Labour leader Chris Hipkins has announced a small business package focused on GST compliance, asset write-offs and supplier payment times, with an estimated $15.6 billion cost across tax and GST relief measures (Stuff). The plan, released ahead of the coming election, would raise the GST registration threshold, lift the instant asset write-off limit, and require large firms to pay small suppliers faster.

The GST registration threshold would rise from $60,000 to $80,000 from 1 July 2028, according to Labour's election policy pages (Labour Party). The party estimates about 35,000 of the smallest operators would no longer need to register. The $60,000 threshold has not changed since 2009.

Here is how the threshold works: businesses and sole traders with turnover below $60,000 can choose whether to register for GST. Once they reach that level, they must register, charge GST on their prices, and pass it to Inland Revenue. The upside of registering is that businesses can claim back the GST they pay on their own purchases, known as input costs (RNZ).

Labour also proposed lifting the asset write-off limit from $1,000 to $10,000 for businesses with turnover under $10 million. An asset write-off lets a business deduct the full cost of an asset, like equipment or a vehicle, in the year it is bought rather than spreading the cost over several years. The package would also require big businesses to pay small suppliers within 15 days on invoices of $25,000 or less, and to publish their payment-speed data (RNZ). Labour's policy pages also reference a simple targeted capital gains tax on investment as part of the wider election platform (Labour Party).

Deloitte GST expert Alan Bullot has cautioned that raising the threshold would not solve the compliance problem for small businesses but simply shift it. Firms earning just above any new threshold would face the same boundary effect — the cliff edge where registering for GST suddenly becomes compulsory. Bullot noted that the increase would benefit businesses generating income through their own labour rather than those buying and selling goods, since labour-driven operators have fewer input costs to claim back (RNZ).

Inland Revenue's internal position, according to Bullot, is that the threshold exists only because of compliance costs, and some within the department argue it should be lowered rather than raised. Bullot also pointed out that many people earning under $60,000 are already captured for GST purposes through platform rules governing ride-sharing and food-delivery services, even if they earn as little as $10,000 a year (RNZ).

By international standards, New Zealand's $60,000 threshold is middle-of-the-pack. Bullot said that had it kept pace with wage inflation since 2009, it would sit at roughly $130,000. The fiscal trade-off Labour has proposed is a reduction in funding for its Investment Boost policy to compensate for the lower GST take (RNZ).

Survey data suggests the threshold does shape behaviour. In 2024, accounting platform Hnry reported that 36 percent of surveyed respondents limited their earnings to remain below the GST boundary. Wellington personal trainer Carl Rein told Hnry he could not absorb GST or pass it on to clients, so he manages his workload to stay under the $60,000 line (RNZ).

The GST threshold proposal also carries fiscal design questions that will face scrutiny if Labour forms government after the election. Lower GST collection from a raised threshold means a direct revenue impact, and Labour's stated offset — trimming Investment Boost funding — will need to be costed and tested against its broader tax-and-spend framework. The party's wider policy slate also includes a targeted capital gains tax, which will likely draw further expert attention during the campaign (Labour Party).

The broader context here is that Labour has form on GST policy controversy. In August 2023, Hipkins announced a plan to cut GST from unprocessed fruit and vegetables as a cost-of-living measure, estimated to save households about $4.25 per week (RNZ). That policy was widely panned by tax experts, who described it as betting on voters' ignorance (RNZ). Inland Revenue has also recently called out horticultural tax dodgers in a separate business-section report (RNZ), reinforcing the enforcement complexities around GST in that sector.

The small business package, in contrast to the fruit-and-vegetables policy, targets structural compliance costs rather than consumer prices. Whether it lands better with the expert community than the 2023 GST removal plan is an open question, but the early signal from Bullot is that the threshold shift creates as many boundary problems as it solves. Election material on Labour's website is authorised by Rob Salmond at 2 Gilmer Terrace, Wellington, while Hipkins' material is authorised by Chris Hipkins MP at Parliament Buildings, Wellington (Labour Party).