Roylance Watson, director at Vazey Child, gives us the lowdown on the government’s Investment Boost, and what it means for transport businesses.

The Investment Boost is a new government tax break announced in the 2025 Budget. It’s designed to encourage businesses to buy new equipment, tools, vehicles, buildings and other useful items by giving them a 20% tax deduction right away. Normally, when you buy a big asset (like a van, a machine or a commercial building), you can’t claim the whole cost as an expense in the first year. Instead, you claim a bit each year through depreciation. The Investment Boost changes that: now, you can claim 20% upfront, plus still get depreciation on the rest over time. This applies from 22 May 2025, so anything new you’ve bought or started using after that date may qualify.

What’s the goal?

The government wants to help businesses grow by making it easier to invest in things that improve productivity. When businesses have better gear, tools or buildings, they can usually get more done, make more money, and hire more staff. This also helps boost the economy. The idea is that this upfront tax deduction will free up cash early on, making it easier for businesses – especially small ones – to take the leap and invest.

 What can you claim it on?

Here are some things you can claim the Investment Boost on:

• new (or new-to-New Zealand) machinery, tools, farming equipment, vehicles and commercial buildings;
• improvements to existing commercial or industrial property;
• second-hand gear – if it’s never been used in New Zealand before.

But there are a few things it doesn’t cover:

• residential buildings (like rental homes);
• land;
• assets already used in New Zealand;
• items you’d normally just write off as a low-value expense (like a cheap printer).

What are the benefits?

Here’s why it might be good for your business:

• Lower taxes in the first year: You get a bigger deduction upfront, which can save you money right away.
• Better cash flow: That tax saving can be put back into your business faster.
• No limit on asset size: Big or small investments can qualify.
• Optional: If you’re not making a profit yet, you can choose not to use it (so it doesn’t increase your losses).

Are there any downsides?

Yes, a few things to keep in mind:

• You’re not saving more overall – you’re just getting some of the deduction sooner. The total tax write-off stays the same.
• Loss-making businesses might not benefit right now: If you’re not paying tax, the deduction won’t save you anything immediately.
• It only applies to new investments from 22 May 2025 – so things you have already bought don’t count.
• Timing – when you sell, you may have to repay the amounts claimed. If you sell the asset for more than its closing value (cost less any claim), you will pay the tax back on that depreciation-recovered amount.

A quick example

Let’s say you buy a trailer for your business for $10,000.

• Under normal rules, you might only be able to claim about $2500 in tax deductions the first year.
• With the Investment Boost, you could claim $2000 upfront (20%) plus some depreciation on the rest – maybe another $2000.
• That’s $4000 in deductions the first year instead of just $2500.

Final thoughts

If you’re planning to buy new gear or upgrade your workspace, the Investment Boost could be a great way to save on tax and grow your business. It’s not free money and if you are planning to sell the asset quickly, you may have to repay the amounts claimed – but it can be a smart way to improve cash flow and invest with more confidence.

Roylance Watson is a chartered accountant and director at Vazey Child Chartered Accountants in Hamilton. Email: roylancew@vazeychild.co.nz Phone: (07) 838 5988 Website: vazeychild.co.nz