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Income Tax Act 2007

Timing and quantifying rules - Depreciation

EE 33: Annual rate for fixed life intangible property

You could also call this:

“Calculating the yearly rate for property with a fixed legal lifespan”

This section talks about how you figure out the yearly rate for fixed life intangible property. Fixed life intangible property is something you can’t touch but has value for a set time.

You don’t use this method for some special types of property. These include excluded depreciable property from the 1992-93 tax year, design registrations, and patents. These have their own ways to work out the rate.

To find the rate, you use a simple math formula. You divide 1 by the legal life of the property. The legal life is how long the property will last according to the law.

There are two ways to work out the legal life:

  1. If section EE 18B or EE 19 apply, you use the remaining legal life from the start of the income year when you recognise the costs.

  2. If those sections don’t apply, you use the remaining legal life from when you got the property.

After you do the math, you turn the answer into a decimal. You round it to two decimal places. If the third decimal is 5 or more, you round up. If it’s less than 5, you round down.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514611.

Topics:
Money and consumer rights > Taxes
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EE 34: Annual rate for patent granted in 2005–06 or later income year, or

“Yearly rate calculation for patents granted from 2005-06 onwards”

Part E Timing and quantifying rules
Depreciation

EE 33Annual rate for fixed life intangible property

  1. This section is about the annual rate that applies to an item of fixed life intangible property, not including—

  2. an item of excluded depreciable property for which a rate is set in section EZ 15 (Annual rate for excluded depreciable property: 1992–93 tax year):
    1. a design registration for which a rate is set in section EE 34B:
      1. a patent for which a rate is set in section EE 34.

        1. The rate is the rate calculated using the formula—

          1 ÷ legal life.

          Where:

          • In the formula, legal life is,—

          • if section EE 18B or EE 19 apply, the item’s remaining legal life from the start of the income year in which the relevant costs are recognised under the section:
            1. if sections EE 18B and EE 19 do not apply, the item’s remaining legal life from the time at which a person acquires it.

              1. The rate given by the formula is expressed as a decimal and rounded to 2 decimal places, with numbers at the midpoint or greater being rounded up and other numbers being rounded down.

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              Notes
              • Section EE 33(1)(ab): inserted (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 121(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
              • Section EE 33(3)(a): replaced (with effect on 1 April 2011 and applying for the 2011–12 and later income years), on , by section 121(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
              • Section EE 33(3)(b): amended (with effect on 1 April 2011 and applying for the 2011–12 and later income years), on , by section 121(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
              • Section EE 33 list of defined terms design registration: inserted (with effect on 1 April 2015), on , by section 121(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).