With the new Investment Boost tax deduction now in effect, Xero has confirmed it is developing functionality to support this change within its Fixed Assets Register.
However, the new feature is not expected to be available until late September 2025.
In the meantime, it is critical that asset purchases are recorded correctly. If not, clients could face year-end adjustments, including depreciation rollbacks, reclassifications, and missed deductions.
What Is the Investment Boost?
From 22 May 2025, eligible businesses can claim:
- A 20% immediate deduction on the cost of new (or new-to-NZ) depreciable assets
- Plus, standard depreciation on the remaining 80%
Applies to:
- Business equipment, vehicles, and machinery
- Commercial and industrial buildings (even though they’re now non-depreciable)
- Land improvements and fit-outs
Does not apply to: land, residential buildings, fixed-life intangibles (e.g. patents), and low-value assets under $1,000.
What Xero Has Said
“In response to the introduction of the Investment Boost tax deduction for all New Zealand businesses, our team has been working at pace to develop a solution within Xero’s Fixed Assets Register.
Due to the variety of use cases and scenarios that need to be incorporated into the feature, we’re aiming to have this available by late September 2025. We will communicate further updates as they become available.”
— Hugh Wallis, Account Executive, Xero
Until that time, a manual workaround is required.
Interim Treatment in Xero
To help avoid messy corrections later, we recommend this interim approach:
- Record the asset at full cost in Xero’s Fixed Asset Register (e.g. $10,000)
- Post a manual journal to apply the 20% deduction separately (e.g. $2,000 to “Investment Boost Deduction”)
- Adjust the tax value of the asset to 80% of its original cost (e.g. $8,000)
- Apply depreciation to the adjusted base as normal
💡 This ensures correct treatment upfront and avoids the need to reverse depreciation or reprocess asset entries later.
Why It Matters
Incorrectly treated assets may:
- Be over-depreciated
- Require depreciation rollbacks at year-end
- Miss out on eligible deductions
- Trigger avoidable depreciation recovery if sold
A proactive check now can prevent compliance headaches later.
Notify Your Clients Now
If your clients have purchased assets since 22 May 2025, now is the time to review how those have been recorded.
Consider notifying them directly—particularly if they:
- Are investing in commercial premises or fit-outs
- Have imported second-hand equipment
- Have made high-value equipment purchases
Correct treatment now will avoid unnecessary adjustments down the line.
At ClockworX, we keep our fingers on the pulse and make sure our clients get it right the first time. The ClockworX Bookkeeping Services … with a ‘more than bookkeeping approach’.
