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Income Tax Act 2007

Timing and quantifying rules - Depreciation

EE 14: Diminishing value or straight-line method: calculating amount of depreciation loss

You could also call this:

“Calculating the loss in value for your assets”

When you want to work out how much depreciation loss you have for something you own that loses value over time, you need to look at two different amounts and choose the smaller one. This applies to most things that can lose value, like equipment or buildings.

If you own something related to petroleum (like oil drilling equipment), you also need to compare two amounts and pick the smaller one. But in this case, you use a slightly different set of rules to figure out one of those amounts.

To find out exactly what these amounts are and how to calculate them, you’ll need to look at sections EE 15 and EE 16 for regular items. For petroleum-related items, you’ll need to check sections EE 15 and EE 17.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514532.

Topics:
Money and consumer rights > Taxes
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EE 13: Application of sections EE 14 to EE 19, or

“Rules for calculating how much your assets lose value over time”

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EE 15: Amount of adjusted tax value, or

“How to calculate an item's value at the end of the income year”

Part E Timing and quantifying rules
Depreciation

EE 14Diminishing value or straight-line method: calculating amount of depreciation loss

  1. The amount of depreciation loss that the person has for an income year for an item of depreciable property is the lesser of the amounts dealt with in sections EE 15 and EE 16.

  2. The amount of depreciation loss that the person has for an income year for an item of petroleum-related depreciable property is the lesser of the amounts dealt with in sections EE 15 and EE 17.

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