accelerated depreciation scheme, which lets businesses of any size deduct 20 percent of a new asset's cost up front — would be replaced entirely (RNZ).

On the GST side, Labour would raise the registration threshold from $60,000 to $80,000. Businesses earning below that level would not have to register for GST at all. The party estimates about 35,000 businesses would fall out of the GST net, meaning they would no longer need to file GST returns — though they also would not be able to claim back GST on their own purchases.

On late payments — a long-running complaint from small suppliers — Labour would require large businesses to pay small suppliers within 15 days for invoices worth up to $25,000. Large firms would also have to publish how quickly they pay their suppliers. Labour says that transparency measure would create competitive pressure on payment times.

The funding model behind Labour's broader spending commitments is its proposed capital gains tax. Labour has said the tax would apply a 28 percent rate on profit from the sale of commercial or residential investment property, excluding the family home, farms, KiwiSaver, shares, businesses and inheritances (Labour Party policy page). The party says every dollar raised would be ring-fenced for health and that nine out of 10 New Zealanders would not pay it. The CGT policy is undated on Labour's website and predates the small business announcement.

The political logic is fairly direct. Investment Boost, as the coalition designed it, applies to businesses of all sizes. Labour's replacement narrows the benefit to small firms, redirecting the fiscal room toward the GST threshold shift and the payment-time mandates. That positions the package as a direct appeal to small business owners — a constituency Labour has historically struggled with — while drawing a clear line between itself and the coalition on who tax policy should favour.

For those who follow Parliament closely, the packaging is familiar. Labour is combining a tax cut (the write-off lift), a tax exemption (the GST threshold), and a regulatory mandate (the 15-day payment rule and transparency requirement) into a single small business narrative. The CGT funds the health side of the ledger; the small business package stands on its own as a targeted reweighting of existing coalition policy rather than new net spending.

The 15-day payment mandate is likely to draw the most pushback from the business lobby. Large firms routinely operate on 30-to-60-day payment cycles to manage their cash flow, and being forced to disclose payment times would expose variation many would prefer to keep private. Whether a Labour government could legislate this cleanly without disrupting supply chain dynamics is something a select committee — the small groups of MPs who scrutinise legislation in detail — would likely probe.

The GST threshold lift carries its own trade-off. Pulling 35,000 businesses out of the GST net reduces their compliance burden, but those businesses can no longer claim back GST on their own inputs — a cost that eats into margins for firms with significant purchasing needs. The $20,000 threshold increase is modest in dollar terms, and whether it changes behaviour at the margin depends on the profile of the businesses in that band.

Labour has not released costings for the small business package separately from its broader fiscal plan. The CGT revenue is earmarked for health, which means the write-off lift, the GST threshold change, and the payment mandate would need to be funded from elsewhere in Labour's fiscal programme, or offset against the revenue given up by replacing Investment Boost. How that arithmetic stacks up against Treasury's baseline will be a point of scrutiny when the full fiscal plan is released.