National party policy for the 'squeezed middle' with some surprises

30 August 2023

On the morning of 30 August 2023, the National Party (National) released its tax policy for the upcoming general election, titled ‘National’s Back Pocket Boost’. The policy contains a number of changes to the New Zealand tax system, including changes to income tax rate thresholds, relaxation of the tax rules for residential property investment and two curious new taxes targeting non-residents.

This article summarises the key announcements and what they might mean for you.


Tax is set to be a key point of contention this election as households deal with rising costs and inflation. Businesses on the other hand, will be concerned about economic headwinds and a potential extended recession.

National had already put forward some of its key tax changes but today’s announcement includes a number of new policy items with a total cost of $14.6 billion – perhaps a more substantial package than was expected. To fund this package several new tax changes are proposed, as detailed below.

Income tax rates and thresholds

National proposes to adjust a number of the income tax thresholds to deliver relief to what the party calls the “squeezed middle.” The proposed adjustments are set out below.

Existing threshold

Proposed threshold

Threshold rate










It is proposed that these thresholds be revisited at least every three years, to assess the impact of inflation on average tax rates and to adjust for this.

National previously ruled out removing the top marginal tax rate of 39%, introduced by the current Government, in its first term. Consistent with those signals, the policy makes no mention of rate or threshold adjustments for the 39% tax rate. Further, National’s policy does not address the proposed increase to the trustee tax rate from 33% to 39% introduced in the most recent tax bill before Parliament. 

Property tax changes

The bright-line test would be returned to two years (down from the current 10 years) by July 2024, restoring the bright-line test to what it was when introduced by National in 2015. The change would mean that the bright-line test would more closely target speculators in residential property, reflecting the original policy intent. Further clarity is needed on the proposed interaction between the two-year period and the current 10 year period, with the National policy document noting that “properties acquired before July 2022 will not be subject to the bright-line test at sale.” 

Currently, interest deductions on residential rental properties are either fully denied or are being phased out. National proposes to restore that interest deductibility on a “phased in” basis with:

  • 50% interest deductibility kept from April 2024 (rather than being reduced to 25% in line with the current interest limitation rules);
  • 75% interest deductibility from April 2025; and
  • 100% interest deductibility from April 2026.

National, like Labour’s tax policy announcement, also proposes to remove tax depreciation deductions from commercial buildings. As noted in our article on the release of Labour’s tax policy, the reintroduction of depreciation for commercial buildings was thought to be a permanent change when it was reintroduced in March 2020. 


National proposes to reverse what it calls the “App Tax.” This refers to the GST changes enacted by the current Government which will impose GST on certain accommodation and transportation services that operate via digital platforms, such as Airbnb and Uber. The GST changes are due to come into force on 1 April 2024. National’s policy to reverse these changes is based on the party’s belief that the changes will increase the cost of key services and contribute to inflationary pressures.

New taxes for non-residents

The restriction on the purchase of property by foreign buyers will be substantially changed. Currently, a non-resident is effectively unable to purchase residential property. National proposes to change this and introduce a new 15% “foreign buyer tax” on purchases of residential property of $2 million or more by those who do not hold a New Zealand resident class visa. The National policy document cites the foreign buyer tax in New South Wales, Australia (8%) and Vancouver, Canada (20%) as examples of foreign buyer taxes being applied overseas. The restriction on purchasing residential houses with a price below $2 million will continue.

National is also proposing that providers of offshore online casino gambling services will be required to register and report their earnings for New Zealand tax purposes. Currently, offshore online casino gambling services are not required to pay income tax and other levies unlike domestic casino operators. They are technically subject to GST under the rules for remote services, but there is possibly a lack of compliance in this area. Failure to comply with these rules will result in the website being geo-blocked. It is uncertain how this policy will be implemented in the context of existing double tax agreements which usually allocate taxable income to the country of residence (absent a permanent establishment existing in the other country).

National’s tax policy does not address its position in relation to a digital service tax (DST). It is unclear whether National supports the proposed 3% DST that the current Government is proposing to introduce with effect from 1 January 2025. The lack of reference may simply be a result of the policy being prepared prior to that announcement.

Finally, although not strictly a tax change, an increase to Visa processing fees is also proposed (with the exception of visa fees for Pacific Island applicants). A cost-recovery model would operate for immigration services such that the cost of processing visa applications is recovered through fees charged to applicants.

Other tax changes

National also proposes to make a number of changes to expand the Independent Earner Tax Credit and Working for Families in addition to introducing the FamilyBoost childcare tax credit. The Auckland Regional Fuel Tax will also be repealed and National has committed to no increases in fuel taxes during its first term.

Two different approaches

National’s policy contrasts with Labour’s ‘Cost of Living’ package which includes the proposal to remove GST from fruit and vegetables together with increases to Working for Families and the In-Work Tax Credit.  

Voters will therefore have two very different tax packages to consider this election, alongside the tax policies put forward by the minor parties. 

If you have any questions about the matters raised in this article, please get in touch with the contacts listed or your usual Bell Gully adviser.

Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.