Investment Boost – Deduction for New Investment Assets, Are You Eligible?

As part of Budget 2025, the Government has announced a new tax incentive - the “Investment Boost” - designed to encourage business investment through a one-off tax deduction for qualifying new investment assets.

Under the proposed amendments, businesses will be entitled to a deduction equal to 20% of the cost of eligible new investment assets.

This deduction is available in the income year the asset is first available for use (for depreciable property) or when expenditure is incurred (for non-depreciable assets).

Key Features of the Investment Boost

20% One-Off Deduction and Depreciation Impact

Businesses can claim a one-off tax deduction equal to 20% of the cost of new investment assets at the time of acquisition.

Future tax depreciation will be calculated on the reduced cost base of the asset for tax purposes, i.e., 80% of its original cost.

Example 1: Depreciable Property
Raj Ltd purchases a new asset for $10,000 on 1 October 2025. The asset has a 10% DV depreciation rate and is used for six months in the income year ended 31 March 2026.

Tax Deductions for 2025–26:

Investment Boost: 20% × $10,000 = $2,000
Depreciation: 10% × $8,000 × 6/12 = $400
Total deduction for the year = $2,400

Eligibility Timing

The investment boost applies to most assets first used or available for use on or after 22 May 2025. The scheme doesn’t have a set end date, so there’s no need to panic-buy before 31 March.

Example: Timing of Acquisition
Mr Simson, a builder, acquires the following assets in the year ending 31 March 2026:

A new van, available for use from 6 July 2025
A carport, construction started before 22 May and is available for use from 6 July 2025
A drop saw, purchased and used on 8 May 2025

As the drop saw was purchased prior to 22 May 2025 it does not qualify for the investment boost. It will however be depreciable property from 8 May 2025 assuming it is available for use in the business from this time. Consequently, it will only be eligible for a depreciation deduction.

Only the van and carport qualify for the Investment Boost.

Note the Investment Boost deduction must be the net of any capital contribution or government grants.

What could this mean for you?

If you’re planning a big spend this boost could help you reinvest faster. It’s best to chat to us, as there are conditions to consider. Don’t hesitate to get in contact so we can figure out the way best forward.

Article contributed by: Prabhjit Singh, Business Advisory Manager at RSM NZ