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
4. issuing a determination under section 91AAF of the Tax Administration Act 1994.

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

6. gets a figure by applying the formula in subsection (4) to items of that kind; and
7. rounds the figure up or down to the nearest rate specified in schedule 11, column 4 (New banded rates of depreciation); and
8. 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
   2. the reduction in compliance costs that is likely to be achieved.

9. The formula is—

   $1\; ÷\; estimated\; useful\; life.$

   Where:

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

11. 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.