Income Tax Act 2007

Timing and quantifying rules - Depreciation

EE 27: Economic rate for certain depreciable property

You could also call this:

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

You need to know about the economic depreciation rate for certain items. This rate does not apply to buildings or some other types of property. The Commissioner sets the rate from time to time. You should look at how the Commissioner sets the rate. They follow a procedure and issue a determination under section 91AAF of the Tax Administration Act 1994. The Commissioner uses a formula to work out the rate. The formula is 2 divided by the estimated useful life of the item. The estimated useful life is how many years the item will last. The Commissioner rounds the figure up or down to the nearest rate in schedule 11. The Commissioner can set the same rate for similar items if it is appropriate. They think about the rate for each item and the reduction in compliance costs. This helps the Commissioner make a decision about the rate.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514588.

This page was last updated on 29 January 2026 — View changes

Topics:

Money and consumer rights > Taxes

EE 26: Setting of economic depreciation rate, or

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

EE 28: Economic rate for buildings, or

"How buildings lose value over time"

Part ETiming and quantifying rules
Depreciation

EE 27Economic rate for certain depreciable property

This section is about setting the economic depreciation rate that applies to a kind of item of depreciable property.
This section does not apply to buildings, fixed life intangible property, excluded depreciable property, or property for which an economic rate is set under section EE 29 or EE 30.
The Commissioner sets the rate from time to time by—
following the procedure set out in this section; and
issuing a determination under section 91AAF of the Tax Administration Act 1994.

To set the diminishing value rate for a kind of item of depreciable property, the Commissioner—
obtains a figure by applying the formula in subsection (5) to items of that kind; and
rounds the figure up or down to the nearest rate specified in schedule 11, column 1 (New banded rates of depreciation); and
sets the same rate for some or all of the kinds of items of depreciable property that are similar to one another, if the Commissioner thinks it is appropriate to do so having regard to—
1. the rate calculated for each kind; and
2. the reduction in compliance costs that is likely to be achieved.

The formula is—
$2 ÷ estimated useful life.$

Where:
In the formula, estimated useful life is the estimated useful life of the item expressed in years.

Compare

2004 No 35 s EE 25B

Notes

Section EE 27 list of defined terms building: inserted (with effect on 30 July 2009), on 28 May 2010, by section 84 of the Taxation (Budget Measures) Act 2010 (2010 No 27).