Investment Boost and equipment funding: a simple guide for NZ businesses

If you've been putting off buying a new machine, vehicle or piece of plant, Investment Boost is worth understanding. Since 22 May 2025, New Zealand businesses have been able to claim 20% of the cost of eligible new assets as an upfront deduction, then depreciate the rest as normal. For a workshop, factory, farm, fleet or kitchen, that can make a meaningful difference to the real cost of upgrading.

There's a catch that isn't really a catch, just a matter of timing. Investment Boost is a tax deduction, not a cheque. You still pay the supplier the full price on the day, and the benefit shows up later through a lower tax bill. This guide explains Investment Boost in plain English, without the tax-textbook detail, then shows practical ways to fund an eligible purchase so the incentive helps your business rather than straining its cash flow.

What is Investment Boost?

Investment Boost is an Inland Revenue incentive that lets a business claim 20% of the cost of an eligible new asset as an expense in the year it's acquired. The remaining 80% is then depreciated in the usual way over the asset's life.

Think of it as bringing part of your depreciation forward. Normally, a $200,000 machine is written off slowly across many years. With Investment Boost, a fifth of its cost comes off your taxable income straight away, which improves the after-tax return on the investment sooner.

It applies to eligible assets acquired from 22 May 2025, so a purchase you make in 2026 can qualify if the asset itself meets the rules.

How does the 20% deduction work in practice?

The easiest way to see it is with round numbers. Here's how the first-year position changes for a new asset costing $250,000.

Step	Without Investment Boost	With Investment Boost
Cost of the new asset	$250,000	$250,000
Upfront deduction in year one	Nil	$50,000 (20% of cost)
Amount left to depreciate	$250,000	$200,000
Depreciation claimed	Over the asset's life, on the full cost	Over the asset's life, on the remaining 80%

How much tax that saves depends on your business structure and tax position, which is a job for your accountant. What matters for planning is that your taxable income falls by a larger amount in the year you buy, so your tax payable for that year is lower. You don't get more deductions in total; you get them sooner.

Good to know: Investment Boost is claimed through your tax return, so keep the supplier invoice, delivery or installation date and proof of payment together. Your accountant will need them.

Which assets qualify for Investment Boost, and which don't?

Investment Boost covers new assets, including assets that are new to New Zealand. Plenty of the equipment Kiwi businesses buy every day falls into that category, such as:

• New plant and machinery for manufacturing, engineering and joinery.
• New vehicles, trucks and trailers used in the business.
• New commercial kitchen equipment, refrigeration and coffee machines.
• New farm machinery, irrigation equipment and rural plant.
• New IT hardware, tools and specialist trade equipment.

Some assets are specifically left out. The main exclusions to keep in mind are:

• Second-hand assets already used in New Zealand. A used digger bought from another contractor won't qualify.
• Residential buildings. Housing is outside the scheme.

The finer points, such as mixed-use assets or complex imports, are exactly the kind of thing to run past your accountant before you sign. A two-minute call can save an expensive misunderstanding.

Why doesn't Investment Boost solve the cash flow problem?

Investment Boost improves the economics of buying, but it doesn't change when you have to pay. That timing gap is where many businesses get caught.

Here's the usual sequence:

1. You pay the supplier the full price, often with a deposit weeks before delivery.
2. The asset is installed and starts earning, which can take a while to ramp up.
3. At year end, your accountant claims the 20% deduction plus normal depreciation.
4. Your tax payable for the year is lower than it would otherwise have been.

The benefit arrives through your tax position, potentially many months after the money left your account. If you're GST-registered, there's a second timing gap too: you pay GST to the supplier on the full price and only claim it back through your next GST return.

Put those together and a purchase that looks affordable on paper can leave a sizeable hole in the bank account for a season.

If you drain working capital to pay cash, you can end up short when wages, GST and supplier bills fall due. The smarter move is often to fund the asset and keep your cash buffer intact. If tax timing is already tight, our guide to provisional tax and cash flow planning is a useful companion read.

What are your options for funding an Investment Boost purchase?

There are four common ways to pay for a new asset, and each has a place. Here's a straight comparison.

Option	Best for	Things to weigh up
Cash reserves	Businesses with a healthy surplus	Uses your buffer; leaves less room for surprises
Bank business loan	Established firms with strong accounts and time to wait	Can be slow; heavy paperwork; strict credit criteria
Asset finance or lease	New, mainstream assets from a dealer	Usually tied to one asset; some lease structures affect who claims deductions
Property-secured loan	Owners with property who need speed or flexibility	Short to medium term; needs a clear exit; your property is the security

A property-secured loan from fundU is funded by us directly, from $20,000 to $1m, secured on New Zealand real estate by a first or second mortgage. Because the security is the property rather than the machine, one loan can cover the asset plus the costs around it. For a deeper comparison of those two routes, see equipment finance vs a property-secured loan.

When does a property-secured loan make sense for new equipment?

Borrowing against property tends to be the right fit for an Investment Boost purchase in a handful of situations:

• The whole project is bigger than the invoice. New machines often need electrical work, foundations, extraction, freight, training and extra stock. We can fund the lot, not just the asset.
• Timing is tight. A supplier's delivery slot, a production run or a new contract won't wait for a slow bank process.
• Your accounts don't tell today's story. If last year was tough but the order book is full, we look at the property, the purpose, the exit and the full picture, with no financial statements or tax returns needed for the initial assessment.
• Your credit file has bumps. Past defaults or a previous bank decline are considered case by case.
• You want flexible repayments while the asset ramps up. Depending on approved terms, options can include interest-only or capitalised interest, so you're not stretched in the first few months.

Small firms don't always get the same deal as big ones: the Reserve Bank's May 2026 Financial Stability Report points out that smaller businesses depend on both bank and non-bank lenders and are more likely to face tougher terms. With MBIE figures showing 97.2% of New Zealand enterprises have fewer than 20 employees, most businesses weighing up an upgrade are exactly the firms that benefit from having more than one funding option.

How do you plan an Investment Boost purchase? A step-by-step approach

Follow these steps and you'll buy the right asset, claim what you're entitled to and keep your cash flow steady.

1. Get a firm quote. Include freight, installation and any building or electrical work, not just the list price.
2. Confirm eligibility. Ask your accountant whether the specific asset qualifies and roughly what the deduction will be worth to you.
3. Map the cash flow. Note when each payment is due, when the asset will start earning, and when your tax payments fall.
4. Choose your funding. Match the funding to the job: asset finance for a simple dealer purchase, a property-secured loan when you need speed, flexibility or to fund the extras.
5. Line up security early. If you're borrowing against property, have the address, rough value and current mortgage balance ready.
6. Buy, install and keep records. File the invoice, payment proof and in-service date for your accountant.
7. Work your exit. Use the extra earnings from the asset, and the lower tax bill, to reduce or refinance the loan on schedule.

Example scenario

A Canterbury joinery business wins a steady run of kitchen and wardrobe work and decides to buy a new CNC machine and edge bander, with a combined price of about $320,000. Installation, dust extraction upgrades and operator training add roughly $40,000. The bank is interested but wants updated accounts, which are months away.

The owners have a family home worth about $1.1m with a bank mortgage of around $450,000. fundU assesses a second mortgage of around $380,000, covering the machines, the installation work and a small buffer. The bank loan stays in place. Their accountant confirms the new machines should qualify for Investment Boost, lowering taxable income in the year of purchase. The exit plan is a refinance with the bank once a full year of higher output is in the accounts. Illustrative only; every loan is assessed on its own facts.

What mistakes should you avoid?

A few common slip-ups turn a good incentive into an expensive lesson:

• Treating the deduction as free money. It lowers tax payable; it doesn't reduce the price you pay the supplier.
• Buying second-hand and assuming it qualifies. Used assets already in New Zealand are excluded.
• Buying for the tax break alone. If the asset won't earn its keep, a 20% deduction won't rescue the decision.
• Emptying the bank account. Paying cash can leave you short for GST, PAYE and wages at the worst moment.
• Borrowing without an exit. Short-term funding works best when you know how and when it will be repaid.

Growing businesses often pair new equipment with a bigger move, such as extra premises. If that's you, our guide to funding a second site or expansion covers the wider picture, and manufacturers can see how we help on our manufacturing and engineering page.

Key takeaways

• Investment Boost lets businesses deduct 20% of the cost of eligible new assets upfront, then depreciate the remaining 80% as usual.
• It applies to assets acquired from 22 May 2025; second-hand New Zealand assets and residential buildings are excluded.
• It's a tax deduction, not a cash grant, so you still need to fund the purchase.
• Funding the asset, rather than draining working capital, keeps your buffer intact while the benefit flows through.
• A property-secured loan can cover the asset and the costs around it, with fast, in-house decisions and flexible repayment options.

Ready to fund your next upgrade?

If a new machine, vehicle or fit-out would lift your output, don't let the upfront cost hold you back. We lend $20,000 to $1m to Kiwi businesses against property, and every decision is made in-house. Explore our property-backed equipment finance, or start your enquiry now. It takes a couple of minutes, doesn't affect your credit score, and a lending specialist will call you back. You can also phone us on 09 875 4577.