Buying kit this year? New Zealand now lets you write off 20% of it straight away
Good news for once, if you are buying equipment. New Zealand's Investment Boost lets you knock 20% off the cost of a new asset straight away, as a deduction in the year you buy it, on top of the normal depreciation. If a new espresso machine, work van, or gym fit-out was already on your list, this cuts your tax bill now. Here is how much it puts back, exactly what qualifies, and the one reason it is quietly better than it looks for the day you sell.
The deal, in one sentence
Since 22 May 2025 you can deduct 20% of the cost of a new business asset the moment it is ready to use, and still depreciate the other 80% as normal on top. There is no cap on how much you claim, and using it is optional. That is the whole thing. It works for almost any business that buys assets, whether you run a cafe, a salon, a gym or a clinic.
The honest catch up front: this is a timing benefit, not free money. Over the whole life of the asset you deduct the same total either way. Investment Boost just lets you take a big slice of it now instead of spreading it thinly over years. For a business spending real cash on equipment, "now" is exactly when that relief is worth the most.
What it puts back in your pocket this year
Run it on a real purchase. Say you buy a $25,000 espresso setup, new, not second-hand, and get it running this year.
- You deduct 20%, so $5,000, immediately under Investment Boost.
- You still depreciate the remaining $20,000 at the normal rate on top of that.
- At the 28% company tax rate, that $5,000 deduction is roughly $1,400 less tax this year. Trade as a sole trader and it comes off at your own tax rate instead.
The government's own example is just a bigger version: a firm buying a $200,000 asset cuts its tax bill by more than $10,000 in the year of purchase. The value is in the timing. The relief lands in the year you are actually handing over cash for the kit, which is usually the year your bank balance can least spare it.
What counts, and what does not
The rules are broad but not a free-for-all. The asset has to be new, or new to New Zealand (imported gear that was used overseas still counts), and first available to use on or after 22 May 2025.
- In: machinery, equipment, tools, work vehicles, and even new commercial or industrial buildings and fit-out improvements, which normally get no depreciation at all.
- Out: second-hand assets you buy within New Zealand, land, residential rental buildings, most patents and other fixed-life intangibles, and anything already in use here.
So a brand-new oven, styling chair, treadmill or van is in. The used van off Trade Me from a Kiwi seller is out.
The part worth knowing for when you sell
Here is where it quietly beats most tax breaks. A buyer does not value your business on your tax return. They value it on its real earning power, your owner earnings or EBITDA, and when they work that out they add depreciation back, because it is a paper cost, not cash leaving the building. Depreciation is one of the standard add-backs.
Follow that through. Accelerating your depreciation with Investment Boost cuts the tax you pay now but does not cut the profit figure a buyer prices off. Compare it to a wage rise or a new levy, which drag down both. This is one of the rare money moves that helps your cash today and leaves your sale value untouched. You can see what that profit is worth to a buyer with our valuation calculator.
Do not let the tax tail wag the dog
One warning, because it is the mistake people make. A deduction is not a discount. Spending $25,000 to save $1,400 of tax this year only makes sense if you needed the $25,000 asset anyway. Buy the kit that earns its keep, then use Investment Boost to time it well. Do not buy things you do not need just to chase a deduction. And if you are unsure whether an asset qualifies or how it lands on your return, that is a five-minute question for your accountant, not a guess.
What to do about it
Practical moves to protect the margin, and grow it.
- Pull forward the kit you were already going to buy. If a new oven, van, styling chair or gym fit-out is on the list, getting it running inside this tax year lands the 20% deduction now, when cash is tightest; size the timing against your takings with the break-even calculator and the cash flow guide.
- Check it is new or new to New Zealand before you bank on the saving. A brand-new asset or a new commercial fit-out qualifies; a second-hand one bought from a New Zealand seller does not, so confirm the status before you assume the deduction.
- Keep the invoice and the "first available to use" date clean. Investment Boost hangs on that date, and tidy records both back up the claim and are exactly what a buyer checks in due diligence; our clean books guide shows how.
- Do not buy to chase the deduction. It is a timing benefit, not free money, so only buy assets that earn their keep and lift margin; run any bigger purchase through the profit-margin guide first.
- Inland Revenue: New assets, Investment Boost (deduct 20% of the cost of new assets from 22 May 2025, then depreciate the remaining 80% as usual)
- Inland Revenue: What you can claim with Investment Boost (new or new-to-NZ assets, new commercial and industrial buildings, no limit on value; excludes second-hand NZ assets, land, residential buildings and most fixed-life intangibles)
- Beehive.govt.nz: Investment Boost, tax incentive to lift growth (starts 22 May 2025; immediately deduct 20% on top of depreciation; a $200,000 asset cuts tax by more than $10,000 in year one; Treasury estimates GDP +1%, wages +1.5%, capital stock +1.6% over 20 years)