Blog
Oct 09
Investment boost NZ

Investment Boost Guide and Calculator

The 2025 New Zealand Budget introduced a major change for businesses: the Investment Boost. It’s designed to encourage capital investment by letting businesses front-load deductions for new assets. For sole traders, contractors, and small businesses, this is a big deal. Here’s what you need to know, how it works, who qualifies, and how to use it.

In this article:

What is the Investment Boost?

The Investment Boost is a new tax incentive that allows businesses to claim an immediate deduction of 20% of the value of a qualifying new (or new-to-NZ) asset in the year it’s acquired, on top of the normal depreciation deduction rules.

In practice, if you buy a new machine, tool, vehicle, or eligible commercial building (subject to rules), you can deduct 20% of its cost right away, then depreciate the remaining 80% over time.

This accelerates tax relief — it improves cash flow and makes investment more attractive.

The measure applies to assets acquired on or after 22 May 2025.

How is it different from what we currently have?

Under the existing depreciation rules:

  • You deduct depreciation over the useful life of the asset.
  • In year one, the deductions are limited to a percentage of the full cost, based on the depreciation rates.
  • There’s no upfront “bonus” deduction of 20%.

With the Investment Boost, you front-load extra deduction:

  1. You take 20% off immediately in year one.
  2. Then you apply depreciation to the remaining 80% as normal.
  3. Effectively, you can claim more of the deduction earlier.

For many assets, this is just a timing shift (you still get the same total deduction over full life), but in the first year the benefit is much better in terms of cash flow.

Notably, for some assets like commercial buildings, the Investment Boost changes more than timing — because under current rules those buildings often can’t be depreciated. With the boost, you can get a deduction where none existed before.

The Investment Boost is limited to new or new-to-NZ assets. Second-hand assets already used in New Zealand generally don’t qualify.

Who can claim the Investment Boost?

The incentive is available to a broad range of businesses and entities, including sole traders, companies, and trusts, as long as they carry on business and are taxable in NZ.

Key conditions:

    • The asset must first become “available for use” in your business on or after 22 May 2025.
    • The asset must be “new” in the sense that it has not been used in New Zealand before (though being new-to-NZ may qualify).
    • It’s optional, you choose to claim it. 

The rules around “available for use” can be technical for assets under construction or imported assets. Businesses will need to pay attention to the timing.

Which assets are eligible for the Investment Boost?

Here’s a breakdown of what generally qualifies and what is excluded.

Eligible asset types

Almost all new depreciable assets (or new-to-NZ) are eligible. Specifically:

  • Machinery, equipment, tools, vehicles used for business
  • Commercial and industrial buildings (or major improvements), even though many of these currently have 0% depreciation rates.
  • Improvements to farmland, planting of listed horticultural plants, aquaculture business assets, forestry improvements
  • Assets associated with petroleum/mining development (where depreciation rules normally apply)

Ineligible assets / exclusions

There are also things you can’t claim via Investment Boost. Some common exclusions:

  • Land (bare land itself) is explicitly excluded.
  • Residential buildings (houses, dwellings) are excluded (though exceptions exist for hotels, rest homes, hospitals)
  • Fixed-life intangibles (e.g. patents, copyrights)
  • Assets already in use in NZ (i.e. second-hand, used) are generally excluded unless they are new-to-NZ in special circumstances
  • Assets that are expensed under other rules (for example items under $1,000 which are fully expensed)
  • Trading stock

Because the rules are detailed, assets under construction or imported before “available for use” dates need special attention.

How to calculate the Investment Boost

Let’s walk through how you calculate your deduction using the Investment Boost.

  1. Claim 20% of the asset’s cost as an immediate deduction in the year the asset becomes available for use.
  2. Depreciate the remaining 80% using standard depreciation rules.

So effectively: Deduction in year one = 20% + (depreciation rate × 80%)

Example:

  • You buy a machine costing $100,000.
  • The depreciation rate is 10%.
  • Under Investment Boost:
    • Immediate deduction = $20,000 (20%)
    • Depreciation allowed on the remaining $80,000 = $8,000 (10% of 80,000)
    • Total deductions in year one = $20,000 + $8,000 = $28,000

Under the old rules, you’d only claim $10,000 (10% of full cost) in year one, so the boost gives you 2.8× more deduction in that first year. If your tax rate is 28%, that extra deduction saves you $5,600 in tax in year one (i.e. 28% of $20,000).

There is no cap on the asset value eligible for the boost. However, if the asset is used for both business and personal purposes, then you can only claim portion of the Investment Boost that relates to your business use.

Investment Boost calculator

To calculate the Investment Boost deduction of your asset, enter the asset purchase price (excluding GST) and the percentage the asset is used for your business.

How to claim the Investment Boost

To use the Investment Boost, you need to follow the rules when filing your tax return and maintain supporting records.

Here’s a suggested step-by-step:

  1. Verify eligibility
    • Make sure the asset is new (or new-to-NZ) and first becomes available for use on or after 22 May 2025.
    • Check that it’s not excluded (e.g. land, residential building, intangible, already used asset).
  2. Record the cost and dates
    • Record the full cost, date you acquired the asset, and the date it is “available for use.”
    • For assets under construction or imported, document when they become usable.
  3. Claim 20% deduction
    • In your tax return for the income year when the asset is available for use, include the 20% as a deduction.
    • Then depreciate the remaining 80% under your standard depreciation schedule.
  4. Complete your tax return
    • Include the boost deduction in your income tax return (e.g. IR4 for proprietors or IR3 for individuals).
    • Declare depreciation and any associated adjustments.
  5. Keep records
    • Retain invoices, purchase contracts, import documentation (if applicable), and evidence of availability dates.
    • Be ready in case IRD requests proofs.

How Solo can help

With Solo, you can claim asset depreciation and apply the Investment Boost automatically — no spreadsheets or calculations needed. The correct depreciation amount is built straight into your tax return, ready to file. That means you can claim confidently and reduce your tax bill without lifting a finger.

Solo also makes it easy to file GST and income tax returns, claim expenses, and create professional invoices. Try it free today.