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Income Tax Act 2007

Timing and quantifying rules - Depreciation

EE 26: Setting of economic depreciation rate

You could also call this:

"How to work out the depreciation rate for different items"

Illustration for Income Tax Act 2007

The economic depreciation rate is set for items under different sections. You can find the rate for some items in section EE 27, section EE 28, section EE 29, or section EE 30. Some items have their rate set under section EZ 23. You cannot set an economic depreciation rate for fixed life intangible property or excluded depreciable property. Some sections override others, like section EE 32 overriding subsections. The rules for setting economic depreciation rates are important for understanding how depreciation works. You need to look at the different sections to find the right rate for an item. The sections help you figure out the economic depreciation rate for different kinds of items.

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EE 27: Economic rate for certain depreciable property, or

"A special rate to help work out how much some items are worth over time"

Part ETiming and quantifying rules
Depreciation

EE 26Setting of economic depreciation rate

  1. The economic depreciation rate that applies to a kind of item of depreciable property is set under—

  2. section EE 27, for items that—
    1. are not buildings, fixed life intangible property, excluded depreciable property, or property for which an economic rate is set under section EE 29 or EE 30; and
      1. are acquired on or after 1 April 2005:
      2. section EE 28, for items that are buildings and—
        1. are acquired on or after 19 May 2005; and
          1. do not have an economic depreciation rate set under section EZ 23 (Economic rate for plant or equipment acquired before 1 April 2005 and buildings acquired before 19 May 2005):
          2. section EE 29, for certain aircraft and motor vehicles acquired on or after 1 April 2005:
            1. section EE 30, for items that—
              1. have an estimated residual market value greater than 13.5% of cost:
                1. would, in the absence of section EE 30, have an economic depreciation rate set under section EE 27 or EE 28:
                2. section EZ 23 for items that—
                  1. are not buildings, fixed life intangible property, or excluded depreciable property and are acquired before 1 April 2005:
                    1. are buildings acquired before 19 May 2005:
                      1. are buildings acquired on or after 19 May 2005, as relationship property or from a company in the same wholly-owned group of companies, from a person who applied to the item an economic depreciation rate set under section EZ 23 or a corresponding provision.

                      2. An economic depreciation rate must not be set for a kind of item of depreciable property that is fixed life intangible property or excluded depreciable property.

                      3. Subsection (1)(a), (c), and (d) are overridden by section EE 32.

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                      Notes
                      • Section EE 26 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).