What is Investment Boost?

In the recent Budget 2025 announcement, the Government introduced the Investment Boost tax incentive.

Designed to encourage businesses to invest in new productive assets. Businesses can now claim an 20% tax deduction on new asset purchased from 22 May 2025.

This accelerates depreciation benefits, providing immediate tax savings in the year of purchase.

Investment Boost lets businesses deduct 20% of the value of new assets from that year's taxable income, on top of normal depreciation. This means you can accelerate your depreciation benefits and get immediate tax savings in the year you make the purchase.

How does it work?

It's pretty straightforward. Purchase a $50,000 piece of equipment and you can immediately deduct $10,000 from your taxable income in year one, plus your regular depreciation. For a company paying 28% tax, this means $2,800 in immediate tax savings.

What assets qualify?

Investment Boost applies to most new assets that are depreciable for tax purposes, plus some specific non-depreciable assets.

**Eligible assets:**

Machinery and equipment (manufacturing equipment, tools, computers)
Work vehicles (trucks, vans, specialised vehicles)
Commercial and industrial buildings (warehouses, factories, offices)
Building improvements and capital improvements (strengthening, major renovations)
Farm and forestry improvements (fencing, irrigation systems)
Horticultural plantings (listed plants only)
Assets purchased from overseas (including second-hand items not previously used in NZ)

Not eligible:

Second-hand assets previously used in New Zealand

Land purchases (though land improvements may qualify)

Residential buildings and dwellings

Assets held as trading stock (inventory for resale)

Fixed-life intangible assets (patents, licenses)

Assets under $1,000 (already fully expensed under existing rules)

Are there any limits?

No limits on the number of assets or their total value. The deduction is optional - you can choose standard depreciation if it better suits your situation.

What about timing?

Only assets that become available for use from 22 May 2025 onwards qualify. Construction projects started before this date may still qualify if completed after 22 May 2025.

Key considerations

This is a tax deduction, not a cash rebate

Works best when you have taxable income to offset

Consider your cash flow and investment timing

Get professional advice for larger investments

Next steps

Investment Boost provides an opportunity to improve cash flow when making capital investments. If you’re planning capital investment during the financial year, then chat with your accountant on the best options for accounting for the appropriate deductions.

Sources: Budget at a Glance: Investment Boost