What is the Investment Boost – and Why Should Dairy Farmers Care?

The 2025 New Zealand Budget introduced a major incentive for dairy farmers and agricultural businesses: the Investment Boost. If you’re planning to invest in new farming equipment or infrastructure, you could be eligible to claim an immediate 20% tax deduction.

That’s right—buy the right asset and you could write off 20% of its value straight away.

So, how does it work? And how can you make the most of it?

Let’s break it down.

What is the Investment Boost?

The Investment Boost is a new tax incentive designed to encourage New Zealand businesses—including dairy farms—to invest in their future.

If you purchase a brand-new asset (or one that’s new to New Zealand), and it’s available for use on or after 22 May 2025, you can claim 20% of the purchase price as a tax deduction right away.

The rest (80%) continues to be depreciated under the normal depreciation rules.

Why This Matters

Traditionally, farmers had to spread deductions over several years. Now, with the Investment Boost, you can:
– Improve cash flow immediately
– Reduce your taxable income in the same year
– Make delayed investments more financially viable

What Farming Assets Qualify?

To qualify, the asset must:
– Be new or new to New Zealand
– Be available for use in your farming business on or after 22 May 2025

Examples of Eligible Assets:

– New tractors and farm vehicles
– Milking systems and shed upgrades
– Solar panel installations
– Effluent management systems
– Irrigation equipment

Real Life Example

If you buy a $100,000 tractor, you can immediately claim $20,000 as a tax deduction.

That could save you around $6,600 to $7,800 in tax—depending on your income tax rate.

The remaining $80,000 continues to depreciate at the usual rate (e.g., 13% for tractors).

When is the Right Time to Invest?

Timing is everything. To claim the deduction:
– The asset must be available for use (i.e., delivered and ready to go) from 22 May 2025 onwards

If you were already planning purchases, consider bringing forward the timeline to take advantage of this incentive.

But don’t rush in just for tax reasons. Ask:
– Will this asset boost productivity?
– Can it reduce costs or improve efficiency?
– Will it enhance long-term sustainability?

How Much Could You Save?

Smart Strategies to Maximise Your Claim

Strategic planning can amplify your return:
– Stagger large purchases across tax years to maximise annual deductions
– Use the boost during high-income years to reduce your tax bill more effectively
– Align the boost with upgrades you’ve already been planning—like sustainability improvements or automation tech

What Records Do You Need?

To claim the Investment Boost, you’ll need:
– Invoices showing purchase price and delivery date
– Proof the asset is new or new to NZ
– Documentation confirming the asset is available for use in your farming business

Working with your accountant ensures these are structured properly and meet IRD compliance requirements—especially for larger or staged investments.

What About Long Term Tax Effects?

Here’s the trade-off: by claiming a bigger deduction now, you’ll have less depreciation left for future years.

For most farmers, this is still a win. Thanks to the time value of money, saving tax now helps with:
– Cash flow
– Financing new growth
– Creating a buffer in volatile seasons

This Opportunity Won’t Last Forever

Like many government schemes, the Investment Boost may only be available for a limited time.

If you’re thinking about upgrading or investing in your operation, start planning now.

Let’s Talk About Your Farm’s Tax Strategy

At CMK Chartered Accountants, we’ve been helping Taranaki farmers and agricultural businesses for decades.

Our rural accounting experts will help you:
– Identify assets that qualify
– Plan your purchases for maximum tax benefit
– Ensure all compliance boxes are ticked

Don’t miss this game-changing opportunity.
Call us today or visit our website to book your free consultation.