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Income Tax Act 2007

Timing and quantifying rules - Depreciation

EE 9: Description of elements of calculation

You could also call this:

“Elements involved in calculating depreciation loss”

You’ll learn about how to calculate depreciation loss. There are three methods you can use: the straight-line method, the diminishing value method, and the pool method. These methods are explained in sections EE 12 to EE 24.

The rates of depreciation are also important. There’s the economic rate, the annual rate, and special or provisional rates. You can find information about these in sections EE 26 to EE 36.

Sometimes, you might improve an item, have a low-value item, or stop using an item. Sections EE 37 to EE 39 tell you what to do in these cases.

If you transfer items during certain business mergers or between related people, sections EE 40 to EE 43 explain what to do.

When you get rid of property or something similar happens, sections EE 44 to EE 52 have the details you need.

There are also some important definitions and explanations in sections EE 54 to EE 67. These cover things like how GST affects cost and what ‘adjusted tax value’ means.

Lastly, if you have items from before 24 September 1997, sections EZ 9 to EZ 28 tell you what to do with them.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514518.

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Part E Timing and quantifying rules
Depreciation

EE 9Description of elements of calculation

  1. Sections EE 12 to EE 24 deal with the methods of calculating an amount of depreciation loss. The methods are—

  2. the straight-line method, which is dealt with in sections EE 13 to EE 19; and
    1. the diminishing value method, which is also dealt with in sections EE 13 to EE 19; and
      1. the pool method, which is dealt with in sections EE 20 to EE 24.

        1. Sections EE 26 to EE 36 deal with the rates of depreciation. The rates are—

        2. the economic rate, which is dealt with in section EE 26; and
          1. the annual rate, which is dealt with in sections EE 31, EE 33, and EE 34; and
            1. a special rate or a provisional rate, both of which are dealt with in sections EE 35 and EE 36.

              1. Sections EE 37 to EE 39 deal with the cases of—

              2. an improvement made to an item of depreciable property; and
                1. an item of depreciable property that is of low value; and
                  1. an item of depreciable property that is no longer used.

                    1. Sections EE 40 to EE 43 deal with the transfer of items of depreciable property in certain amalgamations and between associated persons.

                    2. Sections EE 44 to EE 52 deal with disposals of property and events that involve property and are similar to disposal.

                    3. Sections EE 54 to EE 67 deal with the following interpretation matters:

                    4. section EE 54 deals with the effect of goods and services tax (GST) on cost; and
                      1. sections EE 55 to EE 60 deal with the meaning of adjusted tax value; and
                        1. sections EE 61 to EE 67 contain definitions.

                          1. Sections EZ 9 to EZ 28 (which relate to depreciation) deal with items acquired in periods before 24 September 1997.

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