23/05/2025
Yesterday, the New Zealand Government announced proposed tax changes as part of Budget 2025.
The most relevant change Investment Boost is summarised below (additional budget announcements will be emailed later):
Investment Boost
The Investment Boost allows a business to immediately deduct 20 per cent of the cost of a new asset, on top of depreciation, meaning a much lower tax bill in the year of purchase.
The Investment Boost starts today and applies to new assets purchased in New Zealand as well as new and used assets imported from overseas. It includes commercial buildings, machinery, equipment and work vehicles but excludes land, residential buildings, and assets already in use in New Zealand.
The 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.
You can claim Investment Boost in your tax return for the year that you purchase the asset.
Especially for our overseas team members, the Investment Boost is claimable by any business that pays tax in New Zealand. Foreign residents who invest in New Zealand resident companies will benefit from Investment Boost.
Depreciation is calculated after the you 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 per cent of the value of the asset, plus the usual depreciation deduction, calculated as if the asset’s value were reduced by 20 per cent.
You can claim Investment Boost on all your eligible assets and there is no value limit.
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.
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.
Improvements to depreciable property are eligible for Investment Boost if the asset being improved is eligible for Investment Boost. (e.g., significant strengthening of an industrial building).
If you sell your asset and you claim the Investment Boost, 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.
If you have any queries or would like to discuss potential transactions, please direct message me, Stephen Diedericks or email me [email protected]
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