Investment Boost Deduction Calculator NZ

This calculator works out the Investment Boost deduction on a new business asset in New Zealand and, most usefully, how much extra you can claim in the first year compared with normal depreciation alone. Investment Boost lets a business deduct twenty percent of a new eligible asset's cost immediately, then depreciate the remaining eighty percent as normal, which front-loads the deduction and reduces tax in the year you invest. The headline number people want is not just the total first-year deduction, but how much bigger that is than what they would have claimed anyway through ordinary depreciation, because that difference is the genuine extra benefit of the scheme. You enter the asset cost, its normal depreciation rate, and your company or marginal tax rate, and the calculator shows the first-year deduction with Investment Boost, the deduction you would have claimed without it, the extra deduction the boost provides, and the extra tax that saves you this year. Keep in mind the benefit is mainly about timing: because an asset's cost can only be deducted once, claiming more now means less depreciation later, so the real value is improved cash flow when you have just spent on the asset. Eligibility excludes land and residential buildings and can change, so confirm with IRD or your accountant. General information, not tax advice.

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$2,520
extra first-year tax saved vs normal depreciation
Year-1 deduction with Boost$14,000
Year-1 without Boost$5,000
Extra deduction$9,000

A timing benefit: more deduction now means less in later years. Eligibility excludes land and residential buildings. Confirm current rules with IRD. General information only.

How it works

The year-one deduction with Investment Boost is 20 percent of cost plus depreciation on the remaining 80 percent. Without the boost, the year-one deduction is just normal depreciation on the full cost. The extra deduction is the difference, which equals 20 percent of cost less the depreciation that 20 percent would have earned. The extra tax saved is that extra deduction times your tax rate.

Worked example

On a 50,000 dollar asset depreciated at 10 percent, the boost gives a 14,000 dollar first-year deduction versus 5,000 dollars without it, an extra 9,000 dollars. At a 28 percent rate, that is about 2,520 dollars of extra tax saved in year one.

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Frequently asked questions

How much can I deduct with Investment Boost?

You deduct 20 percent of the asset cost immediately, plus normal depreciation on the remaining 80 percent in the first year. This calculator shows that total and, more usefully, how much extra it is compared with normal depreciation alone.

What is the extra deduction worth?

The extra first-year deduction is 20 percent of the cost less the depreciation you would have claimed on that 20 percent anyway. Multiplied by your tax rate, that is the extra tax you save in the year you buy the asset, improving cash flow.

Is it a permanent saving?

No, it is mainly a timing benefit. Because the asset's total cost can only be deducted once, claiming more now means less depreciation in later years. The value is in bringing the deduction forward, which helps when you have just spent on the asset.