Investment Boost

From 22 May 2025 businesses can deduct, as an expense, 20% of the value of new assets in the year that they purchase the asset.

Assets covered include machinery, equipment and work vehicles. Assets need to be previously unused in NZ.

Also covered are improvements to farm and forestry land (such as fencing), planting of listed horticultural plants, improvements to aquacultural businesses.

Investment Boost will apply to the purchase and construction of new commercial buildings – provided they have not been previously used prior to 22 May 2025.

Improvements to existing depreciable property are eligible for Investment Boost if the asset they are improving is a depreciable asset.

The 20% deduction is not permitted on assets that have previously been used in New Zealand, second-hand assets (unless sourced from overseas), trading stock, land and residential buildings.

The Investment Boost as well as a standard depreciation deduction can be claimed in the year the asset is purchased. Depreciation will be based on the asset cost less the 20% deduction.

As an example:

A business purchases a new forklift for $50,000 (excluding GST). In the year of purchase the business can claim:
20% Investment Boost deduction ($50,000 x 20%) $10,000
Depreciation (($50,000-$10,000) x 16% DV rate) $ 6,400
Total deduction $16,400
Reduction in tax payable (at Company Tax Rate of 28%) $ 4,592

Without the Investment Boost the only claim in Year 1 would be depreciation of $8,000 ($50,000 x 16% DV rate), with a tax benefit of $2,240.