The Government has announced its Budget for 2025 on the 22nd of May 025. The taxation measures in the Budget are:
- Introducing Investment Boost, a tax incentive that supports businesses with an immediate tax deduction for new assets first available for use on or after Budget Day (22 May 2025) – Investment Boost information sheet.
- Changes to Working for Families, including raising the abatement threshold and the abatement rate, and income testing the first year of Best Start.
- Changes to KiwiSaver including increasing the default employer and employee contribution rates, introducing the ability to opt for a temporary rate reduction, extending eligibility for receiving employer and government contributions to 16- and 17-year-olds, reducing the government contribution to KiwiSaver for all members and removing the government contribution for those earning over $180,000 a year.
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Now, let’s look at the details of the Investment Boost information sheet.
What is Investment Boost?
Investment Boost is a new deduction available to New Zealand businesses when they purchase new
capital assets for their business. The deduction allows businesses to accelerate the depreciation of their
assets by taking a larger deduction in the year of purchase.
Why is the Government introducing Investment Boost?
Investment Boost supports productivity and economic growth by providing a benefit to businesses that
make new investments. More investment means greater productivity and higher wages for working New
Zealanders.
How does Investment Boost work?
Businesses can deduct 20% of the cost of new assets in the year that they purchase the asset. You can
claim both Investment Boost and a standard depreciation deduction in the year you purchase the asset.
What assets does Investment Boost cover?
Investment Boost applies to the purchase of most assets that are depreciable for tax purposes – common
examples include machinery, equipment and work vehicles. Investment Boost also applies to the
purchase of new commercial and industrial buildings – that do not allow depreciation deductions.
What assets does Investment Boost not cover?
Investment Boost does not cover:
▪ assets that have previously been used in New Zealand
▪ land
▪ trading stock
▪ residential buildings (dwellings)
▪ fixed life intangible assets (such as patents)
▪ assets that are fully expensed under other rules.
Further technical information
Do I have to claim Investment Boost?
No. Investment Boost is optional for new assets. You can depreciate your asset under the standard
depreciation rules.
How do I calculate my depreciation deductions after I have claimed Investment Boost?
The base from which standard depreciation is calculated is reduced by the amount of the Investment
Boost deduction. In the year that you purchase the asset, you can claim:
▪ 20% of the cost of the asset, plus
▪ the amount of the usual depreciation deduction that would otherwise apply but calculated as if the
cost of the asset were reduced by 20%.
Are there any limits on the number of assets I can claim Investment Boost for?
No. You can claim Investment Boost on all your eligible assets and there is no value limit.
Can I claim Investment Boost for assets I purchase from overseas?
New and secondhand assets that have been imported from overseas may be eligible for Investment
Boost if they have not been used before in New Zealand.
Can I claim Investment Boost for an asset that is only partly used in my business?
You can claim Investment Boost on the business-use portion of the asset. You cannot claim Investment
Boost for an asset to the extent it is used for private purposes.
Can I claim Investment Boost on new buildings?
New commercial and industrial buildings are eligible for Investment Boost. Residential buildings are not
eligible for Investment Boost. This means that most buildings used to provide accommodation are not
eligible for Investment Boost. There are explicit exceptions for some buildings such as hotels, hospitals,
and rest homes.
What if I have a construction project underway? Can I claim Investment Boost when it is completed?
If you started a construction project before 22 May 2025, your asset may be eligible for Investment Boost. The asset needs to be used or available for use for the first time on or after 22 May 2025. The asset must meet the other qualifying conditions.
Are new capital improvements eligible for Investment Boost?
Yes. Improvements to depreciable property are eligible for Investment Boost if the asset that they are
improving is eligible for Investment Boost. An example of an improvement is significant strengthening of
an industrial building.
What happens when I sell my asset that I claimed Investment Boost for?
The deduction for new investment assets generally reduces an asset’s adjusted tax value (or equivalent).
Just like depreciation, some or all of the deduction may be recoverable if the asset is disposed of (or
deemed to be disposed of) and the consideration is more than the asset’s adjusted tax value. Separate
rules apply for assets that are not depreciable property.
Is anything other than depreciable property eligible for Investment Boost?
Yes. Certain assets that are allowed depreciation-like deductions but are not depreciable property have
been included in the policy. These include improvements to farmland, planting of listed horticultural
plants, improvements to aquacultural business, and improvements to forestry land. Certain kinds of
petroleum development expenditure and mineral mining development expenditure are also eligible for
Investment Boost.
Can I claim Investment Boost and the R&D tax credit?
Yes. The deduction is an eligible expenditure for the purposes of the research and development tax
credit.
If you need any assistance with claiming Investment Boost, please contact us without hesitation.