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Budget 2025 included a win for Canterbury Manufacturers. After sustained advocacy from Business Canterbury, we were pleased for the launch of the new Investment Boost scheme offering a 20% upfront tax deduction on new (or new-to-NZ) assets - including tools, machinery, vehicles, and commercial buildings with normal depreciation on the rest. We see this as a strong incentive/opportunity to invest.
Be sure to get professional advice to make this work best for your business as soon as you can. In the meantime, hopefully we can answer some of your general queries below.
You'll find a link to the full Government resource at the end of this post.
Investment Boost FAQs - June 2025
To support businesses in understanding the new Investment Boost tax incentive, we’ve pulled together key information from official Government sources. This FAQ outlines what the policy means, how it works, and what businesses should consider when planning future investments.
- 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.
- 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.
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.
- 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).
- No. Investment Boost is optional for new assets. You can still choose to depreciate your asset under the standard depreciation rules. This may be preferable for some businesses who expect to make sustained losses, such as start-ups.
- Investment Boost reduces taxable income by the amount of the deduction. If your business makes a tax loss, Investment Boost will increase the size of that tax loss. Tax losses can be carried forward into future years when the business makes a taxable profit.
- 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.
- No. You can claim Investment Boost on all your eligible assets and there is no value limit.
- Yes. Investment Boost can be claimed on both new and second-hand assets if they are purchased from overseas on or after 22 May 2025. Second-hand assets from overseas are eligible because these increase the capital stock, whereas assets traded between New Zealand businesses do not.
- New commercial and industrial buildings are eligible for Investment Boost. Residential buildings and most buildings used to provide accommodation are not eligible for Investment Boost – though there are explicit exceptions for some buildings such as hotels, hospitals, and rest homes.
- 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.
- Yes. Improvements to depreciable property are eligible for Investment Boost if the asset they are improving is eligible for Investment Boost. (e.g., significant strengthening of an industrial building).
- 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 are looking for more information, your best contact is your accountant/accountancy firm.
You can also come along to our Investment Boost seminar on 1st July, with Deloitte's.
This information is provided by Business Canterbury and is based on publicly available Government resources. It is for general guidance only and does not constitute tax, financial, or legal advice. Businesses should seek independent advice specific to their situation.
Download the official Investment Boost FAQs PDF here.
Investment Boost 2025: What It Means for Your Business
Keen to know more? Join our Deloitte experts on 1st of July to unpack asset eligibility, tax and what you need to know about the Government's new Investment Boost.
