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EE 27: Economic rate for certain depreciable property
or “Setting depreciation rates for certain property types”
You could also call this:

“How the tax office sets depreciation rates for buildings”

This section explains how the Commissioner sets the economic depreciation rate for buildings. The rate applies to buildings that don’t already have a rate set under other sections of the law.

To set the rate, the Commissioner follows a process and issues a determination. They use a formula to calculate a straight-line rate for each type of building. The formula is 1 divided by the estimated useful life of the building in years.

After calculating the rate, the Commissioner rounds it to the nearest rate in a special schedule. They can set the same rate for similar types of buildings to make things simpler.

If you made a deal to buy or build a building before 19 May 2005, you need to use a different economic rate. This rate is determined by another section of the law.

The Commissioner considers things like the calculated rate for each type of building and how to reduce paperwork when setting rates for similar buildings.

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Next up: EE 29: Economic rate for certain aircraft and motor vehicles

or “How certain aircraft and motor vehicles lose value for tax purposes”
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Part E Timing and quantifying rules
Depreciation

EE 28Economic rate for buildings

  1. This section is about setting the economic depreciation rate that applies to a kind of item of depreciable property that is a building and for which an economic rate is not set under section EE 30 or EZ 23 (Economic rate for plant or equipment acquired before 1 April 2005 and buildings acquired before 19 May 2005).

  2. The Commissioner sets the rate from time to time by—

  3. following the procedure set out in this section; and
    1. issuing a determination under section 91AAF of the Tax Administration Act 1994.

      1. To set the straight-line rate for a kind of item of depreciable property, the Commissioner—

      2. gets a figure by applying the formula in subsection (4) to items of that kind; and
        1. rounds the figure up or down to the nearest rate specified in schedule 11, column 4 (New banded rates of depreciation); and
          1. sets the same rate for some or all of the kinds of buildings 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
              1. the reduction in compliance costs that is likely to be achieved.

              2. The formula is—

                1 ÷ estimated useful life.

                Where:

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

                • Despite subsection (1), a person who before 19 May 2005 enters into a binding contract for the acquisition or construction of a building must apply to the building the economic rate for the kind of the building determined under section EZ 23.

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                Notes
                • Section EE 28(6): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                • Section EE 28 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).