Get ready to move your business forward! The Government's new tax incentive, Investment Boost, offers an opportunity for businesses to invest and accelerate their growth. Now is the time to act if you've been considering new equipment, updated technology, or even additional commercial premises. Investment Boost allows businesses to immediately deduct 20% of the cost of a new eligible asset from taxable income in the year of purchase. This is in addition to normal depreciation claims, meaning a lower tax bill. It frees up funds to be reinvested in anything from hiring new staff, exploring new markets or even developing further products. Minister for Small Business and Manufacturing, Hon. Chris Penk says, "It's the number one change I've heard the sector call for."
The Budget brings a bona fide boost to business.
The idea behind Investment Boost is straightforward: make it more financially attractive for businesses to invest in the tools and infrastructure that enhance productivity. It's all about driving the economy forward by supporting those putting in the work. When you invest in your business, you're not just helping your own bottom line; you're contributing to a stronger economy for everyone. The Treasury and Inland Revenue project that this policy will lift New Zealand’s GDP by 1% and wages by 1.5% over the next 20 years, with about half of these gains expected in the first five years.
The change will benefit farmers, tradies, manufacturers, and other businesses by helping them invest in what they do. Firms will be supported to become more competitive, and, in turn, workers will benefit from wage growth.
For you, as an individual business owner, this means several things. Firstly, major capital expenditure becomes more affordable, including "the tools, tech and equipment that people need to boost their productivity, stay competitive and expand," as Minister Penk says.
That new piece of machinery, the upgraded software suite, or the eco-friendly vehicle fleet might now fit more comfortably within your budget. Secondly, the improved cashflow from the upfront deduction can ease financial pressures and provide a buffer for other operational needs. This initiative effectively lowers the cost of capital.
Now is the time to invest in your business's future
The scope of Investment Boost is broad. In fact, most new assets that are depreciable for tax will qualify. Think about the backbone of your operations.
- New machinery and tools that lift output for manufacturers and food producers
- Modern equipment for service providers such as cafés and salons
- More reliable and efficient work vehicles, including utes for tradies and delivery vans for retailers.
- Leading technology and digital infrastructure that streamline processes
A game-changing inclusion is new commercial and industrial buildings, which previously offered no depreciation deductions. If you've been considering owning your premises or expanding your physical footprint this will be welcome. Even improvements to existing eligible depreciable property can qualify, such as earthquake strengthening of an industrial building.
Minister Penk says Investment Boost responds directly to calls from business. "Depreciation of asset purchases has been the wish-list item most often raised with me since I became Small Business and Manufacturing Minister, so I'm delighted with this reaction and what it means for investing in productivity-enhancing kit."
The incentive also applies to new or second-hand assets purchased from overseas, as long as they haven't been used in New Zealand before.
While the scheme is comprehensive, some assets are not covered, such as land (though some land improvements like fencing may qualify), residential buildings (with exceptions like hotels and hospitals), assets held as trading stock, and fixed-life intangible assets like patents.
Investment Boost in action means real stories of growth
Let's consider how the new scheme might play out for everyday New Zealand businesses.
Picture a local café investing $15,000 in a new, multi-group espresso machine and grinders. The Investment Boost provides an immediate $3,000 tax deduction (20% of $15,000). The remaining $12,000 is then depreciated as usual. This upfront benefit could also allow the café to refresh its outdoor seating or hire new staff to attract and serve more customers.
A small creative agency may want to upgrade its technology to handle more complex projects and improve client presentations. They invest $25,000 in new high-performance laptops for their designers, a set of interactive tablets for client meetings, and a state-of-the-art projector for their main conference room. Under previous rules, they would depreciate this tech equipment over time, with up to $12,500 in the first year. With Investment Boost this amount lifts to $15,000.
Make Investment Boost work for your business
One of the most appealing aspects of Investment Boost is its simplicity and breadth. There is no cap on the value of eligible investments or the number of assets you can claim for. Whether you're a sole trader buying a new laptop or a larger company overhauling your entire production line, the benefit applies. As Minister Penk put it, "Tradies, farmers, manufacturers, small business owners… this one’s for you."
The incentive is available for eligible assets you buy now. You claim it in your tax return for the income year in which the asset was purchased. While Investment Boost is designed to be beneficial, it is optional. Businesses, particularly start-ups or those anticipating sustained losses, might find that standard depreciation rules are more suitable. A conversation with your accountant will clarify the best approach for your circumstances.
Investment Boost shows the Government’s commitment to business. Every sector has been knocked around by challenging local and international economic conditions. This tax incentive means this has not gone unnoticed. It offers a chance to think strategically about how new assets can improve your efficiency, enhance your offerings, and drive sustainable growth.
Plan your growth with expert support and mentoring
To fully understand how Investment Boost will apply to your operations, it's wise to speak with your accountant or tax advisor, who can give you tailored advice.
You can also find further information on the official Budget website.
The Investment Boost Fact Sheet can be downloaded as a pdf from Inland Revenue.
For broader strategic guidance on growth along with first-hand experience, your Business Mentor is invaluable. Be sure to discuss the opportunities from the latest Budget and how they could change your day-to-day work.
