For Kiwi businesses, Investment Boost is a new tax incentive to encourage investment in assets to increase productivity.
The incentive applies only to new assets and new-to-New Zealand assets, i.e.
• New assets sourced in New Zealand.
• New and second-hand assets sourced from overseas.
Second-hand assets from overseas are eligible because these increase the capital stock, whereas second-hand assets traded between New Zealand businesses do not.
It allows a one-off deduction of 20% of the asset’s cost in the year of purchase, along with depreciation deductions going forward, calculated as if the cost of the asset were reduced by 20%. The deduction is eligible expenditure for the purposes of research and development tax credits.
Investment Boost also applies to investing in new commercial and industrial buildings (even though they have a depreciation rate of 0%). Construction projects started before Budget 2025 may be eligible for Investment Boost, if they are used or available for use for the first time on or after 22 May 2025 and meet the other qualifying conditions. Improvements to farm and forestry land, planting of listed horticultural plants, aquacultural improvements and some petroleum and mineral mining development expenditure may also be eligible.
The Investment Boost deduction is clawed-back if the asset is later sold for greater than its tax value or original cost.
Costing a projected $6.6b over the next 4 years, Investment Boost is forecast to increase New Zealand’s capital stock by 1.6%, GDP by 1% and wages by 1.5%.
Along with boosting domestic investment, Budget 2025 allocates $85m to establish Invest New Zealand to attract talent and capital to New Zealand, lifting growth across technology, science, innovation, and other high-value sectors.
$65m is set aside to ease thin capitalisation rules for foreign direct investment (FDI) into qualifying private infrastructure projects.
Disclaimer: This blog has been carefully prepared, but it has been written in general terms only. The blog should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation.
