Thinking of buying a new business asset? Read this first.
If you’re a business owner considering purchasing new equipment, tools, or technology, pause for a moment. A new tax incentive called the Investment Boost could help you save more than you think.
The rules around asset purchases are changing, and with it comes an opportunity to improve your cash flow and reduce your tax bill. But timing and eligibility are everything—so before you click “buy now,” here’s what you need to know.
What is the Investment Boost?
The Investment Boost is a temporary tax deduction introduced by Inland Revenue (IRD) to encourage business investment. It allows you to claim an extra 20% deduction on the cost of new eligible assets, in addition to the usual depreciation you’d claim over time.
That’s not just good news for your balance sheet, it’s a direct boost to your cash flow via reduced tax.
What Qualifies (and What Doesn’t)?
Here’s a quick overview of which assets are eligible:
| Qualifies | Does Not Qualify |
|---|---|
| New (or new to NZ) assets purchased and used in your business (in NZ) | Second-hand assets |
| Physical assets like machinery, office equipment | Residential rental buildings |
| Assets bought or finished constructing on or after 22 May 2025 | Intangible assets (e.g. software licences, goodwill) |
👉 Important: You must still depreciate the remaining 80% of the asset’s value over time.
Timing Matters
To be eligible, your new asset must:
Be acquired and available for use on or after 22 May 2025.
Be used or installed, ready for use in New Zealand for your business
This means if you're planning a major purchase, it’s worth acting before the cut-off.
What Happens When You Sell the Asset?
Here’s where you need to be smart.
The Investment Boost gives you an upfront 20% deduction, but if you later sell the asset for more than its depreciated value, depreciation recovery kicks in. That means:
You may need to return part of the tax benefit if the asset is sold for more than its adjusted value.
This applies whether you sell the asset during or after the Investment Boost period.
So, while you get a great deduction now, keep in mind the potential tax adjustment later.
How It Affects Your Cash Flow
The main benefit of the Investment Boost is immediate tax savings. Here’s how it helps:
20% upfront deduction reduces taxable income (and provisional tax)
Lower tax = more money left in the bank
It’s especially helpful if you’re purchasing big-ticket items like plant, machinery, or vehicles
Let’s say you buy a $50,000 asset. That’s a $10,000 immediate deduction, which could translate to thousands in tax savings this year alone.
Need Help Deciding?
At Affinity Accounting, we help small businesses make confident financial decisions, especially when they involve big purchases.
If you’re planning to buy a new asset, we can help you:
Confirm if it qualifies for the Investment Boost
Maximise your tax deductions
Forecast the cash flow impact
Plan for depreciation and potential resale down the track
Get in touch with our team today—your trusted business accountants in Wellington. Let’s make sure your next investment works smarter for your business.
Learn more on the IRD’s official Investment Boost page: IRD Investment Boost
What our clients say
“We are so happy we’ve found a business accountant in Wellington that is approachable, professional, proactive and really takes the time to explain in a no judgement way how we can meet our obligations and improve our business finances. We highly recommend Affinity Accounting to any of our friends and contacts.”
-Steph Adriaansen-Fink