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The 2025 Government Budget has landed, and with it comes several changes that you should consider in your business plan and budget for the year ahead.

One of the standout features of Budget 2025 is the Investment Boost—a new tax incentive designed to encourage business investment. If your business purchases new assets (like machinery or equipment) from Budget Day onwards (22 May 2025), you can now claim an immediate 20% tax deduction, on top of standard depreciation [1]. That’s a big win for cashflow and could make capital investments that have been on the backburner now viable.

Other key updates include:

• Changes to KiwiSaver: Higher default contribution rates and reduced government contributions for high earners. Employees can opt down to 3% temporarily if needed, and employers will still match that rate. Employers should plan ahead for the phased increases to avoid cashflow surprises. The default contribution rate for both employees and employers will rise from 3% to 4%, phased in over three years:
  • 3.5% from 1 April 2026
  • 4% from 1 April 2028.
• Working for Families adjustments: New thresholds and income testing to better target support.
• Fringe Benefit Tax reform: Proposals to simplify and modernise the rules.

Many of you will be in the process of finalising your business plans and budgets for this financial year – the new Investment Boost announcement may now be the catalyst for you to purchase new equipment that will enable your growth strategy. Below we have outlined what assets are and are not eligible under Investment Boost.

Eligible Assets

You can claim Investment Boost on:

• New depreciable assets (e.g., machinery, tools, equipment, work vehicles)
• New commercial and industrial buildings (which normally don’t qualify for depreciation)
• New imported assets (if they haven’t been used in NZ before)
• Improvements to farmland.

Ineligible Assets

You cannot claim Investment Boost on:

• Assets previously used in New Zealand
• Land
• Trading stock
• Residential buildings (e.g., rental properties)
• Fixed-life intangible assets (e.g., patents)
• Assets fully expensed under other rules (e.g., under $1,000 threshold).

You can learn more about Investment Boost here.

Planning Considerations

It is still important to ask yourself challenge questions when considering asset purchases, such as:

• Will this investment improve productivity or profitability for my business?
• How will it impact cashflow over the next 12–24 months? (even with the new deductibility rules, can we afford this purchase?)
• Where does this purchase sit in comparison to other investment priorities? (Align asset purchases with your broader capex and tax strategy).

While the current environment may feel favourable, interest rates and commodity prices are notoriously cyclical. Consider instead if now is the time to focus on reducing debt to improve your equity position and provide a financial buffer that prepares your business for the inevitable ups and downs. The decision to invest in new assets should not be made solely for immediate tax benefits and current affordability, but by answering the questions, “Is it essential to business continuity?” or “ Does it improve my profitability both now and into the future?”.

Let’s chat about how we can build the Budget 2025 changes into your business plan and budget for the coming year. Get in touch!

References

[1] Budget 2025 – taxpolicy.ird.govt.nz