Income tax Dates
Investment Boost is a new tax deduction for all businesses. From 22 May 2025, businesses can claim 20% of the cost of new assets as an expense, then claim depreciation as usual on the remaining 80%.
What you can claim for
Businesses can claim 20% deductions for the costs of new (or new to New Zealand) business assets that they bought - or finished constructing - on or after 22 May 2025.
To claim Investment Boost, the asset must be:
- new or new to New Zealand
- available for the business to use on or after 22 May 2025, and
- depreciable for tax purposes.
You can also claim for:
- new commercial and industrial buildings
- improvements to depreciable property (but not residential buildings)
- primary sector land improvements
- assets arising from petroleum development expenditure and mineral mining development expenditure incurred on or after 22 May 2025 (except rights, permits or privileges)
- mixed-use assets.
There is no limit to the value of new investments you can claim Investment Boost for.
What you cannot claim for
You cannot claim Investment Boost for:
- second-hand assets that are sourced from New Zealand
- residential rental buildings
- most fixed-life intangible assets (such as patents).
How to claim
You can claim Investment Boost in your income tax return for the year you buy a new asset. For example, if you buy a new asset on 23 May 2025, you can claim Investment Boost by adding the amounts to the relevant sections of your 2026 income tax return.
If the asset is sold
If a business sells the new asset for more than its adjusted tax value (its cost minus the deductions and depreciation), they must declare the gain as taxable income on their tax return. This does not apply to primary sector land improvements.
What this means for you
Here are some examples of how businesses can claim Investment Boost.
Queen City Carriers is a transport and logistics business that wants to expand its fleet of trucks in Auckland. They invest in 4 new trucks for $75,000 each, and expand their fenced parking lot to accommodate them - at a cost of $200,000 for new fencing.
In total, all the new trucks ($300,000) and the land improvements ($200,000) cost $500,000. Queen City Carriers can claim 20% of the total cost as a deduction in that year's tax return - that's $100,000.
Queen City Carriers can claim depreciation on the remaining 80% of the cost of the new assets ($400,000) as if that amount is 100% of the cost.
Jenaye's Fish 'n Chip shop is struggling to keep up with demand on Friday nights, so they invest in a new commercial deep fryer for $2,500. The shop can claim 20% of this cost as a deduction in that year's tax return - that's $500.
Jenaye's Fish 'n Chip shop can claim depreciation on the remaining 80% of the cost of the deep fryer ($2,000) as if that amount is 100% of the cost.
Ella Taxis is a taxi business. The business buys a car for $45,000 near the end of the 2025-26 income year.
Over the next 90 days, Ella Taxis keep records of when and why they use the car. They realise that they used half the car’s mileage for work and half for private use.
This means that the car is a mixed-use asset and only half of the expenses of running the car are deductible expenses.
Ella Taxis can claim half of the Investment Boost amount as a deduction in the 2025-26 income year – that’s $4,500.
Ella Taxis can calculate depreciation on the remaining 80% of the cost of the car ($36,000) as if that amount is 100% of the cost.
The benefits of Investment Boost
Investment Boost is a form of accelerated depreciation. It does not change the total value of deductions you claim over the life of an asset. However, it does mean you can claim a greater deduction in the 1st year. This means you pay less tax in that year. Because money saved today is worth more than money saved later, this helps you save more overall.
Depreciation – the numbers
If you buy an asset for $100,000 and use a straight-line depreciation rate of 20%, without Investment Boost, you can deduct $20,000 each year for 5 years. With Investment Boost, you can deduct $36,000 in the year you bought the asset and $16,000 for the following years. In both cases, $100,000 has been claimed in deductions at the end of year 4.
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
|---|---|---|---|---|---|
| Deductions without Investment Boost | $20,000 | $20,000 | $20,000; | $20,000 | $20,000 |
| Deductions with Investment Boost | $36,000 | $16,000 | $16,000 | $16,000 | $16,000 |
A timing advantage for businesses
However, Investment Boost gives businesses a timing advantage. Earlier deductions lower the present value of the tax paid and mean better cashflows for your business. Using a 4% interest rate, the present value of the deductions in the example are:
- $92,598 without Investment Boost
- $94,078 with Investment Boost.
Depreciation recovered when you sell assets
If you sell an asset partway through its life and you’ve claimed investment Boost, the amount of depreciation recovered you need to declare may be different.
If you sold the asset at the start of year 3 for $40,000, and did not claim an Investment Boost deduction, the asset has an adjusted tax value of $40,000. If you claimed Investment Boost, the asset has an adjusted tax value of $32,000.
There is no depreciation recovery income in the 1st case because the sale price equals the adjusted tax value. There is depreciation recovered in the 2nd case because the sale price is $8,000 higher than the adjusted tax value.