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The following is from the 2025 Budget's Fact Sheet.

 

Investment Boost

 

What is Investment Boost?

Investment Boost is a new tax incentive for New Zealand businesses to invest in productive assets like machinery, tools and equipment. Businesses can deduct 20 per cent of the new asset’s value from that year’s taxable income, on top of normal depreciation. The deduction applies to new assets purchased from today, 22 May 2025.

 

Why is the Government introducing Investment Boost?

Investment Boost improves the cashflow from new investments, meaning more investment opportunities become financially viable and therefore take place. Business investment raises the productivity of workers, lifts incomes and drives long-term economic growth. By increasing the stock of capital in New Zealand, Investment Boost is expected to lift GDP by 1 per cent and wages by 1.5 per cent over the next 20 years, with half these gains in the next five years. 

 

What impact will this have on businesses?

Businesses that invest will receive a tax benefit, giving them more money in the hand in the year they purchase a new asset. Business owners recognise the value of earlier deductions that can be reinvested and compounded when making investments. Investment Boost makes New Zealand a more attractive place to invest, and gives businesses facing global uncertainty a reason to keep investing in themselves and in the future of New Zealand.

 

How does Investment Boost work?

Businesses can deduct 20 per cent of the value 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. This allows businesses to accelerate the depreciation of their assets by taking a larger deduction in the year of purchase.

 

What assets does Investment Boost cover?

Investment Boost applies to the purchase of most new 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 buildings, which do not allow depreciation deductions. Second-hand assets are generally not eligible for Investment Boost, but those that are sourced from overseas may be able to claim the deduction.

 

What assets does Investment Boost not cover?

To ensure Investment Boost is most efficiently lifting productivity, some assets are not eligible for the deduction, including:

• assets that have previously been used in New Zealand

• land (although land improvements, such as fencing, may be eligible)

• assets that will be held as trading stock

• residential buildings (dwellings)

• fixed-life intangible assets (such as patents)

• assets that are fully expensed under other rules (e.g., assets valued below $1000).