Telecommunications Act 2001

Structural separation of Telecom - Taxation consequences of structural separation

69XO: Depreciation

You could also call this:

"How telecom companies claim loss when assets lose value over time"

Illustration for Telecommunications Act 2001

You need to understand how depreciation works for some assets. When a Telecom company has an asset that loses value over time, it can claim a deduction for that loss. The company does not get income from the asset's value increasing, and it does not claim a loss under certain sections of the Income Tax Act 2007. You should look at the Income Tax Act 2007 to understand what depreciable property, depreciation loss, and depreciation recovery income mean. After a certain day, another company, Chorus, must calculate the income and losses from the asset as if it had always owned it. Depreciable property, depreciation loss, and depreciation recovery income have the same meanings as in the Income Tax Act 2007.

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This page was last updated on 8 October 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4187716.

Topics:

Money and consumer rights > TaxesBusiness > Industry rules

69XN: Purpose, or

"This law helps prevent tax problems when assets are transferred from Telecom to Chorus."

69XP: Tax effect of distribution of ChorusCo shares, or

"Getting ChorusCo shares is tax-free"

Part 2AStructural separation of Telecom
Taxation consequences of structural separation

69XODepreciation

For the purposes of the Income Tax Act 2007, for a designated asset (the asset) that is depreciable property,—
the relevant Telecom company has a deduction for an amount of depreciation loss for the period beginning on the first day of the vesting year and ending on the day before the appointed day:
the relevant Telecom company does not derive depreciation recovery income and does not have a deduction for an amount of depreciation loss under sections EE 44 to EE 52 of the Income Tax Act 2007 as a result of the vesting of the asset:
the relevant Chorus company must calculate, on and after the appointed day, depreciation recovery income and deductions for amounts of depreciation loss as if, in respect of the period up to and including the appointed day, it and the Telecom company were the same person.

In this section, depreciable property, depreciation loss, and depreciation recovery income have the same meanings as in the Income Tax Act 2007.

Notes

Section 69XO: inserted, on 30 November 2011 (being the date of separation day, and an Order in Council (SR 2011/302) having been made under section 36), by section 51 of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Act 2011 (2011 No 27).