Running a business means spending money on gear — laptops, tools, chairs, shelves, even that coffee machine for the office. But did you know that if the item falls under the low value assets threshold, you can deduct the full cost right away instead of depreciating it over several years?
In New Zealand, the low value assets threshold is currently $1,000 (excluding GST). That means if you buy something for your business under this limit, and it qualifies under IRD’s criteria, you can write it off immediately in your tax return.
It’s a great way to simplify your accounting and reduce your taxable income — but only if you know the rules.
In this guide, we’ll explain how the low value asset IRD rules work, what qualifies, what doesn’t, and how to claim it correctly.
What is the low value assets threshold?
The low value assets threshold is the maximum amount you can spend on a business asset and still claim the full cost as an expense upfront, without having to depreciate it over several years.
It’s a simple rule designed by Inland Revenue (IRD) to make life easier for small businesses and sole traders. If your asset costs $1,000 or less (excluding GST), and it’s used for business purposes, you can write it off immediately in your tax return.
This helps you:
- Simplify your asset register
- Save time on depreciation calculations
- Get a faster tax deduction
What is the current threshold in NZ?
As of 2025, the low value assets threshold in NZ is $1,000 excluding GST.
Key points:
- This applies to each individual item, not the total invoice
- It includes both new and second-hand assets
- If you’re GST registered, the threshold is measured before GST
- If you’re not GST registered, include GST when checking the $1,000 limit
A quick historical note:
The threshold used to be $500 but was temporarily increased to $5,000 in 2020–2021 due to COVID-19 tax relief measures. It’s now settled at $1,000 going forward. As you can see, rules are changing fast ! Make sure you know the latest tax updates for 2025.
What can be claimed as a low value asset?
To qualify, the asset must:
- Cost $1,000 or less (ex GST if GST-registered)
- Be used for business purposes only
- Be a standalone item, not part of a group
Examples:
- A $950 desk for your home office
- A $700 drill for a tradie
- A $980 second-hand laptop
Can I claim this asset under the threshold?
| Asset | Cost (ex GST) | Part of a Group? | Claimable in Full? |
|---|---|---|---|
| Office chair | $450 | No | ✅ Yes |
| Laptop (standalone) | $980 | No | ✅ Yes |
| Printer + scanner bundle (1 invoice) | $1,400 | Yes | ❌ No (must depreciate) |
| Kitchen fridge for break room | $1,050 | No | ❌ No (over threshold) |
| 3 bar stools (itemised $300 each) | $900 total | No | ✅ Yes |
How to record and claim a low value asset
You won’t need to add the asset to your depreciation schedule — but that doesn’t mean you can forget it altogether.
Best practices:
- Record the purchase in your accounting software (e.g. Xero, MYOB, Hnry)
- Keep the receipt and note the business purpose
- Enter it as an expense, not a fixed asset
- Claim the full deduction in the year of purchase
Tip:
If you’re unsure whether to expense or depreciate an asset, have a look on the IRD website or talk to your accountant before filing — especially near the end of the financial year when you’re making bigger purchases.
Make the most of the threshold
The low value assets threshold is a simple but powerful tool to reduce your tax bill and keep your accounting streamlined. If you’re buying gear for your business that costs $1,000 or less (ex GST), chances are you can write it off immediately without worrying about depreciation.
Just remember: the asset must be standalone, used 100% for business, and under the threshold per item — not per invoice.
Need help figuring out what qualifies? At BH Accounting, we can help you track your purchases, stay compliant, and make smarter tax decisions — one asset at a time.
FAQ about the low value assets threshold NZ
Can I claim GST on a low value asset too?
Yes — if you’re GST registered, you can claim the GST portion as usual in your GST return.
What happens if an asset costs just over $1,000?
It must be capitalised and depreciated over time. The threshold is strict — even $1 over disqualifies the item.
Does this rule apply to sole traders?
Yes. The same threshold applies whether you operate as a sole trader, company, partnership, or trust.
Can I claim multiple assets from one invoice?
Yes — as long as each item individually is under the threshold. Don’t try to bundle or split invoices to fit the rule.
Is there a limit to how many assets I can write off?
No. You can claim as many low value assets as you like — as long as each one qualifies.
Disclaimer
This article is for information only—not legal, financial, or tax advice. Every business is different, and rules change, so don’t make major decisions based on what you read here. If you’re unsure, talk to a professional—it’s cheaper than fixing a costly mistake later.