What is the Investment Boost?
The Investment Boost was announced in Budget 2025 as a key measure to stimulate business growth across New Zealand. But what exactly is it—and how does it work?
The Investment Boost is a new tax incentive that allows businesses to claim an immediate 20% deduction on eligible new assets, on top of standard depreciation. It’s designed to reward businesses that invest in productivity-enhancing assets—such as machinery, tools, equipment, and commercial buildings—by improving cash flow in the year the investment is made.
Available From: 22 May 2025
Applies To: New eligible depreciable assets
Purpose: Encourage business investment, support growth, and improve productivity
How the Investment Boost Works for Businesses
Let’s say you purchase an eligible asset worth $100,000. With the Investment Boost, you can claim an immediate $20,000 deduction (20% of the purchase price). You also claim standard depreciation on the remaining $80,000. If your depreciation rate is 10%, that’s another $8,000. Total year-one deductions = $28,000, compared to $10,000 under the old rules. At a 28% company tax rate, this could save you $7,840 in tax in the first year alone. It’s important to note: the upfront benefit is a timing advantage. Future depreciation deductions will be smaller since you’ve already claimed more in year one.
Eligibility Criteria: What Assets Qualify?
The Investment Boost applies to most new depreciable business assets. These include equipment and tools, work vehicles (used 100% for business), new commercial and industrial buildings, and capital improvements to eligible assets. Eligible new and second-hand assets purchased from overseas also qualify. However, certain assets are excluded to ensure the incentive supports productivity. These include land, residential buildings (like rental properties), second-hand assets already used in New Zealand, assets used as trading stock, intangible fixed-life assets (e.g., patents, certain software licences), and low-value assets under $1,000 (already fully deductible).
Strategic Benefits of the Investment Boost
The government introduced the Investment Boost to improve short-term business cash flow, encourage businesses to invest in productive assets, and support long-term economic growth and higher wages. For businesses, this can mean more funds available to reinvest in projects, upgrade equipment, and improve operational efficiency, leading to accelerated growth and competitiveness in the market.
Final Thoughts: A Smart Opportunity for SME Growth
For small and medium-sized businesses, the Investment Boost is more than just a tax break—it’s a practical opportunity to strengthen your business. Whether you’re investing in equipment, tools, or commercial upgrades, the upfront tax benefits can free up cash to reinvest where it matters most. But like any incentive, it pays to plan. The right investments can fuel productivity and growth—while the wrong ones can drain your resources. That’s where we come in.
Need support? At Mondo Advisory, we help business owners make smart, strategic decisions that support long-term success. Get in touch with us to understand how the Investment Boost could apply to your business—and how to use it to your full advantage.
