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Income Tax Act 2007

Timing and quantifying rules - Depreciation

EE 7: What is not depreciable property?

You could also call this:

“Items you can't claim depreciation on for tax purposes”

You can’t claim depreciation on certain types of property. This includes land, except for buildings, fixtures, and some improvements listed in schedule 13. You also can’t claim depreciation on leases of land that can be renewed forever, things you sell as part of your business, most farm animals, financial arrangements, and property that won’t lose value because you’ll be paid for any loss when you sell it.

You can’t claim depreciation on parts of aircraft or aircraft engines if the cost is treated as an aircraft engine overhaul. Utilities distribution networks are also not depreciable, except for some related assets.

If you choose not to treat something as depreciable under section EE 8 or EE 38, you can’t claim depreciation on it. You also can’t claim depreciation on property if someone else is allowed to claim a deduction for its cost, or if you’re allowed a deduction for its cost under a different part of this Act or an earlier Act.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514512.

Topics:
Money and consumer rights > Taxes
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EE 6: What is depreciable property?, or

“Property that loses value over time when used for business or taxable activities”

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EE 8: Election that property not be depreciable, or

“Choosing not to claim depreciation on property”

Part E Timing and quantifying rules
Depreciation

EE 7What is not depreciable property?

  1. The following property is not depreciable property:

  2. land other than depreciable intangible property, although buildings, fixtures, and the improvements listed in schedule 13 (Depreciable land improvements) are depreciable property if they are described by section EE 6(1):
    1. a lease of land with a perpetual right of renewal:
      1. trading stock:
        1. livestock to which subpart EC (Valuation of livestock) applies:
          1. financial arrangements:
            1. excepted financial arrangements other than depreciable intangible property:
              1. property that will not decline in value, as far as its owner is concerned, because, when they dispose of it, they have a right to be compensated for any decline in its value:
                1. property that is a piece of an item of depreciable property that is an aircraft or an aircraft engine, if the expenditure on the piece is treated under section DW 5(8) (Aircraft operators: aircraft engines and aircraft engine overhauls) as being expenditure incurred in carrying out an aircraft engine overhaul:
                  1. a utilities distribution network, to the extent to which it is treated as an item of property separate from the relevant utilities distribution assets:
                    1. property that its owner chooses, under section EE 8, to treat as not depreciable:
                      1. property that its owner chooses, under section EE 38, to deal with under that section:
                        1. property for whose cost a person other than the property’s owner is allowed a deduction:
                          1. property for whose cost a person is allowed a deduction under a provision of this Act outside this subpart or under a provision of an earlier Act.

                            Compare
                            Notes
                            • Section EE 7(a): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 46(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                            • Section EE 7(ab): inserted, on , by section 65(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                            • Section EE 7(c): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 65(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                            • Section EE 7(e): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 46(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                            • Section EE 7(fb): inserted, on (applying for the 2017–18 and later income years), by section 59(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                            • Section EE 7(fc): inserted (with effect on 1 April 2008), on , by section 51(1) (and see section 51(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                            • Section EE 7(j): amended, on (with effect on 1 April 2014), by section 66 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                            • Section EE 7 list of defined terms aircraft engine: inserted, on , by section 59(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                            • Section EE 7 list of defined terms aircraft engine overhaul: inserted, on , by section 59(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                            • Section EE 7 list of defined terms building: inserted (with effect on 30 July 2009), on , by section 84 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
                            • Section EE 7 list of defined terms depreciable intangible property: inserted (with effect on 1 April 2008), on , by section 46(3) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                            • Section EE 7 list of defined terms land: inserted (with effect on 1 April 2008), on , by section 46(3) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                            • Section EE 7 list of defined terms utilities distribution asset: inserted (with effect on 1 April 2008), on , by section 51(2) (and see section 51(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                            • Section EE 7 list of defined terms utilities distribution network: inserted (with effect on 1 April 2008), on , by section 51(2) (and see section 51(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).