Budget 2025: What the Investment Boost Means for Your Business
The new Investment Boost tax deduction, introduced in Budget 2025, aims to encourage businesses to invest in new, productive assets. 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 Assets Qualify?
To qualify, an asset must:
- Be new or new to New Zealand (not previously used here)
- Be available for the business to use on or after 22 May 2025, and
- Be 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.
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).
Who Benefits Most?
The impact will vary depending on the business, tax-paying businesses benefit more than loss-makers. Capital-intensive industries will gain more than labour, and owners of commercial/industrial buildings could benefit the most, as they can now deduct capital works like seismic upgrades.
Key Considerations and Compliance Risks
To claim the boost, businesses need to:
- Update systems to account for the deduction and adjust depreciation.
- Avoid errors like claiming in multiple years or missing the “available for use” date.
- Be prepared for Inland Revenue scrutiny—especially around:
- Proving assets are new to New Zealand.
- Determining when an asset is available for use.
- Handling asset disposal valuations and recovery income correctly.
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.
In Summary
The Investment Boost offers real tax savings for businesses making eligible capital investments—but it comes with some complexity.
Every business is different so now would be a good time to touch base with your accountant to assess whether the investment boost is worthwhile for your business, and what it could mean for your business planning. Plus ensuring systems and documentation are in place.
