How The Investment Boost Scheme Can Help Your Business

You’re probably not looking to make many massive capital outlays right now given the economic climate, but I thought if you were thinking of doing so, or on the fence about taking the plunge, I’d write this article for you.

The government introduced a new tax incentive recently, called The Investment Boost Scheme.

The scheme allows you to claim a 20% tax deduction in the year of purchase, for any new assets with a purchase price in excess of $1,000 (excluding GST).

Remember, assets with a purchase price of less than $1,000 (excl. GST) can be written off in full at the time of purchase anyway.

The whole point of the scheme is to provide a sweetener to business owners by reducing their tax bills.

What does this actually mean, in reality?

If you purchase an asset for, say $100,000 (excl. GST), you will get a tax deduction of $20,000 in the financial year that you bought the asset.

The $20,000 deduction will result in a tax saving of $6,000.

That’s a fairly significant cash flow saving, especially if you’re financing the asset with a small deposit.

The rest of the value of the asset (the tax value, after deducting the 20%) will be depreciated as normal.

If the asset in question were a vehicle, the depreciation for the year would be $22,000 (assuming the vehicle was purchased in May, the earliest date this scheme was implemented).

You can see how the ‘savings’ start to stack up. The tax benefit on the $22,000 is again about $6,000.

To sum that all up; you could be receiving a tax benefit totaling $12,000 in the first year you purchase the asset.  

Assuming you put down a 20% deposit, your cash outlay is only $8,000 ($20,000 deposit, less $8,000 in tax benefits).

A summary of the investment boost scheme.

What if I sell the asset?

Just like you get the tax benefit when you purchase the asset, you may have a tax COST when you sell the asset.

GST must be returned on the sale price of the asset.

You will pay income tax on any gain made on the asset, when compared to the accounting (tax) value of the asset.

The tax you pay will depend on the gain you make.

Gains occur when the tax treatment (depreciation and the 20% deduction) exceed market-based depreciation. If the vehicle has a tax value of $70k and you sell it for $80k (excl GST), then you’ll pay tax on the $10k.

Some details to be aware of

• The scheme came into effect on 22 May 2025, so only applies to assets purchased after this date.

• The asset must be new and be depreciable for tax purposes (a normal business asset, basically).

• You can also claim for new commercial buildings, improvements to depreciable property (for instance fit-outs on commercial property).

• Primary sector land improvements (farms), oil and gas industry assets, mixed-use assets.

Unfortunately, you cannot claim the deduction for second hand purchased assets, residential rentals, or intangible assets.

Sing out if you have any questions and I’ll be happy to help.