Newsletter - October 2025

Last week, the next generation of business owners had their confidence tested at the Young Enterprise Scheme finals (sponsored by Polson Higgs). Making it to the finals is an amazing achievement, and I am confident that we will hear more about these entrepreneurs in the future.

One of the most important habits they can develop, is to take a step back from the day-to-day activities and review how their business operates. In this newsletter there are two good reasons to have a review of your business, the change to the OCR and 39% trust tax rate.

*ASB Regional Economic Scoreboard

Enjoy the newsletter.

Mike

In this Newsletter

• Trusts & 39% Tax
• Official Cash Rate (OCR)
• Investment Boost
• XERO and Investment Boost
• Holiday Pay Changes
• Young Enterprise Scheme
• Net Promoter Score (NPS)

Trusts & 39% Tax

There are approximately 400,000 Trusts in New Zealand, which for a country of 5.2 million is high.  But their popularity is understandable given the advantages they offer:

1. Asset protection

2. Estate and Succession Planning

3. Tax planning and efficiency

However, all tax planning requires regular review - especially when legislation changes. The recent increase in the trustee tax rate from 33% to 39%, effective for the 2025 year onwards, is a prime example.

This change may affect the overall efficiency of your trust structure, particularly if income is retained within the trust. It’s an ideal time to reassess whether your trust is still fit for purpose, and whether income allocations or structural adjustments are needed.

If you have any questions about the new tax rate, your trust’s structure, or broader tax planning strategies, please contact your partner.

Official Cash Rate (OCR)

On the 8^th of October the OCR rate was cut by 50 basis points to 2.5%, this is the lowest rate since August 2022. The decision was made as inflation was within the target band and economic growth is slow.

In response, all major trading banks have reduced their mortgage and lending rates, creating a timely opportunity to review your borrowing arrangements. Now is a good time to ask:

• Is your current business or personal debt structure still the most effective?
• Could you reduce interest costs and improve profitability?
• Should you consider a capital purchase, given lower interest rates and the availability of the Investor Boost (see below).

If you’d like to review your debt structure or simply discuss how interest rate changes might affect your business, please contact your Partner.

Investment Boost

The investment boost deduction is a tax incentive allowing an immediate additional 20% tax deduction for the cost of eligible new assets.

It has a broad application extending from a new ute or tractor, new commercial buildings to improvements to farmland. For example, an improvement such as farm tracks which normally have a 5% deduction per year would qualify for an upfront 20% tax deduction plus the usual 5% per year.

There are rules and eligibility criteria for the deduction. Also timing of the purchase is important, so you should contact your Partner before any major capital purchases, to ensure you receive the maximum tax benefit.

Xero and Investment Boost

If you are using XERO, they have recently updated their software to include the Investment Boost deduction.

In your Xero fixed asset register, select the 20% option in the Investment Boost dropdown box to apply it. It can be applied to any eligible new assets purchased on or from 22 May 2025.

The new feature will help you:

• Automatically calculate the 20% upfront claim and subsequent depreciation for both straight line and diminishing value methods
• Identify Investment Boost deductions from normal depreciation transactions
• Calculate Investment Boost in line with private use of an asset

If you have any questions about XERO then contact Kathryn Gardner from our Business Systems Support Team.

Holiday Pay Changes

The recently announced changes to the Holiday Act have prompted plenty of conversation around their potential impact on employers and employees. Will the changes “solve” the complexities of the current act, creating a simpler system that reduces errors and compliance costs?

Lisa Sintmaartensdyk, our Human Resource Manager recently presented a free webinar-style update on the proposed changes and what they could mean for you and your team. You can view the recording here, and as some of the slides contained quite a bit of detail, you can download a copy of them here. Lastly, you can find some scenario (from MBIE) related examples here. 

As more information about the proposed changes becomes available, we’ll continue to keep you updated. In the meantime, if you have any questions, please don’t hesitate to ask.

For payroll-specific queries, feel free to contact our Payroll Manager, Michelle MacDonald.

For broader questions around HR policy or employment contracts, get in touch with our Human Resource Manager, Lisa Sintmaartensdyk.
 

Young Enterprise Scheme

Tess Brais-Laflamme, Senior Accountant - Judges Panel 2025 Otago YES Finals

Polson Higgs are proud to be a regional sponsor of the Young Enterprise Scheme. Congratulations to Nature’s Prime winner of the regional final, with their all-natural leather restorer.

We also sponsored a sustainability award, which this year was won by Good Grains a team from the Liger Leadership Academy in Queenstown. They use upcycled brewery grain, that is normally discarded, to make crackers.

Jamie Reidie, Partner - Presenting Polson Higgs Sustainability Award to Good Grains

Congratulations to all the teams, you can find out more about their products below:

• Natures Prime – St Hilda’s Collegiate School
• Rhythm – Otago Girls’ High School
• Good Grains – Liger Academy
• Donate Mate – St Hilda’s Collegiate School
• Sunscent – Otago Girls’ High School
• Clean Bean Collective – Queen’s High School
• Bug Free Bliss – Mount Aspiring College
• Kitchen Canvas – Mount Aspiring College

Net Promoter Score (NPS)

We have just undertaken a client survey. This will help us gauge how our clients view the level of service that we are providing. Your experience when dealing with Polson Higgs is important to us, which is why we are continually looking at how to improve 

Many thanks to everyone who completed the survey, your time and feedback is greatly appreciated.

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