The 2025 NZ Budget introduced a 20% instant depreciation policy for new vehicles, plant, and machinery — pitched as a way to boost business investment and productivity. Greater detail on what is included can be found here.
But if you’re a small or mid-sized civil construction firm or transport operator, you’re probably asking:
“Who’s actually buying brand new gear right now?”
For many SMEs, the answer is simple: not us.
Sentiment out there tells us that today it is about cashflow, ahead of next years tax return.
Where Have SME’s Been Left Out and What Are Some Viable Alternatives?
1. Most SMEs Buy Second-Hand
- SME contractors and transporters rarely buy new.
- Instead, they buy second-hand or lease — and neither qualify under the current rule.
2. Cashflow First, Tax Benefits Later
- Even if depreciation helps at tax time, you still need capital up front.
- Smaller firms often lack this liquidity — especially in tight margin sectors.
Solution:
- Auckland Finance can offer no upfront deposit, with GST back in the 3rd month, enabling a lower purchase price and no working capital consumed.
- Seasonal or graduated payment terms, allowing for businesses to begin reaping the benefits of their investment and generate a return before Principal repayments are scheduled.
3. Doesn’t Support New-Age Investment
- The policy encourages physical asset purchases — but not the tech, tools, or systems that could help firms run leaner, smarter, and safer.
Solution:
Grants or Credits for Digital Tools
- Fleet management, job scheduling, safety systems — these are the real levers for productivity
- Tech that reduces fuel, rework, or admin delivers ROI faster than most machines
More of this in a future article..
The 2025 budget may hold downstream benefits for SME’s. For example, greater investment in newer equipment leading to an increased supply in the second hand market, applying downward pressure on purchases prices.
While downstream benefits may be found, it begs the question.. have SMEs been adequately supported by the decisionmakers in Wellington.
Let me know your thoughts on this. Whether you think SMEs interests should’ve been targeted more directly or if you think they have been sufficiently considered in this budget.