From 22 May 2025, businesses in New Zealand can claim a new tax deduction called the Investment Boost when buying eligible assets.
What is it?
The Investment Boost lets you claim an extra 20% tax deduction upfront on the cost of a new asset in the year you buy it. You depreciate the remaining 80% as normal.
It doesn’t increase your total deductions over the asset’s life — it simply gives you more of the tax benefit earlier, improving cash flow.
How It Works (Simple Example)
Let’s say your business buys a new piece of equipment for $100,000:
Claim $20,000 (20%) immediately.
Depreciate the remaining $80,000 as usual.
Result: A larger deduction in Year 1 and less tax to pay upfront.
This doesn’t change the total deductions you’ll get over the life of the asset — it simply accelerates them. But accelerating deductions means you pay less tax today, and cash saved now is generally more valuable to your business than the same amount saved later.
What Types of Assets Qualify?
To be eligible for Investment Boost:
✔ The asset must be new, or new to New Zealand
✔ It must be available for your business to use on or after 22 May 2025
✔ It must be depreciable for tax purposes
Assets that typically qualify include:
New machinery and equipment (e.g., Feed out wagon or trailer)
Work/farm vehicles.
Office and IT equipment
New commercial or industrial buildings and significant improvements (but not the land)
What Doesn’t Qualify
Assets that don’t qualify include:
Second-hand items already used in
Residential rental buildings
Land
Most intangible assets
Real-World Examples
Here are simple examples of how different businesses can use the Investment Boost:
Isaacs Fish ’n Chips buys a new deep fryer for $2,500:
Investment Boost: $500 deduction (20%) in the year bought.
Depreciation: Claim depreciation on the remaining $2,000 as usual
Outcome: Higher deduction in the first year, reducing taxable profit now.
A dairy farmer purchases a new tractor for $180,000.
Investment Boost: $36,000 (20%) in the year bought.
Depreciation: Claim depreciation on the remaining $144,000 as usual.
Outcome: A significantly larger deduction in Year 1, reducing taxable profit and provisional tax pressure.
Some Things to Consider
Investment Boost is optional. You choose whether to claim it for each qualifying asset.
For assets sold later, claiming the Boost may affect your “adjusted tax value,” which could influence tax on a gain or loss on sale – what we talk about as depreciation recovered.
Talk to your accountant about how best to use this deduction with your overall tax and investment strategy.
