EXPENSES • 11 JULY 2025 • 1 MIN READ
Investment Boost - the new tax deduction for businesses
SECTIONS
How Investment Boost works
What assets are eligible?
What assets are not eligible?
When and how to claim
Investment Boost is a new deduction for New Zealand businesses, designed to encourage productivity and economic growth.
The deduction allows businesses to immediately claim 20% of the cost of new assets, on top of standard depreciation.
If your business is planning to invest in capital assets, this new rule could mean a significant tax saving in the year you make the purchase.
How Investment Boost works
When you buy an eligible asset for your business, you can claim 20% of the cost as a one-off deduction in your income tax return for that financial year. After that, you continue to depreciate the remaining value as usual.
This means you’re still claiming the cost of the asset over its useful life, but with a larger deduction upfront in the year it was purchased.
Example
If you buy an asset for $10,000 and it will be depreciated over 5 years the difference with claiming costs over the asset's useful life is as follows:
- With Investment Boost: $3,600 is claimed in year one (20% + depreciation), and $1,600 each year after that.
- Without Investment Boost: you’d claim $2,000 per year using the straight-line depreciation method
The overall deduction is the same over the 5-year period, but you get more of the deduction earlier, improving cashflow and reducing your tax bill in the year you invest in the asset.
What assets are eligible?
To qualify for Investment Boost, the asset must be:
- new or new to New Zealand, and
- available for business use on or after 22 May 2025, and
- depreciable for tax purposes
Common examples include machinery, equipment, and work vehicles.
Investment Boost also applies to buying new commercial and industrial property (that don’t allow depreciation deductions), improvements to depreciable property (not residential), primary sector land improvements, mixed-use assets, and certain petroleum and mineral mining development assets.
There’s no cap on what can be claimed. You can claim Investment Boost on any number of qualifying assets, regardless of their value.
What assets are not eligible?
Investment Boost can not be claimed on:
- Second-hand Assets - Assets that have previously been used in New Zealand
- Land
- Trading stock
- Residential buildings (including rental properties)
- Fixed life intangible assets (such as patents)
- Assets that are fully expensed under other rules (such as low-cost assets under $1000 that are fully deductible in the year of purchase)
When and how to claim
Investment Boost will be calculated and deducted by your accountant in your income tax return in the year in which the asset was purchased (or the building constructed in the case of commercial/industrial buildings).
If you later sell the asset for more than its adjusted tax value, you may need to declare the gain as taxable income (primary sector land improvements excluded).
For more information, check out the IRD’s Investment Boost Fact Sheet or discuss any planned asset purchases with your accountant to see how this deduction could apply to your business.
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