Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
EE 50: Amount of depreciation loss when item partly used to produce income
or “How to calculate depreciation when an item is used partly for business”
You could also call this:

“How to calculate tax on recovered items previously claimed as lost or stolen”

This law applies when you lose or have an item stolen, but later get it back. If you still own the item and can use it, here’s what happens:

You’re treated as if you bought the item again on the day you got it back. The price you’re treated as paying is what the item was worth for tax purposes at the start of the year you lost it.

You’ll also have to report some income related to the depreciation of the item. This income is equal to the amount of depreciation loss you were allowed to deduct from your taxes for the item.

You can choose when to report this income. You can either report it in the tax year when you lost the item, or in the tax year when you got it back.

This law is part of section EE 47(3) of the Income Tax Act 2007, which deals with depreciation recovery income. The amount of depreciation loss mentioned is calculated according to section EE 48(2) of the same Act.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: EE 52: Amount of depreciation recovery income when compensation received

or “How to calculate recovery income when you get insurance or compensation for an item”
Next

Part E Timing and quantifying rules
Depreciation

EE 51Amount of depreciation recovery income when lost or stolen items recovered

  1. This section applies when an item of property to which section EE 47(3) applies—

  2. is recovered in a later income year; and
    1. is still owned by the person; and
      1. is still used or available for use by the person.

        1. The person is treated as having acquired the item, on the date of recovery, for its adjusted tax value at the start of the income year in which it was lost or stolen.

        2. The person is treated as deriving an amount of depreciation recovery income equal to the amount of depreciation loss that the person has under section EE 48(2) for which they have been allowed a deduction.

        3. The income year in which the person derives the depreciation recovery income is—

        4. the income year in which the item is lost or stolen, if the person chooses that year; or
          1. the income year in which the item is recovered, in any other case.

            Compare