A common myth is that you can claim the full cost as an expense on your tax return. In reality, a vehicle purchase is capital expenditure, NOT an immediate deduction.
The good news is that, from 22 May 2025, you may be able to claim 20% of the cost of eligible new assets upfront under the Investment Boost, and then depreciate the remaining 80% as usual.
Example:
If you buy a vehicle for $50,000, in the first year, the Investment
Boost lets you:
- Deduct $10,000 upfront (20% of cost)
- Depreciate the remaining $40,000 at 30% p.a., diminishing value > $12,000 in the first year
Total First-year deduction: $10,000 + $12,000 = $22,000, or 44% of the total vehicle cost.
This means you pay less tax in that (first) year. Because money saved today is worth more than money saved later, this helps you save more overall.
Quick tips:
- New vehicle = capital expenditure (Investment Boost may apply)
- Repairs & maintenance = usually deductible
- Any business asset over $1,000 = capital expenditure
Note: The Investment Boost applies only to new assets (or those new to New Zealand). Second-hand purchases usually don’t qualify.
Get in touch for a free 15-minute consultation call.
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