If you’ve bought new equipment, vehicles, machinery, or commercial premises for your business over the past year, there’s a recent tax incentive worth considering if you haven’t already factored it in.
What is Investment Boost?
Investment Boost is a tax deduction introduced by the Government, available for eligible business assets first used on or after 22 May 2025. In simple terms, it lets businesses claim 20% of the cost of a qualifying new asset as an immediate deduction, on top of standard depreciation on the remaining 80%.
It’s a timing benefit, not a cash grant or a rebate. You still get the same total deductions over the asset’s life, but a bigger chunk arrives upfront, in the year you buy the asset, rather than being spread out over several years.
What qualifies for Investment Boost?
To be eligible, an asset generally needs to be:
- New, or new to New Zealand — it can’t have been previously used here (minor demonstration use, like a single test-drive, doesn’t disqualify it)
- Used primarily for business purposes — for mixed-use assets like vehicles, only the business-use portion counts
- Depreciable under IRD rules
There’s no cap on the value of assets you can apply it to, so it covers everything from a new laptop to a multi-million-dollar building fit-out. Commercial and industrial buildings qualify too, and although land itself doesn’t qualify, certain land improvements (like irrigation systems) can.
Assets that are already fully expensed under other rules, such as low-value items under $1,000, are not eligible since there’s no depreciation left to accelerate.
An example of how Investment Boost works
Say your business buys a new piece of equipment for $30,000 (GST exclusive) and puts it into use this financial year. Under Investment Boost, you can deduct $6,000 (20%) immediately, then depreciate the remaining $24,000 as usual using standard depreciation rates.
At a 28% company tax rate, that upfront deduction alone reduces this year’s tax bill by roughly $1,680 — cash that stays in the business initially before trickling out over several years.
Why Investment Boost matters for SMEs
For business owners weighing up a delayed equipment upgrade, vehicle replacement, or premises investment, Investment Boost improves the cash-flow case for doing it now rather than later. The Government has pitched the policy as a way to lift productivity and investment without the fiscal cost of a broader company tax cut.
For some SMEs, though, the administrative overhead could exceed the perceived financial advantage of Investment Boost.
What is worth knowing about Investment Boost
A few things are worth flagging to clients or factoring into your own planning:
- Record-keeping matters more, not less. You’ll need evidence showing an asset was genuinely new (or new to NZ) and exactly when it became available for use — contracts, import documentation, or correspondence from the time of purchase.
- It affects future depreciation. Because the 20% comes off the asset’s cost base, later depreciation claims are smaller. If you sell the asset for more than its remaining tax book value, the Investment Boost portion can be clawed back as “recovery income.”
- Systems need to keep up. Fixed-asset registers and accounting software need to correctly track which assets have had Investment Boost applied, particularly for businesses still using manual or spreadsheet-based systems, where errors (like double-claiming in a later year) are easy to make.
- IRD is watching claims closely. With increased funding directed at compliance activity, IRD is taking a firmer line on reviewing business tax positions generally — Investment Boost claims included.
The bottom line
Investment Boost is a genuinely useful cash-flow tool for businesses already planning capital investment, but it rewards good record-keeping and a bit of upfront planning. If you’re weighing up a purchase, or unsure whether an asset you’ve already bought qualifies, it’s worth a conversation with your accountant before your next return is filed, rather than after.
If you want to find out more about how Investment Boost and how it can work for your business, get in touch with the Auctus team today.
