Should you take the 20% Investment Boost?

There have been a few questions around the government’s new 20% investment boost. So I thought I would address these and use a practical example to help explain.

First, what is the 20% investment boost?

It’s a new tax incentive the government is offering for businesses that buy new or new to New Zealand assets from 22 May 2024 onwards. The idea is to give you a bigger upfront tax deduction via depreciation in the first year.

But there are a few catches.

What qualifies?

To be eligible:

• The asset must be brand new, or the first time it has been used in New Zealand on or after 22 May 2024.
• Imported second-hand assets do qualify.
• Second-hand assets already used in NZ before 22 May don’t.

In the video above, I’ve included a practical example of a vehicle purchase to help illustrate the scenario.

To summarise: It’s not a “free money” situation. The government wants it to look attractive, but there are hooks in there that could cost you later on.

• Yes, the investment boost gives you more depreciation upfront.
• No, it’s not always a better tax outcome overall.
• Don’t buy something just to access the boost.
• Talk to your accountant to discuss your specific situation before you claim it.

Want a copy of the example spreadsheet used in the video? Flick me an email and I’ll send it through.