If you follow business news from across the ditch, you might have heard about Australia’s “Instant Asset Write-Off,” which allows businesses to deduct the full cost of cars and machinery immediately.

Naturally, many Kiwi business owners wonder if we have a similar perk here. The short answer? New Zealand does have an instant write-off, but it applies to much smaller purchases. While you generally can’t write off a work ute in one go, you can immediately expense a wide range of everyday operational equipment-provided you know the rules.

Here is how New Zealand’s version of the instant asset write-off works and how to use it.

The “Low Value Asset” rule

In New Zealand, the equivalent of the instant asset write-off is technically known as the Low Value Asset rule. Here is how it works: If you buy an asset for $1,000 or less (excluding GST for GST-registered businesses), you can generally claim 100% of the cost as a tax deduction in the year you bought it.

You usually don’t need to spread the cost over several years or worry about depreciation rates. You simply buy it, use it, and expense it.

Common examples of assets under $1,000:

  • Office chairs and desks
  • Smartphones and tablets
  • Power tools
  • Printers and scanners
  • Software subscriptions (if paid annually)
  • Kitchen appliances for the staff room

Don’t get caught by the set rule

The most common mistake businesses make is assuming the $1,000 limit applies to individual items on an invoice without considering if they are part of a set.

Inland Revenue (IRD) rules state that if you buy multiple items at the same time that have the same depreciation rate and are bought from the same supplier, they might be treated as a single asset.

Example: The boardroom chairs

  • Scenario A: Buying a single chair. Let’s say you need to replace a broken office chair. You head to a supplier and pick up a new one for $400. Because the total cost is well under the $1,000 threshold, you can typically claim the full deduction for that chair immediately.
  • Scenario B: Kitting out the whole room. Now, imagine you decide to upgrade the entire boardroom instead. You order six of those exact same chairs at the same time, costing $400 each (a total of $2,400).

Even though each chair is individually cheap, the “set rule” kicks in because you bought them together from the same place. The IRD views this as a single $2,400 asset, meaning you generally cannot use the instant write-off. Instead, you must depreciate the total cost over time.

What if the asset costs more than $1,000?

If an asset costs more than $1,000, you generally cannot write off the full cost immediately. Instead, you must add it to your fixed asset register and claim depreciation each year (spreading the tax benefit over the asset’s useful life).

However, there is a bonus for bigger assets. If the asset is new (or new to New Zealand), you may be eligible for the Investment Boost. This allows you to claim a bonus 20% deduction upfront in the first year, before depreciating the rest as normal. For full details on larger purchases, read our guide on How to claim the 20% NZ Investment Boost.

Summary: Which rule applies?

With different rules applying to different price tags, here is a quick snapshot of what you can claim:

  • For items under $1,000: You get the full deduction immediately.
  • For items over $1,000: You get the depreciation benefits (plus the potential 20% Investment Boost).

Quick guide: What you can claim

Asset Cost Rule The Benefit
$1,000 or less Low Value Asset Rule Deduct 100% of the cost immediately.
Over $1,000 Depreciation Deduct a portion of the cost each year.
Over $1,000 (New) Investment Boost Deduct 20% upfront + standard depreciation on the rest.

Disclaimer: This information is general in nature and does not constitute tax advice. Tax laws can change, and exceptions apply. You should consult your accountant or a qualified tax professional for advice specific to your business.

Managing the cash flow gap

Whether you are buying a single $900 laptop or upgrading a whole fleet of them, the tax deduction only comes back to you at the end of the financial year.

If you still need the cash to make the purchase today you can use financing to bridge this gap. By using a small business loan to fund the purchase, you can get the equipment you need now – keeping your business moving – while securing the tax deduction for your next return.