Hon Nicola Willis
Minister of Finance

Investment Boost has passed into law, meaning a major new tax incentive to encourage businesses to invest, grow the economy, and lift wages is now in place, Finance Minister Nicola Willis says.

“Investment Boost takes effect immediately. This means businesses that go out today and buy machinery or tools or equipment or vehicles or technology can immediately deduct 20 per cent of that cost from taxable income – meaning a much lower tax bill.

“The feedback to Investment Boost has already been massive, with businesses telling us it will be a game-changer.

“This change will benefit farmers, tradies, hairdressers, manufacturers, and other businesses by helping them invest in productivity improving assets. It is all designed to help firms become more competitive and, therefore, able to lift workers’ wages.

“The Treasury and Inland Revenue estimate Investment Boost will improve economic growth, lifting New Zealand’s GDP by 1 per cent, wages by 1.5 per cent and our capital stock by 1.6 per cent over the next 20 years, with around half these gains expected in the first five years.

“Investment Boost applies to new assets purchased in New Zealand as well as new and used assets imported from overseas. It includes commercial buildings but excludes land, residential buildings, and assets already in use in New Zealand.

“There’s no cap on the value of eligible investments. All businesses, regardless of size, can benefit.

“Investment Boost delivers more bang for buck than a company tax cut because it only applies to new investments, not those made in the past.

“The policy will reward businesses who make new investments by reducing their tax bills in the year they purchase new assets. For example, with Investment Boost, an advanced manufacturing firm that purchases a $200,000 environmental test chamber would reduce its tax bill by more than $10,000 in the year of purchase.

“After many difficult years, New Zealand is once again on a steady economic growth path, thanks to our careful economic management supporting lower inflation, lower interest rates, and more business-friendly policies.

“Businesses have been knocked around by challenging local and international economic conditions. This tax incentive shows that we are backing them to succeed.

“Now is the right time to support New Zealand’s economic recovery by making it easier for businesses to invest, hire more workers, pay them better, and contribute more to our long-term prosperity.

“It is only through a strong economy we can create jobs, lift incomes and afford the frontline public services like schools, hospitals and Police that Kiwis deserve.”

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