The Investment Boost: Smart Strategy or Just a Quick Fix?
The government’s new “Investment Boost” is turning heads, promising bigger tax breaks to motivate New Zealand businesses to invest in new assets.
But is this really a win for business, or just a case of shifting the benefits around?
Let’s unpack what it really means.
What’s the Investment Boost All About?
Unveiled in the 2025 Growth Budget, the Investment Boost is a new tax incentive. It lets businesses deduct an extra 20 percent of the value of new assets in the year they’re bought, on top of the regular depreciation claims.
To qualify:
The asset must be brand new, eligible for depreciation, and in use from 22 May 2025.
The deduction applies in the year of purchase, giving businesses a larger tax break upfront.
The goal is to encourage investment in tools, vehicles, and equipment that help boost productivity and support long-term growth.
You’ll Save More Now, But Not Forever
Imagine buying a $50,000 machine. Under normal rules, you might deduct around $15,000 in the first year. With the Investment Boost, that increases to $22,000.
That’s more money in your pocket now, but it means smaller deductions in future years. Overall, the total deduction stays about the same. You’re just shifting part of it forward.
The Timing Could Work for You or Against You
If your business is having a strong income year, that bigger upfront deduction could be a big help. But if you expect profits to grow in the future, having less to deduct later might not be ideal.
It’s important to understand this is not extra money. It’s simply a shift in timing.
Selling Too Soon? Watch Out for a Catch
If you sell the asset within a few years and the sale price is higher than its book value, the difference may be taxed as income. This is called depreciation recapture.
Example:
Book value after 3 years: $13,720
Sale price: $35,000
Taxable amount: $21,280
This can catch businesses off guard if they focus only on the initial tax benefit.
Which Assets Qualify?
The Investment Boost applies to most new depreciable assets such as:
Machinery
Equipment
Work vehicles
New commercial buildings (these aren’t normally depreciated, but the Boost still applies)
Assets that don’t qualify include:
Second-hand items
Land and residential property
Trading stock (inventory)
Low-value assets under $1,000
Bottom Line: Let Business Needs Guide Your Decisions
Tax incentives like the Investment Boost can be helpful, but they should support smart business decisions, not lead them.
Ask yourself:
Will this asset help my business grow?
Would I still make this purchase without the tax incentive?
When used with care, the Investment Boost can be a powerful tool. But like any tool, it needs to serve your overall business strategy.
Need Help Deciding?
Every business is different, and so are the tax outcomes. If you’re considering a big purchase or want to plan your depreciation strategy, let’s talk.
We can help make sure the Investment Boost works in your favour and supports your long-term goals.
