Investment Boost: more money in your pocket sooner

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Investment Boost: more money in your pocket sooner

A tax incentive worth knowing about

If you bought new equipment, technology, or other business assets since May 2025, there is a good chance you are eligible for a tax deduction you may not have claimed yet. The government’s Investment Boost scheme, introduced as part of Budget 2025, allows businesses and sole traders to claim 20% of the cost of new assets as an upfront tax deduction, on top of the usual depreciation. No application required. No value limit. Just a straightforward deduction you include in your income tax return.

With the 2025/26 financial year now closed, this is a timely moment to make sure you understand what you might be able to claim before you file your return.

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How it works

When you buy a piece of equipment or technology for your business, the IRD recognises that it loses value over time. Rather than letting you deduct the full cost from your taxable income in the year you buy it, they spread that benefit across several years. This is called depreciation. So if you bought a $2,000 laptop, each year you would be able to reduce your taxable income by a small portion of that cost (reducing your taxable income means you pay less tax and get to keep more of what you earn).

That is where Investment Boost comes in. From 22 May 2025, on top of your usual depreciation, you can now deduct an additional 20% of the cost of any new eligible asset from your taxable income in the very first year you buy it. The total tax benefit over the asset’s life does not change. You simply get more of it sooner, which means a lower tax bill in the year you make the purchase and better cash flow when you need it most.

Example: $2,000 laptop

Without Investment Boost With Investment Boost
Year 1 depreciation (standard rate ~20%) $400 $400
Investment Boost (additional 20% upfront) $0 $400
Total deducted from taxable income in year 1 $400 $800
Total income protected from tax in year 1 $400 $800

Note: The depreciation rate used in this example is illustrative only. Actual IRD depreciation rates vary depending on the type of asset and the depreciation method used. Check the IRD depreciation rate finder for the correct rate for your specific asset, or ask Hnry or your accountant to calculate it for you. As always, the specifics will depend on your individual circumstances.

Let’s be honest, knowing what qualifies, how much to claim, and where to enter it in your tax return is a lot to get your head around on top of everything else you are doing. That is exactly why Hnry is such a game changer. If you are a Hnry customer, they calculate and apply both depreciation and Investment Boost on your assets automatically as part of their service. You do not need to understand the mechanics. You just need to make sure your assets are recorded, and Hnry takes care of the rest. If you are not using Hnry, your accountant can help you apply Investment Boost correctly when you file your return. Either way, this is not something you should miss out on simply because the process feels complicated.

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What kinds of assets qualify

To be eligible for Investment Boost, an asset must be:

  • New or new to New Zealand (not previously used here)
  • First available for use in your business on or after 22 May 2025
  • Used primarily for business purposes
  • Depreciable under IRD rules

If an asset is used for both business and personal purposes, such as a vehicle, you can only claim the business-use portion. Keep good records of how you use it.

Common examples that are directly relevant to sole traders include:

  • Technology: Laptops, computers, monitors, phones, and other devices purchased for business use
  • Equipment: Tools, machinery, or specialist equipment used in your work
  • Vehicles: Work vehicles, subject to the business-use apportionment rules
  • Office fit-out: Furniture and fittings for a home office or dedicated workspace
  • Software: Some software purchased as a capital asset may also qualify

Assets that do not qualify include residential buildings, land, and assets that have previously been used in New Zealand. If you are unsure whether a specific asset qualifies, check with your accountant or Hnry before filing.

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How to claim it

You claim Investment Boost in your income tax return for the financial year in which the asset first became available for use. For most sole traders, that means your 2025/26 return covering the year to 31 March 2026.

The deduction is recorded alongside your depreciation, not as a separate line item. If you use Hnry, they calculate Investment Boost and depreciation on your assets as part of their service, so you do not need to work it out yourself. If you manage your own tax, your accountant can help you apply it correctly, or you can use IRD’s depreciation rate finder to check the applicable rates for your assets.

As with any tax matter, the specifics will depend on your individual circumstances. Check with your accountant or Hnry to make sure you are claiming correctly and not missing anything you are entitled to.

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Think ahead to the year ahead

Investment Boost does not just apply to what you have already bought. Any eligible assets you purchase during the 2026/27 financial year, from 1 April 2026 onwards, will also qualify. So if you have been thinking about upgrading your equipment, investing in new technology, or making other capital purchases for your business, the timing has never been better.

At freemeup, we are here to help sole traders make the most of running their own business. Getting your tax, H&S, insurance, and technology sorted means less time on the back office and more time doing the work you love. If you are not yet a freemeup client and would like to find out how we can help, get in touch with us.

Read last month’s blog on getting your finances, insurance, contracts, and H&S sorted before the financial year end. Read it here.

Disclaimer: All content provided on freemeup.nz is for informational purposes only and is intended as a general information resource regarding the matters covered. It is not tailored to cover specific situations and circumstances and shouldn’t be taken as direct professional advice. Freemeup makes no representations to the accuracy or completeness of the information found on this site or found by following any links on this site and will not be held liable for any losses, injuries, or damages from the use of this information. 

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Getting paid – the sole trader cash flow problem

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Getting paid - the sole trader cash flow problem

An hour a week. Gone.

A report published this month by GoCardless and Xero surveyed 800 small-to-medium business owners across Australia and New Zealand and found that over a quarter of small businesses spend up to an hour every single week just chasing late payments.

Think about that. An hour a week is around 50 hours a year – more than a full working week – spent not doing the work you love, not finding new clients, not developing your skills. Just following up on money you’ve already earned and are owed.

For sole traders, this hits differently. When you’re a team of one, an hour spent chasing an invoice is an hour taken directly from your working week. There’s no accounts receivable department to hand it off to. It falls on you to save your cash flow.

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The numbers behind the problem

Late payments aren’t just an inconvenience – they’re a significant financial drag on New Zealand’s small business economy. Xero’s Small Business Insights data consistently shows NZ businesses waiting an average of around 24-25 days to be paid after issuing an invoice, with clients paying an average of 6 days late.

In 2023, Xero calculated that late payments were costing Kiwi small businesses $827 million annually – an 81% increase from just two years earlier.

For a sole trader, a late invoice isn’t just a number on a spreadsheet. It’s your mortgage payment. It’s your ACC levy. It’s the tax you need to put aside. When cash flow stalls, everything stalls.

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Why it happens - and why it's not always your fault

Late payments often feel personal. But most of the time they’re not. Larger organisations frequently use smaller businesses as a source of short-term working capital – holding off on paying invoices to support their own cash flow. The impact falls entirely on the people at the end of the chain.

It’s worth remembering though that this is also one of the reasons going out on your own can be so rewarding. As a sole trader, you set your own rates. When those rates reflect the true value of your expertise, the income you earn, even with the occasional late payment, can far outweigh what a regular fortnightly salary would bring. The irregular nature of the income is real, but so is the upside. Getting the basics of invoicing and cash flow right means you get to enjoy both.

Proactive steps to help make those payments happen

  • Agree on payment terms before work begins – 7 days, 14 days, whatever suits you. Ensure invoicing T&Cs are included in your contract and all your invoices have clear due dates on them. Never assume a client knows when payment is due.
  • Invoice the same day. The sooner you invoice, the sooner the clock starts. Don’t let invoicing slip to the end of the week. Get it out while the work is fresh.
  • Make it easy to pay. Include your bank account details on every invoice. As a freemeup client, you’ll be using Hnry – our trusted partner and one of New Zealand’s leading accounting services for sole traders. Hnry’s invoicing feature is designed specifically to help sole traders get paid faster, with multiple payment options built in and automatic invoice chasing on your behalf. It takes the awkwardness out of following up entirely.
  • Follow up before the due date. A friendly reminder a day or two before an invoice is due is perfectly reasonable. It shows you’re on top of your admin – and it often works.
  • Include a late payment clause. You don’t need to enforce it aggressively. But having it in your agreement gives you a professional basis for a firmer conversation if needed.

A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.

Suze Orman

Protect your cash flow - and enjoy your freedom

That’s something I think about a lot with freemeup. The services we offer – IT, health and safety, and insurance – are all about removing the kind of background stress that comes from having things unsorted. Cash flow is another version of that same problem. That’s exactly why we partner with Hnry – because sole traders who use freemeup already have access to one of the best invoicing and payment tools available, designed from the ground up for people working for themselves. When the basics are in order, you can focus on what you’re actually here to do.

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If you’re just setting up as a sole trader and want to make sure you’ve got your foundations right from day one, get in touch with us. We’d love to help.

Missed last month’s blog on what the Holidays Act changes mean for sole traders? Read it here.

Disclaimer: All content provided on freemeup.nz is for informational purposes only and is intended as a general information resource regarding the matters covered. It is not tailored to cover specific situations and circumstances and shouldn’t be taken as direct professional advice. Freemeup makes no representations to the accuracy or completeness of the information found on this site or found by following any links on this site and will not be held liable for any losses, injuries, or damages from the use of this information. 

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The Holidays Act is changing – but what does it mean if you work for yourself?

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The Holidays Act is changing - but what does it mean if you work for yourself?

Big news from September

On 23 September 2025, Workplace Relations and Safety Minister Brooke van Velden announced that Cabinet had agreed to repeal and replace the Holidays Act 2003 with a new Employment Leave Act. Speaking to an audience of business leaders in Auckland, she described the changes as aimed at making leave calculations “more straightforward” and ensuring workers receive their correct entitlements.

It was headline news across NZ business media – and for good reason. The Holidays Act has been a source of complexity for employers and workers alike for over two decades. The announcement signals the most significant reform to New Zealand’s leave framework in a very long time.

But if you’re a sole trader, you might be wondering – does any of this actually affect me?

What's changing and why it matters

The proposed Employment Leave Act would replace the current weeks-and-days leave system with an hours-based accrual model starting from day one of employment. For most full-time workers, the changes are broadly positive – but not everyone benefits equally. Part-time workers, for example, would see their sick leave entitlement calculated on a pro-rata basis, meaning they could end up with less leave than under the current system. Labour’s workplace spokesperson Jan Tinetti put it plainly, saying “people don’t fall ill on a pro-rated schedule depending on how many hours they work.”

For sole traders though, the picture is much simpler – and considerably more liberating.

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So what does this mean for sole traders?

The short answer is: if you’re a sole trader with no employees, these changes have very little direct impact on you right now.

The Employment Leave Act is fundamentally about the relationship between employers and employees. As a sole trader, you’re neither. You don’t have a boss calculating your leave, and unless you have staff of your own, you’re not calculating anyone else’s leave either.

What you do have – and this is the real upside of self-employment that these headlines are a good reminder of – is complete freedom to decide when you take time off, how much of it you take, and how you structure your working year around it. You don’t need to wait for an anniversary date, navigate a leave calculation, or hope your employer approves your request. You’re in charge.

The leave question sole traders actually face

The more relevant question for most sole traders isn’t how leave accrues – it’s how to make sure you can actually afford to take time off without it being stressful.

This comes back to something I’ve talked about before: building your downtime into your rates from the very beginning. If you want to take four weeks off a year, that needs to be factored into your annual income target and your day rate. It’s not complicated, but it does require being intentional about it, especially when you’re just starting out.

A few things that help:

  • Know your numbers. Work out exactly what you need to earn annually to cover your living costs, savings, insurance, and time off. Our run the numbers calculator is a good place to start.
  • Treat time off as a business expense. Set a little aside during your busier periods, specifically to cover quieter weeks. It removes the guilt from switching off – and the stress of coming back to a zero balance.
  • Plan your year deliberately. School holidays, summer, NZ public holidays – think about when you’re likely to be less busy or want to take a break, and factor those periods into your workload planning. Clients generally appreciate a heads-up well in advance.

The secret of getting ahead is getting started.

Mark Twain

The bigger picture

Reading about employment law changes can sometimes make you feel like the world is designed for employees and businesses, not for the 400,000+ sole traders who sit somewhere in between. But I’d encourage you to see news like this differently.

Every time a big reform like this comes along, it’s a reminder of just how much simpler your situation is when you work for yourself. You’re not navigating payroll legislation, remediating back pay, or updating employment agreements. You’re focusing on the work you love – and building a business on your own terms.

If you’re thinking about making that leap, or you’ve recently started out and want to make sure your foundations are solid, get in touch with us. We’d love to help.

Reference:

Missed last month’s blog on the Gateway Test and what it means for contractor classification? Read it here.

Disclaimer: All content provided on freemeup.nz is for informational purposes only and is intended as a general information resource regarding the matters covered. It is not tailored to cover specific situations and circumstances and shouldn’t be taken as direct professional advice. Freemeup makes no representations to the accuracy or completeness of the information found on this site or found by following any links on this site and will not be held liable for any losses, injuries, or damages from the use of this information. 

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Taking care of your financial future

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Taking care of your financial future

A change that quietly came into effect on 1 July

If you’re a sole trader and you contribute to KiwiSaver, you may have noticed something different this month. From 1 July 2025, the government’s KiwiSaver contribution was halved – dropping from 50 cents for every dollar you contribute, up to a maximum of $521.43 per year, down to 25 cents per dollar, with a new maximum of just $260.72.

It’s worth understanding what this means for people working for themselves – and more importantly, what you can do about it.

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Why sole traders are in a different position to employees

When you work for an employer, your KiwiSaver gets contributions from three places – your own contributions, your employer’s matching contributions, and the government’s annual top-up. As a sole trader, you have two of those three. There’s no employer matching your contributions, because you are the employer.

That government contribution has historically been one of the ways the system acknowledged that sole traders and self-employed people deserve the same opportunity to build retirement savings as anyone else. Retirement Commissioner Jane Wrightson noted that “low-income earners, Maori, women and self-employed people will be hit hardest by the changes”, and it’s a fair point worth being aware of.

But here’s the thing – being aware of a challenge is the first step to planning around it. And as a sole trader, you have something employees often don’t: complete control over how you structure your finances.

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The upside of being in charge of your own finances

One of the genuine advantages of working for yourself is that nobody else is making financial decisions on your behalf. You’re not tied to a fixed salary. You set your own rates, you decide how much to pay yourself, and you choose how to structure your savings. That’s a level of financial autonomy that most employees simply don’t have.

Do not save what is left after spending, but spend what is left after saving.

Warren Buffett

This principle is actually much easier to put into practice as a sole trader than it sounds. When your income flows through your own accounts, you can set up automatic transfers to savings and investment funds the moment money arrives – before you’ve had a chance to spend it. It’s a habit that, built early, makes an enormous difference over time.

How to approach retirement savings when you work for yourself

Rather than feeling discouraged by the KiwiSaver change, treat it as a prompt to think proactively about your financial future. Here are a few practical things worth considering:

  • KiwiSaver is still worth having. Even with the reduced government contribution, it remains a straightforward, tax-efficient way to save. The government contribution – even at the reduced rate of $260.72 – is still essentially free money if you’re contributing at least $1,042.86 between 1 July and 30 June each year. Don’t walk away from it just because it’s been trimmed.
  • Build retirement savings into your rates from day one. This is one of the most powerful things you can do. When you work out what you need to earn as a sole trader, include a line for retirement savings just as you would for tax, ACC levies, and time off. You’re not an employee waiting for someone else to sort this out – you’re a business owner making deliberate choices about your future.
  • You’re not limited to KiwiSaver. Managed funds, term deposits, property, and other investment vehicles are all worth exploring alongside KiwiSaver. A financial adviser who understands self-employment can help you work out what mix makes sense for your situation and income pattern. I’ve written about my own experience with financial advice and the difference it made – you can read that here.
  • Small, consistent contributions add up. You don’t have to save huge amounts all at once. Setting up a regular automatic payment – even a modest one – builds a habit and a balance over time. The magic of compounding means that starting earlier matters far more than starting with a bigger amount.

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What hasn't changed

It’s worth being clear about what the Budget didn’t change for sole traders. The ability to contribute to KiwiSaver voluntarily remains exactly as it was. There’s no requirement to contribute a minimum amount, and you can adjust contributions if your income changes. The scheme is still open to you, and the investment growth within it is still tax-advantaged.

The bigger picture here is that sole traders in New Zealand are part of a growing, thriving workforce of over 400,000 people who have chosen to take control of their working lives. The financial planning side of self-employment is one area where a little intention goes a long way – and the good news is that you’re already ahead of most people simply by thinking about it.

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Focus on what you can control

At freemeup, we believe that working for yourself should be genuinely rewarding – financially, professionally, and personally. The KiwiSaver change is a reminder that some of the support systems designed for employees don’t always translate neatly to self-employment – but that’s exactly why getting the rest of your business foundations right matters so much.

When your IT is secure, your health and safety obligations are covered, and your professional insurance is in place, you free up your time and energy to focus on earning well and building the future you want. That’s what we’re here to help with.

If you’re just starting out as a sole trader and want to make sure you’ve got the right foundations in place, get in touch. We’d love to help you get started with confidence.

Disclaimer: All content provided on freemeup.nz is for informational purposes only and is intended as a general information resource regarding the matters covered. It is not tailored to cover specific situations and circumstances and shouldn’t be taken as direct professional advice. Freemeup makes no representations to the accuracy or completeness of the information found on this site or found by following any links on this site and will not be held liable for any losses, injuries, or damages from the use of this information. 

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How a Financial Advisor protected our future

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How a Financial Advisor protected our future

Our first meeting

About 8 years ago, we were advised by our company accountant to engage a Financial Advisor to help us with some shareholder insurance for the company we owned at the time. Back then, I thought the advisor would come in, and sell us a bit of insurance, and that would be it. I was wrong. 

John introduced himself and proceeded to explain that he liked to help his clients secure all aspects of their finances for their personal and work lives. He then spent a couple of hours quizzing me all about my personal finances and the finances of the company that my husband and I ran. Once he had obtained all the information he needed, he went away and processed the numbers. 

A week later, he returned with a 3-point plan to help us mitigate the risk associated with our personal, company, and shareholder finances. He ensured our areas of exposure were covered, and from that day on, we continued to use John for any matters relating to these policies. 

When we needed our Financial Advisor

Fast forward 6 years, and although we no longer needed the company or shareholder policies, we maintained our personal policies based on advice from John. Good thing too, as following a burnout event, my husband was no longer able to work. We called up John and explained the situation. Straight away he helped us contact the insurance providers and guided us through the process of claiming our income protection. Happily, a year later, my husband was able to stop the claims and return to a normal working life.

Are we still using our Financial Advisor?

Since then, I have been working with John to assess our new financial position based on our current assets, day-to-day earnings and spending, work plans, future plans, and our wish to help our kids get through uni (if they decide to go). We have given him the financial details for how we live our lives now and how want to live them in the future. He has taken this information and shown us what our total net value will be worth over the next 40-50 years, and more importantly, when our money will run out! He has considered scenarios for not being able to work or earning different income amounts depending on different job situations, and what that means for our future security. Most importantly, he has shown us what financial risk and exposure looks like for us, and how we can mitigate that risk. 

What would we do now?

So, without the prompt from the company accountant, if I were asked 8 years ago, do I think I need a Financial Advisor, I would have probably said ‘nah, she’ll be alright”. Having lived through that last 8 years and come out on the other side, plus the fact we will never know what will happen in the next 10, 20 or 50 years, I would now say “absolutely – knowing what your financial situation will look like now and in the future can help you plan for your income, your expenses, and your risk mitigation”. 

A great financial advisor is someone who sees the bigger picture and helps you navigate through the complexities of the financial world.

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Do you need a Financial Advisor?

If you are thinking about becoming a sole trader or are already working for yourself, have a think about your financial position. If you are unsure what it looks like or where to start, think about engaging a financial advisor to help you. It doesn’t have to cost an arm and a leg and here at freemeup we can put you in touch with a trusted advisor. We believe that being supported when managing your business and personal finances helps to reduce the related stress and anxiety. Let us help you take care of the hard stuff, so you can enjoy doing the work you love, when you want, as a freemeup sole trader. 

Disclaimer: All content provided on freemeup.nz is for informational purposes only and is intended as a general information resource regarding the matters covered. It is not tailored to cover specific situations and circumstances and shouldn’t be taken as direct professional advice. Freemeup makes no representations to the accuracy or completeness of the information found on this site or found by following any links on this site and will not be held liable for any losses, injuries, or damages from the use of this information. 

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