If you bought a new ute, a compressor, a scaffolding set, or any other significant piece of kit for your business since 22 May 2025, there's a good chance you're sitting on an extra tax deduction you haven't claimed yet.
IRD's Investment Boost — introduced in the 2025 Budget and quietly active since last May — lets New Zealand businesses deduct an additional 20% of the cost of new depreciable assets in the year of purchase, on top of normal depreciation. For the average NZ tradie spending $20,000–$60,000 a year on tools, vehicles, and equipment, this can mean thousands of dollars in extra deductions against your 2026 tax return.
The 2026 tax year closed on 31 March. If you're filing yourself, returns are due by 7 July 2026. If you use a tax agent, that deadline is likely later — but the clock is ticking. Here's everything you need to know to make the most of the Investment Boost before you file.
What Is the Investment Boost?
The Investment Boost is a tax incentive announced by the New Zealand Government in Budget 2025. The policy was introduced to encourage business investment after a sluggish 2024–25 economic period, and it applies to assets purchased on or after 22 May 2025.
In plain English, it works like this: when you buy a qualifying new asset for your business, you can deduct 20% of the cost in the first year, on top of whatever normal depreciation you would claim anyway.
IRD's official name for this is the "Investment Boost Deduction" and it's administered under the Income Tax Act 2007. You'll find it referenced in IRD's guidance materials and in the IR4GU 2026 company tax guide, though the same rules apply to sole traders and partnerships filing IR3 returns.
The policy is permanent — it's not a one-year stimulus that expires. But the first year you can realistically claim it across a full range of purchases is the 2026 tax year (year ending 31 March 2026), since the rules only kicked in mid-May 2025.
Who Qualifies?
Almost every NZ tradie business qualifies:
- Sole traders filing an IR3 personal tax return
- Partnerships filing an IR7
- Look-through companies (LTCs) filing an IR7L
- Trading companies filing an IR4
- Trusts that run a trade business
There is no turnover cap and no employee headcount threshold. A one-person sparky working from a van qualifies just as much as a 40-person construction company.
The key requirement is that your business is earning income from business activities in New Zealand and the asset you're buying is for use in that business. You cannot claim the Investment Boost on assets that are only for private use — though if you use an asset partly for work and partly personally, you can claim it on the business-use proportion (more on that below).
What Assets Qualify?
To claim the Investment Boost, the asset must meet all of the following:
1. It must be new — not second-hand
This is the big one. The 20% upfront deduction only applies to new assets purchased new from a supplier. If you bought a used ute from Trade Me or a second-hand compressor from another tradie, you cannot claim the Investment Boost (though you can still claim normal depreciation).
"New" means new — unused and in original condition at the time of purchase. A demonstrator model or ex-floor stock item may not qualify; check with your accountant if you're unsure.
2. It must be a depreciable asset
The asset needs to be one you would normally depreciate over more than one year. IRD maintains a depreciation rates table covering thousands of asset types. Common qualifying assets for tradies include:
- Work vehicles (utes, vans, trailers — excluding private-use vehicles)
- Power tools and hand tools above the low-value threshold
- Scaffolding systems and temporary structures
- Compressors, generators, and pressure washers
- Laser levels, GPS units, and survey equipment
- Site office trailers and portable storage units
- Computer and tablet hardware used for job management
- Trade-specific machinery (saw benches, nail guns, welding rigs, cable pulling gear)
3. It must cost more than $1,000 (excluding GST)
New Zealand's low-value asset threshold is $1,000 (ex-GST). Anything below that you can already write off in full in the year of purchase — so the Investment Boost is irrelevant for small purchases. The 20% upfront deduction applies to assets that cost $1,000 or more (ex-GST) that would otherwise need to be depreciated over multiple years.
4. It must have been purchased on or after 22 May 2025
If you bought it before that date, you can't use the Investment Boost — standard depreciation rules apply.
5. It must be acquired for use in your business (not solely for private use)
Assets must be for business use. Partial business use is fine — you just claim the Investment Boost on the business-use percentage.
Assets That Don't Qualify
Worth knowing upfront so you don't waste time on a claim that won't hold up:
- Second-hand assets — no Investment Boost, ever
- Land — not depreciable, never was
- Buildings — residential buildings and many commercial buildings are non-depreciable in NZ; the Investment Boost doesn't apply
- Intangible assets like goodwill or customer lists
- Trading stock — stock you buy to resell (e.g., materials you charge on to clients) is not a depreciable asset
- Assets leased to others — if you buy an asset and lease it to someone else, different rules may apply; get advice
How Does the Maths Work? Real NZD Examples
Let's run through some typical tradie scenarios to show the real dollar impact.
Example 1: New Work Ute ($58,000 ex-GST)
A plumber buys a new Toyota HiLux for $58,000 (ex-GST). The vehicle is used 80% for business and 20% privately.
Business-use cost: $58,000 × 80% = $46,400
Investment Boost (20%): $46,400 × 20% = $9,280 deductible in Year 1
Normal depreciation: Using IRD's diminishing value rate of 30% for motor vehicles: $46,400 × 30% = $13,920
But wait — the Investment Boost is applied first, reducing the asset's opening tax book value. So:
- Opening book value for depreciation: $46,400 − $9,280 = $37,120
- Year 1 depreciation: $37,120 × 30% = $11,136
Total Year 1 deduction: $9,280 + $11,136 = $20,416
Without the Investment Boost, the Year 1 deduction would have been just $13,920. That's an extra $6,496 in deductions in Year 1 alone.
At a 33% tax rate (a sole trader earning over $70,000), that's roughly $2,144 back in your pocket for Year 1 — money that would otherwise sit with IRD until you slowly depreciate the ute over 7+ years.
You can use our depreciation calculator to run these numbers for your own assets with the correct IRD depreciation rates.
Example 2: New Scaffold System ($24,000 ex-GST)
A painter buys a new aluminium modular scaffolding system for $24,000 (ex-GST), used 100% for business.
Investment Boost (20%): $24,000 × 20% = $4,800 in Year 1
Adjusted book value for normal depreciation: $24,000 − $4,800 = $19,200 IRD depreciation rate for scaffolding (mobile, DV): approximately 30% Year 1 depreciation: $19,200 × 30% = $5,760
Total Year 1 deduction: $4,800 + $5,760 = $10,560
Without the boost, Year 1 deduction would be $7,200. That's $3,360 more in deductions this year.
Example 3: Multiple Small Tools ($4,500 total ex-GST across 3 purchases)
An electrician buys three new power tools — a drill kit ($1,800), a rotary hammer ($1,500), and a cable fault locator ($1,200) — all purchased new in October 2025.
Each qualifies individually since each costs over $1,000. Total business-use cost: $4,500.
Investment Boost (20%): $4,500 × 20% = $900 in Year 1
Plus normal depreciation on the adjusted book values. The combined Year 1 saving might only be $200–$300 in actual tax — modest, but completely free money that takes ten minutes to calculate.
GST and the Investment Boost — What to Watch
If you're GST-registered (as most tradies turning over more than $60,000 per year are), you claim GST back on your purchases separately through your GST return. The Investment Boost deduction is calculated on the GST-exclusive price — which is the same basis as normal depreciation.
This means:
- You claim GST back on your next GST return (every 1, 2, or 6 months depending on your filing frequency)
- You claim the Investment Boost and normal depreciation on the ex-GST cost in your income tax return
Don't double-dip — the $58,000 ute example above is already ex-GST. The GST ($8,700 at 15%) is claimed separately and doesn't factor into the depreciation calculation. Use our GST calculator if you need to quickly separate GST from quoted prices.
How to Actually Claim It on Your Return
The Investment Boost is claimed as an additional deduction in your tax return. The mechanics depend on your entity type:
Sole traders (IR3): You'll include the Investment Boost amount in your "other deductions" or as part of your depreciation schedule. IRD's IR4GU 2026 guide has updated depreciation schedule notes reflecting the boost, but many accounting software packages (Xero, MYOB, and others) have updated to handle it automatically — check with your provider.
If filing on paper or through myIR: - List the asset in your depreciation schedule - Show cost, business-use percentage, and Investment Boost amount (20% of business-use cost) - Show the adjusted opening book value after the boost - Apply the applicable DV or SL rate to the adjusted book value
Tip: Keep your purchase receipt and any documentation showing the asset was new and purchased on or after 22 May 2025. IRD may ask for this if they review your return.
What If You Bought Assets Before 22 May 2025?
Standard depreciation rules apply — no Investment Boost. If you bought a ute in January 2025, you're claiming normal depreciation for the 2026 year. The boost only applies from the introduction date.
However, if you're planning a major purchase — a new trailer, a new piece of machinery, a site office container — and you haven't bought it yet, note that the Investment Boost applies to all future purchases too (the rule is permanent, not time-limited).
Combining the Investment Boost with Other Deductions
The Investment Boost stacks on top of all other legitimate business deductions. A few combinations worth knowing:
Vehicle mileage vs. actual costs: If you claim vehicle expenses on a mileage basis (using IRD's approved rates), you generally cannot also claim depreciation on the vehicle. The Investment Boost only applies if you're using the actual cost method. Most tradies with business-only or predominantly business-use vehicles are better off on actual costs — use our vehicle mileage calculator to compare.
Lease vs. buy: The Investment Boost only applies to assets you own. If you lease equipment, your deduction is the lease payments, not depreciation. With the boost available, the maths on buying vs. leasing has shifted further toward buying for many tradies.
Pooling: If you use IRD's low-value asset pool (for older assets between $1,000 and $5,000), be aware that pooled assets use different rules — get your accountant to advise whether the Investment Boost or pooling gives you a better outcome for mid-range assets.
EOFY Planning: Did You Buy Enough in 2025–26?
The 2026 year is closed (31 March 2026), but your return isn't filed yet. Take 30 minutes before you file to:
- List every new asset purchase from 22 May 2025 to 31 March 2026 — tools, vehicles, computers, anything over $1,000 bought new
- Check each one against the qualifying criteria — new, depreciable, business use
- Calculate 20% of the business-use cost for each
- Add that to your depreciation schedule — or hand the list to your accountant
Many tradies will find they've forgotten to include several qualifying purchases. Common ones that get missed:
- New laptop or iPad bought for job management ($1,800–$3,500)
- New work trailer ($5,000–$15,000)
- Updated power tool set ($2,000–$4,000)
- New site storage solution or portable office ($3,000–$8,000)
- GPS or survey equipment ($1,500–$6,000)
Looking Ahead: 2027 and Beyond
Because the Investment Boost is permanent policy, it changes how you should think about capital expenditure timing. There's now a meaningful tax incentive to buy new equipment rather than second-hand, and to buy outright rather than lease, for assets that qualify.
If you're planning a major equipment upgrade in the next 12–18 months, the Investment Boost is worth factoring into your ROI calculation. A $30,000 new compressor setup has roughly $6,000 in extra Year 1 deductions compared to buying second-hand — that's a real cost advantage when comparing options.
Similarly, if you've been putting off buying new equipment because of cashflow, consider whether a small business loan to fund a qualifying purchase might net you enough in Year 1 tax savings to offset a significant portion of the interest cost.
Managing Your Asset Register and Tax Records
One thing the Investment Boost makes more important is having a clean, up-to-date asset register. You need to know:
- Purchase date (must be on or after 22 May 2025)
- Whether the asset was new or second-hand
- Purchase price (ex-GST)
- Business-use percentage
- The IRD depreciation rate applicable to that asset type
If you're still tracking this on a spreadsheet — or worse, in your head — this is a good time to get organised. Apps like Fastcrew (fastcrew.nz) are designed for NZ tradies and can help you track job costs, equipment, and business expenses in one place. Having clean records at tax time doesn't just reduce accountant fees — it means you're less likely to miss deductions like the Investment Boost.
Your accounting software (Xero, MYOB, or similar) should handle the depreciation schedule calculations once you've entered the correct asset information. The key is making sure you've entered it in the first place.
WorkSafe Tip: Don't Let Tax Savings Drive Unsafe Shortcuts
A quick note from a health and safety angle: the Investment Boost only applies to new equipment. New equipment should also come with current compliance documentation (CE marks, PECPR compliance for pressure vessels, electrical safety certifications, etc.) and proper operator training.
WorkSafe NZ has seen cases where tradies buy cheap imported equipment without checking compliance status. The tax deduction doesn't change your obligations under the Health and Safety at Work Act 2015 — equipment must be safe to use regardless of what it cost or how you funded it. Always verify compliance documentation before putting new gear into service.
Get Help If You're Unsure
The Investment Boost is straightforward in most cases, but the edge cases — mixed-use vehicles, leased vs. owned, pooled assets, trust structures — can get complicated. If your situation involves:
- A vehicle you use for both work and personal trips
- Equipment partly owned by a company and partly by a trust
- Assets purchased through hire purchase or a chattel mortgage
- Multiple business entities
...it's worth a conversation with a chartered accountant who works with trades businesses. The IRD's "Tax for the Self-Employed" guide (IR336) and the IR4GU company guide are also free resources available at ird.govt.nz.
Download Free NZ Tradie Templates
Getting your asset register, depreciation schedule, and EOFY checklist sorted before you file takes a bit of admin work. We've put together a set of free templates to make it easier.
Download our free NZ tradie templates at tradietools.nz/templates/ — including an asset purchase tracker, a business-use logbook template, and an EOFY deductions checklist. Everything is set up for NZ conditions, using IRD's standard categories and rates.
The Bottom Line
The 20% Investment Boost is one of the most valuable new tax rules for NZ tradies in years — and it's not getting the attention it deserves. If you bought any new equipment, a vehicle, or significant tools from May 2025 onward, you almost certainly have extra deductions available in your 2026 tax return.
Before you file, take the time to check your purchases, calculate the boost, and make sure your depreciation schedule reflects it. If you bought $30,000 worth of new kit this year, you could easily have $3,000–$5,000 in additional deductions — and several hundred dollars in genuine tax savings — sitting unclaimed.
With 2026 returns due from July, there's still time to get this right.
NZ Tradie Tools provides free calculators, templates and guides for New Zealand tradies. Visit tradietools.nz.