From 22 May 2025, NZ businesses can claim an extra 20% deduction in year one when they buy a new depreciable asset (often called the “Investment Boost”).

You still depreciate the remaining 80% at the normal IRD rate.

It’s not free money—it simply brings forward a slice of future deductions to help cash flow now, with a potential clawback later if you sell above book value.

What qualifies (in plain English): New business assets like machinery, tools, equipment, and many fit-outs.

Not second-hand purchases.

Commercial buildings can qualify for the 20% upfront deduction even though they don’t usually depreciate.

Quick example: Buy a new machine for $100,000.

In year one you can deduct $20,000 immediately.

The remaining $80,000 is depreciated as usual over time.

At a 28% tax rate, that upfront 20% could trim this year’s tax by $5,600—but remember, if you later sell above its book value, some or all of that benefit may be taxed back as depreciation recovery.

Tips to get it right: Keep invoices and an asset register; confirm the asset is new and used for business; factor the bigger year‑one deduction into provisional tax planning; and before signing, check the sale and purchase terms (including any chattels values) so tax treatment matches reality.

This is general advice only so always consult a Chartered Accountant to get advice on your situation.

At David Hooper Chartered Accountants, we help local businesses make smart financial decisions. Get in touch today at [email protected] or call us on 09 421 1635.