Event Recap: What You Need to Know About the Investment Boost

Investment Boost: Key Questions Answered

The Government’s new Investment Boost tax incentive is designed to accelerate business investment and stimulate growth. But what exactly does it mean for your business?

At our Business Canterbury information session on 3rd July, experts from Deloitte walked through the ins and outs of the new scheme, including practical examples, eligibility questions, and implementation advice. Here’s what you need to know – and how to make it work for you.

Insights from our recent information session with Deloitte

✅ What is the Investment Boost?

The Investment Boost gives businesses a 20% tax deduction on the cost of most new assets in the year they’re acquired and available for use in New Zealand (from 22 May 2024 onwards). Ordinary depreciation still applies to the remaining 80% of the asset's value.

This creates a timing benefit – more tax deductions upfront – rather than increasing the total deductions over the asset’s life.

🧱 1. What types of assets are eligible?

Most depreciable assets qualify, including:

• Plant and equipment

• Commercial buildings (even though they’re normally depreciated at 0%)

• Improvements to existing assets

• New-to-New Zealand second-hand assets (e.g., imported vehicles)

There are no limits on asset value or business size.

🚫2.  What’s excluded?

You can’t claim the Investment Boost on:

• Land

• Residential dwellings (mixed-use buildings require apportionment)

• Fixed life intangible property (e.g., software licenses under 4 years, patents)

• Petroleum and mining permits

• Assets already used in NZ (unless previously held as trading stock)

💰3.  How much is it worth?

For a $100,000 asset with a 10% depreciation rate:

• $20,000 Investment Boost deduction

• $8,000 regular depreciation

• That’s a $28,000 deduction in year one, leading to a $5,600 tax saving at the 28% corporate rate.

The longer the depreciation life of the asset, the more valuable the Boost becomes.

🧾4.  Is the Investment Boost optional?

Yes – you can apply it on an asset-by-asset basis, giving you the flexibility to use it where it’s most beneficial.

🧮 5. How do I record this in Xero (or other systems)?

Manual calculation is needed for now:

• Adjust first-year depreciation rates to reflect both the Boost and regular depreciation

• Reset to the standard rate in following years

• Keep detailed records to support your calculations and eligibility decisions

🧠 6. What do I need to consider before claiming?

• Check bank covenants: the Boost affects profit and retained earnings, so talk to your bank

• Consider ownership: only the asset owner can claim (e.g., a landlord, not the tenant)

• Plan timing carefully: you need to know when an asset is considered “available for use”

• Talk to your accountant: the IRD is expected to release more guidance in late July/August

🔍 7. Can it be used alongside other incentives?

Yes – the Boost can be included in Research & Development Tax Incentive (RDTI) claims, especially where assets support innovation and R&D activity.

🏗️ 8. How does it apply to buildings?

• New commercial buildings qualify for the 20% deduction

• Even better: commercial buildings are normally depreciated at 0%, so the Boost provides immediate tax relief

• Mixed-use buildings must be apportioned (only the commercial part qualifies)

🛠️ 9. What about improvements to existing assets?

These are eligible, but the timing of when they become “available for use” matters. Improvements are treated separately for depreciation.

🛎️ 10. What should I do next?

• Review capital expenditure plans to identify eligible assets

• Discuss with your accountant how best to apply the Boost

• Record your rationale for eligibility, especially in grey areas

• Raise the topic at board level to ensure it’s considered in financial planning

Further IRD guidance is due soon (late July/August 2024).

Have questions or need tailored advice? Our Business Services team is an email away. Get in touch to explore how the Investment Boost could work for your business.

You can also read more on our Investment Boost Overview blog here -