New Zealand businesses have a new way to invest in growth and reduce the impact on their cash flow in the process. The government's Investment Boost tax incentive allows businesses to deduct 20% of the cost of eligible new assets upfront, then depreciate the remaining 80% over time in accordance with existing depreciation rules.  

Effective from May 22, 2025, Investment Boost is designed to encourage business investment in productive assets while improving short-term cash flow.

Whether you’re buying equipment, upgrading your premises or expanding your fleet, this incentive could put more cash back in your pocket sooner.

Here’s what you need to know:

What is the Investment Boost?

The Investment Boost is a one-off tax deduction that allows your business to bring forward part of your depreciation claim into the first year. Instead of spreading the full cost of an asset evenly across its useful life, you deduct 20% of the cost immediately, then depreciate the remaining 80% over time.

This accelerated depreciation model does not increase the total deduction available, it simply shifts a portion of it forward, helping businesses to reduce their taxable income sooner.

This means you may pay less tax in the year you make the purchase, which leaves more money in your business when you need it most.

Who can claim the Investment Boost?

The Investment Boost is available to all businesses in New Zealand regardless of size or industry. There is no application process. If you buy an eligible asset and make it available for business use on or after May 22, 2025, you can claim the deduction in your next income tax return.

To qualify, the asset must be used primarily for business purposes. If it has mixed personal and business use (such as a vehicle), only the business use portion of the cost is eligible for the 20% deduction.

Which assets qualify for the Investment Boost?

To qualify, the asset must be new or new to New Zealand, first available for use by the business on or after May 22, 2025, and depreciable under Inland Revenue rules.

Examples of qualifying assets include:

  • Vehicles used primarily for business
  • Equipment and machinery
  • Tools and manufacturing assets
  • Technology such as computers and POS systems
  • Commercial and industrial buildings
  • mprovements to depreciable property such as fencing or interior fit-outs
  • Primary sector land improvements like irrigation systems.

Which assets cannot be claimed?

You cannot claim the Investment Boost for:

  • Second-hand assets purchased in New Zealand
  • Residential rental buildings or dwellings
  • Land (though land improvements qualify)
  • Trading stock for resale
  • Fixed-life intangible assets (e.g. patents, trademarks)
  • Assets already fully expensed under other rules (e.g. low value items costing $1,000 or less).

How does the 20% deduction work?

When you purchase an eligible asset, you claim 20% of its cost in the income year it first becomes available for use. The remaining 80% is depreciated as normal over the asset’s useful life, including the first year of use, using Inland Revenue’s general depreciation rates (found on the IRD’s website).

For example, if you purchase an asset for $10,000 with a straight-line depreciation rate of 20%, you can claim $2,000 immediately under the Investment Boost, while the remaining $8,000 is depreciated over time.

Year 0 Year 1 Year 2 Year 3 Year 4
Deductions with
Investment Boost 		$3,600 $1,600 $1,600 $1,600 $1,600
Deductions without
Investment Boost 		$2,000 $2,000 $2,000 $2,000 $2,000

If you do claim the 20% Investment Boost deduction, you must depreciate the asset. You cannot elect the asset to be non-depreciable.

How to claim the Investment Boost

You claim the Investment Boost in your business income tax return for the financial year that the asset becomes available for use. The deduction is included in  the Financial Statements Summary (IR10), together with any other claimed depreciation.

It’s important to keep accurate records. Hold on to invoices showing the purchase date and cost, as well as documentation proving when the asset became available for use.

If claiming for a mixed-use asset such as a car, keep clear records of business and personal use so you claim only the correct portion.

How to make the most of the Investment Boost

Because this deduction is about timing, strategic planning matters. Here’s how you can make the most of the incentive:

1. Time your purchases carefully

Ensure the asset is purchased and available for use before the end of the financial year to claim the deduction sooner.

2. Prioritise productivity-enhancing assets

Invest in equipment, technology or infrastructure that improves efficiency, revenue capacity or scalability.

3. Consider bundling upgrades

If multiple capital improvements are planned, grouping them within the same income year may maximise upfront deductions.

4. Review other available tax incentives

You may still qualify for low-value asset write-offs or other industry specific deductions alongside the Investment Boost.

It’s also worth speaking with your accountant or bookkeeper to confirm eligibility and ensure you are claiming correctly. The tax savings unlocked in the first year can be reinvested into your business to fund growth, manage working capital, or reduce existing debt

What to do next

If you have been delaying an upgrade to your equipment, vehicles or premises, now is the time to take action. The Investment Boost allows you to improve cash flow while investing in your future.

If you need funding to make a purchase, Bizcap can help. We offer fast and flexible business loans and lines of credit with funding available in as little as 24 hours so you can take advantage of the Investment Boost and keep your business moving forward. Apply today.

Disclaimer: This information is general in nature and does not constitute legal, tax, or financial advice. While we have taken care to ensure the accuracy of this content at the time of publication, rules and regulations may change. For advice specific to your business or circumstances, please consult a registered tax agent, accountant, or the Inland Revenue Department (Te Tari Taake).