Why This is Your Best Year to Upgrade Ageing Farm Equipment

Budget 2025 introduced the Investment Boost scheme on 22 May, allowing businesses to deduct 20% of new asset costs upfront. For farmers, this means immediate tax relief when purchasing equipment rather than waiting years to recoup costs through standard depreciation.

The timing matters. If you've been weighing up whether to replace machinery this year or next, the numbers now favour acting sooner.

How the Investment Boost Works

Purchase qualifying farm equipment, and you can claim 20% of the cost as an immediate tax deduction in year one. The remaining 80% depreciates normally.

Here's an example using a $30,000 piece of farm equipment with a 13% depreciation rate. You'd claim $6,000 (20%) immediately, then depreciate the remaining $24,000 at 13%, giving you an additional $3,120. That's $9,120 in total deductions for year one, compared to $3,900 under standard depreciation alone.

If you’re in the market for an upgrade, browse AgriQuip's full range of vegetation management and agricultural equipment by downloading our 2025 Product Brochure here.

What Farm Equipment Qualifies

The scheme covers most depreciable farm assets purchased or put into use from 22 May 2025 onwards. This includes:

• Vegetation Management Equipment: Reach mowers, batwing toppers, mulchers, hedge cutters
• Agricultural Machinery: Tractors, spreaders, cultivation equipment
• Farm Infrastructure: New farm buildings, woolsheds, covered yards, irrigation systems
• Farm Tools and Equipment: Hydraulic sweepers, aerators, specialised attachments

The asset must be new or new to New Zealand. Second-hand equipment already used domestically doesn't qualify, but importing used equipment from overseas does. Farm infrastructure improvements like fencing also qualify, even though they're not traditionally depreciable assets.

Commercial farm buildings qualify for the 20% deduction despite having a 0% depreciation rate for tax purposes.

The Real Cost of Delaying Equipment Upgrades

Running equipment past its useful life costs more than the repair bills suggest. Worn hydraulic systems and ageing engines consume noticeably more fuel, and on operations using equipment intensively, that inefficiency adds up to hundreds of extra litres per season. Multiply that across multiple pieces of machinery, and the annual fuel penalty becomes substantial.

The timing losses hurt even worse. Farm equipment failures during critical periods create problems that ripple through your operation for weeks. A topper breaking down during peak spring growth disrupts grazing rotation and affects pasture quality long after the repair is done. When a reach mower fails before silage season, you're left scrambling for contractors who may not have capacity. The productivity loss from missed timing windows often costs more than fixing the machine.

As equipment ages, maintenance demands also accelerate. Hydraulic seals need replacing more frequently, blades wear faster, and bearings fail sooner. The labour hours spent on these repairs add up, particularly during seasonal windows when every productive hour counts. That time could be spent on farm work instead of keeping ageing machinery running.

Newer farm equipment offers real performance gains that affect your bottom line. Modern hydraulic systems use less power to do the same work, which translates directly to fuel savings. Cutting systems have been redesigned to reduce power requirements without sacrificing output. Component quality has improved enough that service intervals have genuinely extended, while better guarding and improved operator visibility also reduce accident risk.

The Investment Boost accelerates the return on replacement. Standard depreciation spreads deductions across years, while the 20% upfront deduction delivers immediate tax relief in the year you purchase, shifting the breakeven point significantly closer.

Farm Finance Options That Stack With the Tax Benefit

The Investment Boost works alongside farm equipment financing, making upgrades more accessible. When you finance through specialised farm finance providers, you spread the equipment cost while still claiming the full 20% deduction upfront based on the purchase price.

This creates a useful cashflow advantage. Your tax savings arrive while your payment schedule remains manageable, reducing the immediate capital strain of equipment replacement.

Why 2025 Matters

The Investment Boost applies to assets purchased or available for use from 22 May 2025 onwards. While the scheme has no published end date, government incentives change with budgets. Previous schemes have been modified or removed entirely.

Equipment ordered now qualifies even if delivery extends into 2026, provided it's available for use after 22 May. Assets purchased before that date miss out, regardless of when payment occurs. For farmers planning equipment replacement within the next 18 months, bringing those purchases forward captures a tax benefit that may not exist next year.

The Bottom Line

The Investment Boost works best for equipment you were already planning to purchase. Buying unnecessary machinery for a tax deduction makes poor business sense, but accelerating planned replacements does.

Calculate your savings based on your actual tax rate and the equipment's depreciation schedule. The 20% deduction applies regardless of your business structure, whether you operate as a company, sole trader, or partnership.

AgriQuip supplies vegetation management and agricultural equipment from established brands like McConnel, Spearhead, Major, and Bomford. Our team can help you identify equipment suited to New Zealand farming conditions.