We have been asked many questions about the recently announced Investment Boost, the tax incentive available to businesses when they purchase new capital assets for their business after 22 May 2025. It allows businesses to claim an initial 20% depreciation on the asset, and the remaining 80% of the asset’s value continues to be depreciated under standard depreciation rules.
It's important to remember that you won’t receive 20% cash back under Investment Boost – what you will get is a reduced tax bill at the end of the tax year, as a result of this additional deduction.
Below is a useful example of when it can be used.
2025 Ford Ranger, purchase Price $100,000 ex GST
20% of $100k = $20k
Depreciation: The 20% Investment Boost is a deduction in addition to standard depreciation, but it reduces the asset’s tax book value. For example, for a $100,000 depreciable asset:
- $20,000 is deducted upfront under the Investment Boost.
- The remaining $80,000 becomes the depreciable base and is depreciated using the standard depreciation method and rate.
- When you sell the asset, the Investment Boost deduction is recoverable along with tax depreciation previously claimed to the extent that sale proceeds exceed net book value.
To find out if your business assets qualify for maximising this tax benefits or to find out how it should be treated within your accounting system, get in touch with our experts.
