A new laptop, a van, a coffee machine, a piece of equipment for the workshop. These are fixed assets, things the business keeps and uses for more than a year. Unlike stock or everyday expenses, you usually can't claim the whole cost in the year you buy them. Instead the cost is spread over the asset's life through depreciation.
There are exceptions, and since May 2025 there's a new one worth knowing about. Here's how Inland Revenue's rules work.
What counts as a fixed asset
Inland Revenue says you must claim depreciation on assets kept in your business for longer than a year. That covers things like computers, furniture, vehicles, tools, machinery and fit-out.
Some things can't be depreciated at all: land, trading stock, franchise fees, and intangibles such as goodwill.
Assets under $1,000: claim them straight away
If an asset costs less than $1,000, you can take an immediate deduction for the full cost instead of depreciating it. This threshold has applied since 17 March 2021.
GST-registered or not?If you're registered for GST, the $1,000 is measured excluding GST, and you claim the GST back in your GST return. If you're not registered, use the full price including GST.
Buying several items together doesn't get around the limit. Items bought from the same supplier at the same time that depreciate at the same rate are treated as one asset.
Everything else: depreciation
Each type of asset has a depreciation rate set by Inland Revenue, based on its expected useful life. You'll find them in IRD's rate finder, or in the IR265 general depreciation rates guide. You then choose one of two methods:
Diminishing value (DV)
- A percentage of what's left each year
- Bigger deductions early on
- The most common choice
Straight line (SL)
- The same amount every year
- Simple and predictable
- Same total over the asset's life
You can use different methods for different assets, and change method at the end of an income year.
The year you buy it
In the first year you only claim for the months you owned the asset and used it in the business, and a part month counts as a whole month. Inland Revenue's own example: a $10,000 espresso machine with a 30% DV rate, bought on 20 May by a business with a 31 March year end. That's 11 months, so the first year's depreciation is $3,000 × 11 ÷ 12 = $2,750.
Investment Boost: 20% up front
For new assets bought or finished on or after 22 May 2025, you can deduct 20% of the cost straight away, then depreciate the other 80% as normal. There's no cap on the amount.
To qualify, the asset must:
- be new, or new to New Zealand (an imported asset used overseas but never here can count)
- have been first available for use on or after 22 May 2025
- be depreciable for tax purposes
It also covers new commercial and industrial buildings, improvements to depreciable property, and primary sector land improvements. It doesn't cover second-hand assets bought in New Zealand, residential rental buildings, or most fixed-life intangibles such as patents.
| Example: $50,000 new machine, 20% DV | Year one |
|---|
| Investment Boost (20% of cost) | $10,000 |
| Left to depreciate | $40,000 |
| Depreciation on the $40,000 (full year) | $8,000 |
| Total deduction in year one | $18,000 |
Without Investment Boost, the same machine would give a first-year deduction of $10,000.
Buildings
From the 2025 income year, the depreciation rate for non-residential buildings is 0% again. You can't depreciate the building itself, though new commercial and industrial buildings can still qualify for the 20% Investment Boost deduction. Fit-out and other assets inside the building are depreciated separately.
Pooling, private use and selling
Pooling small assets
Assets costing $5,000 or less can be grouped into a pool and depreciated together, which saves tracking each one. Pools use the diminishing value method at the lowest rate of any asset in the pool. Once an asset is in a pool it can't come out, and buildings can't be pooled.
Private use
If you use an asset partly for private purposes, only the business share of the depreciation can be claimed.
Selling or disposing of an asset
You can't claim depreciation in the year you sell or dispose of an asset. If you sell it for more than its adjusted tax value (cost less the depreciation claimed), the difference is taxable income. If you sell it for less, you record a loss. Either way it goes in the return for the year of sale.
Records to keep
Keep a fixed asset register and hold onto it for at least 7 years. For each asset, record:
- what it cost and when you bought it
- the depreciation claimed each year
- its adjusted tax value
- any depreciation recovered when it's sold
This article is general information based on Inland Revenue guidance on claiming and managing depreciation, low-value assets and Investment Boost, current at October 2026. It isn't advice for your situation.
