Recent tax changes and new technology tools could make a real difference for farming businesses. From the Investment Boost tax deduction to Fringe Benefit Tax (FBT) rules on staff gifts, it’s important for farmers to understand how these updates may affect their tax position.
Below are three key updates our farming clients should be aware of.
1. Investment Boost: Immediate Additional Tax Deduction for Farm Assets
The Government’s Investment Boost allows businesses to claim an immediate 20% tax deduction on qualifying assets purchased after 22 May 2025.
For farmers, this could apply to a wide range of new-to-New Zealand farm assets, including:
Machinery and equipment
- Milking systems
- Tractor implements
- Drafting gates and cattle crushes
- Tractors
Farm infrastructure
- Solar pump setups for water reticulation
- Irrigation systems
- Farm workshops
- Halter towers
- In-shed feeding systems
The 20% Investment Boost deduction is in addition to normal depreciation. However, like depreciation, if the asset is later sold for more than its book value, depreciation recovery may apply and tax may be payable.
For farms planning capital upgrades, this incentive may help reduce tax while improving productivity.
2. Hubdoc: A Simpler Way to Manage Farm Receipts
Many farmers still keep a shoebox full of paper receipts — but tools like Hubdoc make record-keeping much easier.
Included with all Xero subscriptions, Hubdoc is a cloud-based document management and data capture tool that automatically stores and processes invoices and receipts.
With Hubdoc you can:
- Forward supplier invoices directly to your Hubdoc email address or take a picture of a paper invoice with the Hubdoc App
- Automatically capture key invoice data
- Store receipts securely in the cloud
- Reduce paperwork at tax time
For busy farming businesses, this can save time and improve record keeping for GST and tax purposes.
3. Tax on Vouchers, Prezzy Cards, and FarmSource Rewards
The IRD has recently reminded farmers to include FarmSource Rewards dollars in their tax calculations. For some farming businesses, these rewards can add up to thousands of dollars of taxable income.
It’s also important to remember that staff gifts such as:
- Prezzy Cards
- Visa or Mastercard gift cards
- Supermarket gift cards
Are generally subject to Fringe Benefit Tax (FBT) if they exceed the de minimis exemption.
The current exemption thresholds are:
- Under $300 per employee per quarter, and
- Less than $22,500 total across all employees per year
If both thresholds are met, FBT will not apply.
Examples:
- A $400 Prezzy Card at Christmas will trigger FBT.
- A $200 Prezzy Card at Easter and $200 at Christmas will be exempt (assuming the $22,500 annual limit is not exceeded).
Understanding these thresholds can help farming businesses reward staff without creating unexpected tax costs.
Need help navigating these changes?
Tax rules and new technology tools are constantly evolving, and understanding how they apply to your farming business can make a significant difference.
If you’re considering investing in new farm equipment, reviewing your FBT obligations, or improving your bookkeeping systems, our team is here to help.
Get in touch with us today to discuss how these updates may affect your farm and how we can help you make the most of the available tax opportunities.
