Buying new equipment for your business comes with costs, and normally you spread these out over a few years in your accounts. But if you’re planning to buy a forklift for your warehouse or workshop, there’s a chance to get more tax benefit upfront, but you’ll need to act fast. The New Assets – Investment Boost is expiring soon on 31 March, giving businesses a one-time opportunity to claim 20% of the cost of new assets immediately.
We’ll try to make it straightforward, no confusing talk. By the end you should have a pretty good sense of whether this tax rule could help your cashflow when you buy new machinery like forklifts, and what you need to check before you claim it.
What Is the New Assets Investment Boost?
The New Assets – Investment Boost is a tax deduction rule that lets businesses claim 20% of the cost of a new asset as an expense in the year it’s first used. The remainder of the cost is then depreciated over the asset’s normal lifespan.
Before this rule came in, most assets (like forklifts, trucks, machinery) had to be depreciated over time. You could only claim a slice of the cost each year as an expense. Now, you get an extra deduction up front and that can help with your business cash flow because it usually means you pay less income tax in the year you buy the asset.
Here’s how the deduction works in simple terms:
- If you buy a new asset for $100,000, you can claim $20,000 straight away as a deduction in the tax year you buy it.
- The remaining $80,000 is put into your regular depreciation schedule. You continue to claim that over the normal life of the asset.
That’s the basic idea. You’re not getting double deductions, and the total you’ll claim over the asset’s life is the same. But getting some of the deduction up front reduces what you owe in tax that first year, which helps your cashflow.
What Types of Assets Qualify
To use the Investment Boost before it expires, an asset must:
- Be new or new to New Zealand, meaning it hasn’t been used here before.
- Be first available for use before 31 March. This is critical if your forklift arrives after this date, it won’t qualify.
- Be depreciable for tax purposes.
There’s no upper limit, so big investments get the 20% upfront deduction too.
What Doesn’t Qualify
Not everything qualifies for the Boost. Some things you cannot claim it on are:
- Assets that have already been used in New Zealand (unless the use was minor).
- Most intangible assets, like patents or licences.
- Residential rental buildings.
So if you’re buying a used forklift that’s already been in use here, it wouldn’t count. But a brand new forklift that’s coming into NZ for the first time could.
What This Means for Buying a Forklift
Now let’s zoom in on forklifts. You might be looking to replace an older machine or add extra capacity to your workshop or warehouse. If you decide to buy a new forklift before March 31, it should be eligible for the Investment Boost, as long as it meets the conditions above.
That can make a real difference on your tax return in the year you buy it. Instead of waiting to claim depreciation on the full cost over the next several years, you get a bigger chunk to claim right away as an expense. That means your taxable income for that year is lower, and you pay less tax.
Here’s an example:
- Buy a new forklift for $60,000 and put it into use before 31 March.
- Claim $12,000 (20%) immediately.
- Depreciate the remaining $48,000 over the forklift’s useful life.
This immediate deduction lowers taxable profit for that year, helping cash flow and letting you reinvest in your business sooner.
When You Sell the Asset
One thing to be aware of is that if you sell the forklift later for more than its adjusted tax value (which is what it’s worth after your deductions), the extra amount you get back might count as taxable income. That’s something you should talk through with your accountant.
This doesn’t stop you from claiming the Investment Boost, but it’s good to be aware it can affect your tax when you dispose of the machine.
Benefits of Using the Investment Boost for Forklifts
- Lower taxable income: Claiming the boost reduces your profit for tax purposes, meaning you pay less in income tax for that year.
- Easier fleet upgrades: The extra deduction can help businesses afford higher-quality or higher-capacity forklifts without stretching budgets.
- Supports business growth: More efficient forklifts mean faster operations, safer workplaces, and better material handling, which can improve productivity.
- Encourages modernisation: Using the boost can help businesses replace older forklifts with modern, safer, and more energy-efficient models.
Even small warehouse operators in New Zealand can benefit, especially if they rely on forklifts daily to move stock, pallets, or materials.
Planning Your Forklift Purchases
Timing is key if you want the 20% deduction before 31 March:
- Assess your needs: Load capacity, lifting height, indoor vs outdoor use, and fleet size.
- Budget for upfront costs: Factor in purchase price and tax benefits to see net cost.
- Choose the right model: Reliable forklifts from trusted suppliers reduce future repair costs.
- Coordinate timing: Ensure the forklift is in use before the 31 March deadline to qualify.
For businesses in New Zealand, suppliers like Stellar Machinery can provide advice on which forklift fits your operation, as well as delivery and maintenance options.
Frequently Asked Questions
Can used forklifts qualify for the Investment Boost?
No. Only new forklifts that are first used or installed within the specified period qualify for the extra deduction. Used forklifts can still be depreciated, but the 20% boost won’t apply.
How much tax can I save using the Investment Boost?
It depends on your tax rate and the asset cost. For a $50,000 forklift, the 20% boost means a $10,000 deduction, which reduces your taxable income for the year.
Does this apply to all forklift types?
Most new forklifts used in business operations qualify, including electric, LPG, diesel, rough terrain, and shipping container models. Pallet jacks may also qualify if new and first used for your business.
Can I claim the boost if I hire a forklift?
No. The Investment Boost only applies to assets you purchase and first use or install. Hiring equipment does not qualify.
How long is the New Assets Investment Boost available?
It expires on 31 March. Assets first used or installed after that date are not eligible.
Make the Most of the Investment Boost for Your Forklift
If you’re adding new forklifts to your New Zealand operation, now is the time to act. Claiming the New Assets – Investment Boost before 31 March could save you thousands in tax and help you upgrade your warehouse fleet sooner. Stellar Machinery can help you choose the right forklift for your needs, advise on timing for the tax deduction, and support you with delivery, servicing, and maintenance.
Call 0800 995 057 or email paul@stellarmachinery.co.nz or rohit@stellarmachinery.co.nz to discuss your options and find the best solution for your business.
