Investment Boost 20% Deduction Explained

This calculator explains how New Zealand's Investment Boost works and shows the first-year deduction and tax saving it delivers when your business buys a new asset. Investment Boost was introduced to encourage businesses to invest, and it does so by letting you deduct twenty percent of the cost of a new eligible asset immediately in the year you first use it, on top of the normal depreciation you would claim on the remaining eighty percent. In other words, instead of writing the asset off slowly over many years, you get a big chunk of the deduction straight away, which cuts your taxable profit and your tax bill in the year you invest. Eligible assets are generally new depreciable business assets such as machinery, equipment and commercial vehicles, while land, residential buildings and second-hand assets are typically excluded. You enter the asset cost, its normal depreciation rate, and your company or marginal tax rate, and the calculator shows the immediate twenty percent deduction, the first-year depreciation on the rest, the total first-year deduction and the tax it saves. Remember this is mainly a timing benefit that improves cash flow when you invest, not a permanent extra deduction, since the remaining cost is depreciated as usual over time. Eligibility and rules can change, so confirm the current detail with IRD or your accountant. General information, not tax advice.

A timing benefit: the remaining 80% is depreciated as usual over later years. Eligibility excludes land and residential buildings. Confirm current rules with IRD. General information only.