Making Sense of the Investment Boost Scheme
If you're considering buying new equipment, upgrading your business assets, or building new commercial space — the Government's new Investment Boost scheme could be a win for your tax bill. But as with any tax break, the details matter.
Here’s what you need to know.
What is the Investment Boost?
From 22 May 2025, the Investment Boost scheme allows you to:
Claim an upfront 20% tax deduction on the cost of eligible new assets.
Continue to depreciate the remaining 80% as normal over time.
Think of it as front-loading your depreciation — you get a chunk of the deduction now rather than spreading it evenly over the asset’s life.
What Assets Qualify?
The deduction applies to most new depreciable business assets, including:
New vehicles
Machinery and tools
Commercial buildings
Capital improvements (e.g. seismic upgrades, structural refits)
New farming and aquaculture infrastructure
Things that don’t qualify include second-hand assets, unless they’re new to New Zealand and not previously used and residential property (but commercial buildings are in).
What’s the Actual Benefit?
Here’s a worked example:
Your business buys a new $100,000 ute.
You claim a $20,000 deduction immediately (20%)
You depreciate the remaining $80,000 over time
At the 28% company tax rate, that’s $5,600 saved in year one
Compare this to just $10,000 in depreciation without the scheme — you’re getting a much bigger tax deduction upfront.
But remember…
If you sell the asset later for more than its book value, you may need to repay some of that tax saving through depreciation recovery like with any other asset.
Timing vs Permanent Savings
It’s important to understand this is mostly a timing benefit, not a permanent reduction in tax. You still claim the full depreciation — you’re just claiming a bit more now, and a bit less later.
The only real exception is for certain capital improvements (e.g. building upgrades) that previously weren’t depreciable. In those cases, the Investment Boost could deliver a true deduction you wouldn’t otherwise get.
Do You Have to Use It?
Nope — it’s optional.
You can choose not to apply the deduction (e.g. if you're in loss and don't want to burn through it early).
It applies asset-by-asset, so you can opt in for large assets and leave smaller ones out.
Is There a Rush?
No. The scheme doesn’t have a set end date, and the Government expects it to be around for at least the next few years. So there’s no need to panic-buy before 31 March.
Buy when it makes commercial sense
Don’t spend $1 just to save 28c in tax
Should I Buy New or Used?
Here’s a realistic example of buying a new vehicle versus something second hand. Let’s compare:
Ultimately, a new vehicle still costs a lot more when it comes to cash, but you do save more on tax in year one (it’s important to remember this is a temporary tax saving and if you sell the vehicle, you may have tax to pay back when it sells). The tax deduction alone shouldn’t be the only consideration when it comes to buying a new or second-hand asset.
Need Help Deciding?
We can help you model the true tax and cashflow impact of your next purchase. Whether you’re upgrading tools, buying a vehicle, or planning a building fit-out, it's worth checking if the numbers stack up.
Pop us and email or book a quick call if you want to run the numbers before committing.