Budget 2025 has switched on a powerful incentive for businesses planning new premises. From 22 May 2025, the Government’s Investment Boost scheme lets you claim an immediate 20% tax deduction on the cost of a brand-new commercial or industrial building the year it’s first ready for use- and still take normal depreciation afterwards.
How the 20 % deduction works
|
Build cost |
Year-one Investment Boost deduction |
Extra standard depreciation (on 80 % of cost) |
|
$1 m |
$200 k |
Usual rate applied to $800 k base |
|
$5 m |
$1 m |
Usual rate applied to $4 m base |
That up-front write-off reduces taxable profit immediately, freeing up cashflow that can be reinvested in stock, staff or further expansion.
Why the scheme matters
- Stronger ROI: A faster tax benefit shortens pay-back periods and can tip marginal projects into the “go” column.
- No spending ceiling: Whether your warehouse costs $100 k or $50 m, the full 20 % applies.
- Open to every business: All entity sizes and sectors qualify—there’s no turnover or head-count threshold.
What qualifies?
- New commercial or industrial buildings (including factories, hangars, showrooms, distribution centres).
- Major extensions or upgrades to an eligible building.
- Any new depreciable asset that has never been used in New Zealand before.
What’s excluded?
- Residential dwellings or accommodation assets (with narrow exceptions such as hospitals and hotels).
- Land purchases.
- Second-hand assets that have previously been used in New Zealand.
- Patents, goodwill and other fixed-life intangibles.
Timing is everything
You can only claim the deduction in the income year the building is finished and available for use. If your project is still on the drawing board, accelerating the programme could mean banking a sizeable tax saving sooner. Projects already under construction can still qualify, provided the completion date is on or after 22 May 2025.
How we can help
Our design-build team specialises in commercial and industrial facilities—from early feasibility right through to hand-over. We’ll:
- Model the numbers so you can see exactly how Investment Boost affects project cashflow.
- Optimise the timeline to ensure your build meets the “in-use” date criteria.
- Guide the paperwork so your accountant has everything needed to support the deduction.
Thinking about a new facility? Contact us to learn about commercial and industrial new build opportunities.
Disclaimer: This article provides general information only and does not constitute tax or financial advice. Always seek personalised guidance from a qualified professional before making investment decisions.
Sources:
https://www.beehive.govt.nz/release/investment-boost-tax-incentive-lift-growth
https://taxpolicy.ird.govt.nz/-/media/da7a5eb3c5d1486ba1d3d40ac763b820.ashx?modified=20250521211149
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