As a sole trader, you’ve probably daydreamed about investing in some new top-notch equipment to help grow your business. It’s a great idea! But unfortunately, it can be hard to make big purchases if cash flow is tight. Claiming depreciation can help relieve some of the upfront cost, but it can take years to get the full tax benefits.
To help balance this equation, the government recently announced their new Investment Boost initiative, as part of budget 2025. Sole traders (and other businesses) can now claim 20% of a new asset’s cost as an immediate tax deduction, in addition to regular depreciation deductions.
What this means is that you’ll receive more tax relief in an asset’s first year of purchase, so it’s not as big a hit to your cash flow. Essentially, the government wants businesses to feel less financially constricted, so they can focus on growth – and this is one way they’re supporting that aim.
Let’s break down how Investment Boost works, what assets qualify, and how you can make the most of this new initiative.
- What is Investment Boost?
- How is this different from what we currently have?
- Which assets are eligible for Investment Boost?
- How to claim Investment Boost
- Use Hnry
What is Investment Boost?
Investment Boost is a new initiative from the 2025 budget. It aims to support business growth by making equipment purchases more affordable through targeted tax relief.
Under this scheme, you can now claim 20% of an asset’s cost as an instant tax deduction, on top of your regular depreciation. This means you’ll be able to save more on your tax bill in the first year of use than under the previous depreciation-only rules.
You can claim the Investment Boost for most assets (more on that in a sec) that are purchased or first used after 22 May 2025. Interestingly, there’s also no upper limit on eligible assets, so whether you’re investing in a modest upgrade or a major piece of equipment, the 20% immediate deduction applies.
How is this different from what we currently have?
Previously, businesses could immediately deduct the full cost of low-value assets — anything worth $1,000 or less. For anything more expensive, you had to claim the cost gradually over time through depreciation.
While depreciation eventually gives you the full tax benefit of the purchase, it spreads that relief over several years, leaving you to manage the full upfront cost in the meantime.
The new Investment Boost changes that. Now, for eligible assets purchased or first used after 22 May 2025, you can claim 20% of the asset’s cost as an immediate deduction in the year of purchase. You can then continue to depreciate the remaining 80% as you normally would.
This means you’ll get a significant portion of the tax benefit right away. Whoo!
Which assets are eligible for Investment Boost?
While Investment Boost is pretty generous in eligibility, there are some limits.
To be eligible for Investment Boost, and asset will need to:
- first become available for use on or after the 22nd of May, 2025,
- be new (not secondhand), or new to New Zealand.
There are a few exclusions, however, including:
- Land
- Residential property
- Fixed life intangible property (for more info, check out this IRD document)
… and that’s about it, really. Pretty straightforward!
How to claim Investment Boost
You’ll be able to claim Investment Boost through your end-of-financial-year tax return.
For any new asset purchased or first made available post 22nd of May, 2025, you’ll be able to claim 20% of the cost as an immediate tax deduction. You’ll then need to claim depreciation on the remaining 80% of the cost.
Under Investment Boost, he claims 20% of the total cost, so $3,000 as an immediate deduction.
He then depreciation on the remaining 80% – $12,000 – as if it’s 100% of the original cost.
Due to his new mower, he’s able to increase his client base by 15% this year. He also seriously enjoys riding it around his clients’ lawns, so it’s a win all round.
💡Remember, like with all business expenses, you can only claim the business-related portion of the asset.
Hnry makes it easy
Hi, we’re Hnry – an award-winning tax service designed specifically for sole traders.
For just 1% +GST of your sole trader income, capped at $1,500 +GST a year, we sort your taxes for you. This includes calculating Investment Boost and depreciation on all your assets – seriously, we do it all.
We also deduct, and pay all your taxes, levies, and whatnot for you, including:
… meaning you won’t have to think about any of that. Ever. We’ll even file your annual tax return for you, at no additional cost.
If this sounds good to you, brilliant! Join Hnry, and never think about tax again.
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