Investment Boost and equipment finance: timing and funding new assets

What is Investment Boost?

Investment Boost is a tax incentive for business investment. In Inland Revenue’s words: from 22 May 2025, businesses can claim 20% of the cost of new assets as an expense, then claim depreciation as usual on the remaining 80%.

Normally, the cost of a depreciable asset is spread over its useful life through depreciation. Investment Boost brings a chunk of that deduction forward to the year the asset is first available for use, which reduces taxable income — and therefore tax — sooner.

It’s an accountant’s topic first and a lender’s topic second. But because it can change which asset you buy and when, it has a real effect on the funding decision.

Which assets qualify?

According to Inland Revenue, an asset qualifies if it is:

• new, or new to New Zealand — even if it was used overseas before being imported;
• first available for the business to use on or after 22 May 2025; and
• depreciable for tax purposes.

Inland Revenue also lists new commercial and industrial buildings, improvements to depreciable property (but not residential buildings), primary sector land improvements and mixed-use assets as qualifying categories.

Excluded:

• second-hand assets sourced from New Zealand;
• residential rental buildings; and
• most fixed-life intangible assets, such as patents.

Asset	Likely Investment Boost position (check with your accountant)
New ute from a NZ dealer	Qualifies if depreciable and first used after 22 May 2025
Used ute bought locally	Excluded — NZ-sourced second-hand
Used excavator imported from overseas	May qualify as new to New Zealand
New commercial oven	Qualifies if depreciable
New factory building	Listed as a qualifying category
Residential rental building	Excluded

How does it interact with equipment finance?

The deduction is about the asset and its tax treatment, not the funding. A business that buys a qualifying new asset with cash, with a loan or with equipment finance may be able to claim Investment Boost — but the type of finance arrangement can affect who is treated as owning the asset for tax purposes. A loan or hire purchase is usually treated differently from an operating lease, for example. Ask your accountant how your chosen structure is treated before you sign.

What Investment Boost does to the funding decision is more indirect:

1. It tilts new versus used. A new or newly imported asset may qualify; a locally sourced used one won’t. That can narrow the price gap between them.
2. New assets suit equipment finance. Standard new assets from dealers are the quickest and cheapest to finance against.
3. Used local assets often suit unsecured loans. Private-sale or hard-to-value used assets can be simpler to fund unsecured.

Our comparison of equipment finance vs unsecured loan goes through that choice in detail.

Does it help cash flow on purchase day?

No — and this is the most common misunderstanding. Investment Boost reduces taxable income, which reduces tax payable later. You still need to fund the full purchase price on the day. The cash benefit shows up when your tax is calculated, which may affect provisional tax or terminal tax payments.

That timing matters for funding. If you’re relying on the tax saving to help repay a loan, map when it actually arrives. For many businesses, it’s months after the purchase. Our provisional tax dates guide shows how instalment timing works.

Illustrative example. A Hawke’s Bay orchard contractor is choosing between a new tractor from a dealer and a cheaper locally sourced used tractor. The used tractor costs less upfront but doesn’t qualify for Investment Boost. The new tractor qualifies, and its accountant calculates the upfront deduction narrows the after-tax difference. The new tractor is also quicker and cheaper to finance, with the tractor itself as security. The contractor buys new, funds it with equipment finance, and treats the tax saving as a bonus that arrives later — not as part of the repayment plan.

What should you ask your accountant?

• Does this specific asset qualify, and from what date is it “first available for use”?
• How does the finance structure I’m considering affect who claims the deduction?
• How will the deduction affect my provisional tax this year?
• Is there a timing advantage to buying before or after my balance date?
• How does Investment Boost interact with normal depreciation on this asset?

Keep the accountant’s answers in writing alongside the finance documents. If the asset’s tax treatment ever comes up — at year end, in a review, or when you sell the business — you’ll want to show what was decided and why.

What should you ask the financier?

• Will you finance new and imported assets on the same terms?
• What deposit, if any, will you require?
• What will you register on the PPSR, and over what?
• Can repayments be timed around my seasonal income?
• What’s the total repayable in dollars?

What about a breakdown — buy now or wait?

If a key asset fails, you may not have time to optimise for tax. Keep trading first — hire a stopgap if needed — and then decide between repair and replacement. Our page on equipment breakdowns covers the fast options. If you’re buying equipment for a newly won job, won a big contract looks at whether buying or hiring makes more sense.

Watch for PPSR issues on imported and used assets

For imported assets, make sure title is clear and there’s no overseas finance attached. For any used asset, search the Personal Property Securities Register — the online register of security interests in personal property — before paying, to confirm there’s no existing finance registered. Your financier will do this too, but it’s your money at risk if you pay a seller who doesn’t have clear title.

Does Investment Boost change how much you should borrow?

Not directly. Lenders assess the purchase on the asset’s value, your cash flow and your security — not on your expected tax saving. Some owners are tempted to stretch to a bigger or more expensive asset because “the tax deduction makes it cheaper”. Be careful. The deduction reduces tax on profit; if the business isn’t profitable, or the asset doesn’t earn its keep, the deduction doesn’t help much. Size the purchase on what the asset will earn and what the business can repay, then treat Investment Boost as a welcome improvement to the numbers rather than the reason to buy.

What about buildings and land improvements?

Inland Revenue lists new commercial and industrial buildings and primary sector land improvements among qualifying categories, while residential rental buildings are excluded. For larger projects like these, funding usually involves property-secured lending rather than equipment finance, and the timing of when the asset is “first available for use” can matter. These are bigger, more complex decisions — get tax advice early and talk to a lender about construction-stage funding before committing.

A buying checklist

• Confirm whether the asset is new, new to New Zealand, or NZ-sourced second-hand.
• Confirm it’s depreciable and when it will be first available for use.
• Ask your accountant about Investment Boost and the finance structure.
• Get a quote or tax invoice and ask the financier for the total repayable.
• Search the PPSR for used assets.
• Map repayments against your cash flow, not the expected tax saving.

For the full product detail, see equipment finance.

Buying a new asset soon? Find out the fastest way to fund it.

Fund the asset, let the tax benefit follow

The tax deduction is your accountant’s job; getting the asset funded quickly and sensibly is ours. Enquiring involves no credit check, and we don’t pass your details to a long list of financiers — one specialist reads your application and calls you. Tell us exactly what you’re buying, whether it’s new or used, who’s supplying it and when you need it, and we’ll come back with the funding options that fit. Start your application.