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Income Tax Act 2007

Timing and quantifying rules - Depreciation - Adjusted tax value

EE 57: Base value in section EE 56 when none of sections EE 58, EE 59, and EZ 22(1) applies

You could also call this:

“How to calculate an item's base value when standard rules don't apply”

This section explains how to figure out the base value of an item when other specific rules don’t apply. The base value is usually the cost of the item to you. However, there are some important things to know about what counts as the cost:

Some money you spend isn’t included in the cost if you’ve already gotten a tax deduction for it under certain rules. But money you’ve spent that you got a tax deduction for under other rules is still included in the cost.

If you spent money on things like patent applications, design registrations, plant variety rights, or resource consents, and you had to pay tax on income related to these because of a specific rule, that spending is included in the cost.

There are also some special rules about what spending is included or not included in the cost for items you got before April 1995.

Remember, these rules are part of figuring out the ‘adjusted tax value’ of something for income tax purposes.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514707.

Topics:
Money and consumer rights > Taxes
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EE 56: Formula, or

“How to calculate the adjusted tax value of an asset”

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EE 58: Base value in section EE 56 when no previous deduction, or

“Calculating value of previously unclaimed items for tax purposes”

Part E Timing and quantifying rules
Depreciation: Adjusted tax value

EE 57Base value in section EE 56 when none of sections EE 58, EE 59, and EZ 22(1) applies

  1. This section applies when none of sections EE 58, EE 59, and EZ 22(1) (Base value and total deductions in section EE 56: before 1 April 1995) applies.

  2. Base value is the cost of the item to the person.

  3. In this section, cost is qualified as follows:

  4. expenditure is excluded from it if it is expenditure for which a person has been allowed a deduction for an amount of depreciation loss they have had under section EE 38(3) or EE 48(2) or the corresponding provision of the Income Tax Act 2004 or the Income Tax Act 1994; and
    1. expenditure is not excluded from it if it is expenditure for which a person has been allowed a deduction for an amount of depreciation loss they have had under any other provision of this subpart or the corresponding provision of the Income Tax Act 2004 or the Income Tax Act 1994; and
      1. expenditure is excluded from it if it is expenditure for which a person has been allowed a deduction under any other subpart or the corresponding provision of the Income Tax Act 2004 or the Income Tax Act 1994; and
        1. expenditure is included in it if the item is a patent application, a patent, a design registration, a design registration application, plant variety rights, or a resource consent under the Resource Management Act 1991 and the expenditure has given rise under section CG 7B (Disposals or applications after earlier deductions) to a corresponding amount of income relating to the item; and
          1. expenditure—
            1. is not excluded from it if it is described in section EZ 22(2)(a); and
              1. is excluded from it if it is described in section EZ 22(2)(b) or EZ 23BA(2) (Aircraft acquired before 2017–18 income year: adjusted tax value, base value, reduced; total deductions increased).

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              Notes
              • Section EE 57(3)(cb): inserted (with effect on 1 April 2014 and applying for the 2014–15 and later income years), on , by section 67(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
              • Section EE 57(3)(cb): amended, on , by section 6 of the Resource Management (Natural and Built Environment and Spatial Planning Repeal and Interim Fast-track Consenting) Act 2023 (2023 No 68).
              • Section EE 57(3)(cb): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 125(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
              • Section EE 57(3)(d)(ii): amended, on , by section 65 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
              • Section EE 57 list of defined terms design registration: inserted (with effect on 1 April 2015), on , by section 125(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
              • Section EE 57 list of defined terms design registration application: inserted (with effect on 1 April 2015), on , by section 125(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).