Budget 2025 introduced the Investment Boost scheme — a targeted tax incentive to support business reinvestment and growth. But what does it actually mean for your business?
As part of Budget 2025, the Government introduced a new initiative called Investment Boost — a tax incentive designed to make it easier for Kiwi businesses to invest in new assets and equipment.
The goal? To stimulate growth, productivity, and resilience across the economy. Treasury expects it to lift GDP by 1% and wages by 1.5% over the next 20 years — with half of those gains expected in just the next five.
So, what does this mean for your business?
What is Investment Boost?
From 22 May 2025, businesses can claim an immediate 20% tax deduction on the cost of eligible new assets. The remaining 80% is depreciated as usual.
This applies to all businesses, regardless of size or structure — making it a valuable opportunity for small and medium enterprises to improve cash flow and invest in future growth.
What Can You Claim?
To qualify, the asset must be:
- New (or new to New Zealand)
- Available for use on or after 22 May 2025
- Depreciable for tax purposes
Eligible assets include:
- New commercial and industrial buildings
- Improvements to depreciable property (excluding residential buildings)
- Primary sector land improvements
- Assets from petroleum or mineral development
- Expenditure incurred on or after 22 May 2025 (excluding rights, permits, or privileges)
What’s Not Eligible?
You can’t claim the 20% deduction for:
- Second-hand assets sourced within New Zealand
- Residential rental buildings
- Most fixed-life intangible assets (e.g. patents)
How Do You Claim?
You’ll include the 20% deduction in your income tax return for the year the asset is purchased. For example, if you buy an eligible asset on 23 May 2025, you’ll claim the deduction in your 2026 income tax return (year ending 31 March 2026).
How to Use Investment Boost Strategically
Here are five ways to make this incentive work for your business:
- Modernise with Technology & AI
Use the 20% tax deduction to buy new machinery, software (including AI tools) and equipment. This direct cashflow benefit makes modernising your operations more affordable and, with new, cutting-edge equipment and tech, you can give yourself a real competitive edge. - Boost Productivity & Wages
By investing in new assets that boost productivity, your business can generate more revenue and improve profitability. This financial uplift helps you offer competitive wages and benefits, making your business a more attractive employer in the currently tight labour market. - Upgrade & Future-Proof
In an unstable economic climate, the Investment Boost encourages proactive investment. By replacing aging equipment, upgrading commercial buildings, or investing in new infrastructure you’re better prepared to weather the economic ups and downs that lie ahead. - Invest in Sustainability
Use the tax savings from the Investment Boost to invest in environmentally friendly assets. This could include purchasing electric vehicles for your fleet, installing energy-efficient machinery, or investing in renewable energy solutions for your premises. - Fuel Growth
The lower tax bill from the Investment Boost frees up more capital. Reinvest these savings into areas that fuel growth. This could include expanding your product lines, entering new markets, increasing marketing efforts, or providing advanced training for your team.
As highlighted in our recent Budget 2025 blog, the 20% up-front deduction makes capital investment more accessible — but it doesn’t replace the need for a solid business case. Affordability remains crucial, especially in uncertain times. And remember: if you sell an asset, the 20% deduction will be included in depreciation recovery, meaning it may be taxable.
Talk to us about making the most of Investment Boost.
If you’re looking to invest in new assets and equipment, this incentive has come along at exactly the right time. We’re here to help you make the most of it.
About Pathfinder Solutions
Pathfinder Solutions advisory team members have either owned or managed businesses, or are investors themselves, so we know first-hand the challenges you face in your world.
Sure we’re Accountants, but the best solutions in business come from focusing on more than just the numbers. Our real-world business experience delivers just that.
