What's in the Budget for franchising

The 2025 Budget brought good news for franchises amongst other small to medium enterprises, as the New Zealand government introduces a new business incentive allowing companies to deduct 20% of a new productive asset’s value from their tax return. 

In its Budget at a Glance document, the Government says, “With Investment Boost, businesses can deduct 20% of a new asset’s value from that year’s taxable income, on top of normal depreciation,” reasoning that, “because the cashflow from investments improves, more investment opportunities become financially viable and therefore more take place.”

The Government hopes that with this boost to business investment it will help raise the productivity of workers, lift incomes and drive long-term economic growth.

“If you look at the small and medium enterprises in New Zealand, the top 10% are seven times more productive than the bottom 10%,” Prime Minister Christopher Luxon told Newstalk ZB earlier in the week, “A lot of it is to do with their adoption of capital, plant and equipment.”

On the back of the Budget, Government also revised their GDP and unemployment forecasts. Almost 3% growth is expected in each of the next three years and unemployment is projected to continue to rise – bringing a larger pool of potential franchisees to the market.

There will be some pain for small businesses as they plan for increases in the default rate of employer contributions to KiwiSaver at the rate of half a percent per annum for two years starting 1 April 2026. Employers will also be expected to match 16 and 17-year olds’ contributions at 3.5% from the same date, increasing to 4% in the following year. This will likely impact retail and hospitality franchises the most, as these sectors have higher youth employment rates.