Investment Boost Explained: The New Tax Deduction That Will Save Kiwi Businesses Thousands

As part of Nicola Willis’s 2025 Budget, the Investment Boost allows New Zealand businesses to claim an upfront tax deduction of 20% on the purchase of new assets. Crucially, this deduction does not mean a discount on the purchase price — a point the team is quick to clarify. For example, buying a $10,000 asset lets you immediately deduct $2,000 from your taxable profit, and then depreciate the remaining $8,000 under standard rules.

It’s a timely incentive, designed to support those businesses already considering an upgrade. But it’s not a free-for-all — buying gear you don’t need just to chase the deduction could do more harm than good.

While the Investment Boost might sound like a no-brainer, it comes with risks. One major trap is assuming this deduction makes business purchases “cheaper.” As Amanda, our in-house accountant, points out: you still spend the full amount. This is not a 20% discount — it’s a tax deduction.

The real danger lies in poor planning. Buying assets you wouldn’t have otherwise purchased, or acquiring vehicles like a Raptor Ranger that won’t genuinely grow your business, can cost more in the long run. You’re still out of pocket and may not see any return.

There’s also the risk of depreciation recovery — if you sell an asset that hasn’t dropped as much in market value as it has on your books, you could find yourself paying tax on the difference.

Not every business asset is eligible. The Investment Boost only applies to new assets — not second-hand items, land, or residential property. This is meant to support business growth, not speculative buying.

Some key points to consider:

• The asset must have a clear business purpose.

• Mixed-use or personal items (like a car used for both home and work) need careful structuring.

• You may choose to use the Investment Boost on some purchases and stick with standard depreciation on others.

In all cases, alignment with your business’s needs and strategy is key.

• The Investment Boost lets you deduct 20% of a new asset’s value upfront — plus ongoing depreciation.

• It’s not a discount — you still pay the full price for the asset.

• Only new assets qualify; second-hand goods, land, and residential property are excluded.

• Poorly structured purchases can lead to depreciation recovery and unexpected tax bills.

• Focus on assets that genuinely support your business goals.

• Talk to an accountant before making any decisions.

If you’d like to learn more, check out these other episodes below.