Tax expert hails 20% deduction as golden opportunity for agribusiness investment

Findex Tax Advisory Partner Craig Macalister says that since this tax incentive allowing tax deductions on new capital asset purchases was announced in Budget 2025, they are already fielding enquiries regarding purchasing new equipment from multiple customers.

However, he adds that used ute sales might be under the gun under the policy dubbed 'Investment Boost'.

Investment Boost is a component of a $6.7 billion operating and $4 billion capital spending plan by the NZ Government aiming to encourage investment, support economic recovery and drive productivity, particularly in the rural sector. Specifically, Investment Boost is equal to 20% of the costs of a new asset, deductible in the year of purchase.

Macalister describes the policy as "accelerated depreciation".

"When agribusiness operators purchase a qualifying capital asset, they can deduct 20% in the year of purchase, along with normal depreciation on the balance. It is effectively everything qualifying is on sale, essentially one fifth off."

And that, he notes, explains the immediate impact.

"New, modern equipment can improve productivity and deliver operational efficiencies. Our farmers tend to have an eye on the latest technologies, but those of course come at a cost. An effective discount through the tax system puts that new equipment within their reach - and that's good for the overall economy."

Minister of Agriculture Todd McClay recently noted the importance of agribusiness, describing it as continuing to underpin the economy. MPI's Situation and Outlook for Primary Industries (SOPI) report expected primary sector export revenue to jump by 7% to $56.9 billion in the year to 30 June 2025, the Ministry for Primary Industries says.

Agriculture contributes nearly 6% to gross domestic product - so advantages for farmers can deliver advantages for everyone.

"This government policy reduces the cost of capital investment, making it easier for agribusinesses to grow," Macalister adds.

Effective for assets used or available for use from 22 May 2025, Investment Boost applies to new or previously unused assets in New Zealand, including imported machinery, equipment and vehicles. It also applies to new commercial and industrial buildings, despite the 0% standard depreciation rate applicable to such assets.

Importantly it also covers farming, horticulture, aquaculture, and forestry land improvements, such as dams or settling ponds, and improvements to eligible assets, like extending a milking platform or re-piling a woolshed. Certain petroleum and mineral mining development expenditures are also eligible.

Excludes are assets that have previously been used in New Zealand, land, trading stock, residential buildings (dwellings), fixed life intangible assets (such as patents and trademarks), and assets that are fully expensed under other rules (such as assets that cost less than $1,000 that are fully deductible).

The policy has no limit on eligible assets and applies to mixed-use assets based on business-use percentage. For instance, a manufacturer's building premises with an owner's apartment can claim 20% of the industrial portion's cost.