New Zealand consults on low-value asset deductions and Investment Boost

Comments close on 20 November 2026. The document gives preliminary views on existing Income Tax Act 2007 rules; it neither introduces a new allowance nor provides final guidance on which taxpayers can rely.^[1][2]

Original cost determines eligibility

Section EE 38 permits taxpayers to elect through their income tax return to deduct qualifying asset costs in the acquisition year. The item must be used or available for use in that year, qualify as depreciable property apart from the election, remain separate from other depreciable property and otherwise be denied a deduction for its cost. The existing NZ$1,000 threshold applies to assets acquired from 17 March 2021.^[3]

The threshold is generally GST-exclusive for registered taxpayers and GST-inclusive otherwise. Investment Boost is tested separately: DI 5 allows 20% of qualifying expenditure after relevant contributions, and DI 6 adjusts subsequent depreciation amounts. EE 38(1B) prevents that adjustment reducing cost for the low-value threshold. In the draft’s example, an eligible asset costing NZ$1,125 excluding GST remains above the limit after a NZ$225 allowance reduces its depreciation base to NZ$900.^[2][3][4]

Components and procurement batches need separate tests

Asset identification matters. Physical distinctness, functional completeness and whether an item changes another asset’s function help distinguish separate property from an integrated component. No single indicator resolves every case.^[3][5]

Items acquired simultaneously from the same legal supplier with the same depreciation rate require an aggregate threshold test. Under the draft’s approach, ownership passing determines acquisition timing; separate purchases on one day are not necessarily combined. For a group generally consisting of trading stock, only items not treated solely as stock are aggregated.^[2][3]

A full write-off does not end the record requirement

Disposal consideration must be returned as income. Ceasing mainly to use, or retain availability of, the asset for assessable-income or business purposes triggers a deemed market-value disposal unless the later use is subject to fringe benefit tax.^[3]

For multinational groups’ New Zealand operations, these rules make asset-register accuracy important: procurement batches and component classifications can prevent immediate deductions even where each invoice line is inexpensive, while disposal records remain relevant after a full write-off.^[2][3][5]