How the Investment Boost tax incentive works for you

 

 

In the latest Budget, the Government announced the new Investment Boost scheme. This is great news for anyone wanting to invest in new assets like equipment or vehicles for their business. From May 2025, businesses can claim 20% of the cost of new assets as an expense, as well as claiming depreciation on the remaining 80% as usual.

The special benefit for tradies is that it also covers new commercial and industrial buildings, so it may help encourage potential clients to greenlight construction work. Because these buildings are normally non-depreciable assets, being able to claim some money back might be the deciding factor for clients to build.

How does it work?

To claim Investment Boost, the asset must be: 

• new or new to New Zealand (i.e. it includes second-hand items imported from overseas, but not ones sourced here) 
• available for the business to use on or after 22 May 2025, and 
• depreciable for tax purposes. .  

Residential buildings aren’t included, but land improvements in the primary sector are, which could also have flow-on benefits for tradies who specialise in anything from fencing to earthworks and planting. Mixed-use assets are also covered (more on that below).

Best of all, there’s no limit to the value of new investments you can claim Investment Boost for. However, if you then sell the asset for more than its taxable value (once the 20% is taken into account), you have to declare this as taxable income on your tax return.

Now is a great time to think about upgrading some of your plant and equipment, to help improve efficiency on site. Inland Revenue gives the example of a business that invests $500,000 in new trucks and an expanded yard to park them in – meaning it can claim $100,000 back that tax year. It can then claim depreciation on the remaining 80% of the cost of the new assets ($400,000) as if that amount is 100% of the cost. 

If your new vehicles are used for private use rather than business half the time, however, they count as mixed-use assets. That means you can only claim on half the value of the investment – but you can claim depreciation on the remaining 80%. 

For more information on Investment Boost, or to get advice on how it works, visit the IRD website or ask an accounting professional.