Assets, depreciation, and the Investment Boost

When you buy something for your business it's either an expense (deducted in full in the year you buy it) or a capital asset (deducted over time through depreciation).

The general rule: items with an expected life beyond one year are capital assets. But IRD provides a useful shortcut:

Low-value asset write-off (Income Tax Act 2007 s EE 38): any item costing less than $1,000 excl GST can be deducted in full in the year you buy it, with no depreciation schedule. This covers most routine purchases (accessories, small tools, peripherals).

For assets purchased on or after 22 May 2025 that cost $1,000 or more excl GST, you can claim an extra 20% of the cost as a deduction in year one, on top of normal depreciation (Taxation (Budget Measures) Act 2025, Income Tax Act 2007 as amended).

Example: a $5,000 laptop (excl GST) bought in August 2026 with the Investment Boost elected:

- Investment Boost deduction in year one: $5,000 × 20% = $1,000 - Remaining depreciation base: $4,000 - Year one DV depreciation at 50%: $4,000 × 50% × (8 months / 12) = $1,333 - Total year-one deduction: $2,333 instead of the $1,667 without the boost

PayWren's asset register has an Investment Boost checkbox when you add an asset. It only applies to new eligible assets.

NZ depreciation uses two methods:

Diminishing Value (DV): each year's deduction is a percentage of the remaining book value (opening adjusted tax value). Deductions are larger in early years and taper off as the book value falls. Most asset classes have a DV rate.

Straight Line (SL): each year's deduction is a fixed percentage of the original cost. Equal deductions every year until the asset is fully written off. Simpler to track but smaller early deductions.

PayWren supports both. You choose the method when you add the asset. You can't switch methods later without IRD approval.

For most sole traders, DV gives better cashflow (larger early deductions); SL gives certainty about future deduction amounts.

These are the rates for the asset classes in PayWren's register, from IRD's IR265 General depreciation rates (March 2026 edition):

Laptops and computers (COMP): DV 50%, SL 40%, estimated useful life 4 years

Mobile phones and smartphones (OFUR): DV 67%, SL 67%, estimated useful life 3 years

Professional cameras and photographic equipment (AUDI): DV 40%, SL 30%, estimated useful life 5 years

Motor vehicles up to 12 seats (TRAN): DV 30%, SL 21%, estimated useful life 5 years

Office furniture (OFUR): DV 16%, SL 10.5%, estimated useful life 12.5 years

Hand and power tools: DV 67%, SL 67%, estimated useful life 3 years

All rates are from IR265 General depreciation rates, March 2026 (IRD). First-year deductions are prorated by the number of whole months the asset was owned in the financial year.

Go to Assets in the sidebar to add and track your business assets. For each asset you enter:

- Description and asset class (which sets the depreciation rate) - Purchase date and cost (excl GST) - Depreciation method (DV or SL) - Investment Boost: tick if purchased on or after 22 May 2025 and cost is $1,000+ - Immediate write-off: tick if cost is under $1,000 excl GST

The register calculates the depreciation schedule automatically. The total depreciation for the current financial year feeds into the income tax estimate that drives the Tax Planner reserve.

When you sell or dispose of an asset, record the disposal date and sale proceeds. The register calculates any depreciation recovered (if sale price exceeds book value, up to original cost) or loss on sale; both flow into your IR3.

The asset register accumulates your total depreciation deduction for the financial year. Take the year's deduction total to your accountant when filing your IR3: it reduces taxable income and therefore your tax bill.

Assets disposed of during the year also surface in the register as depreciation recovered or loss on sale; include both in your return discussion.

For more on how depreciation flows into provisional tax estimates, visit /guides/tax-planner-guide.