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Income Tax Act 2007

Timing and quantifying rules - Depreciation - Adjusted tax value

EE 60: Total deductions in section EE 56

You could also call this:

“How to calculate total deductions for an item's adjusted tax value”

When calculating the total deductions for an item’s adjusted tax value, you need to add up several amounts:

  1. You need to include any amounts subtracted from the item’s adjusted tax value since the start of the 1993-94 income year, as required by certain sections of tax law.

  2. You also need to add all deductions for depreciation loss that you were allowed for the item. This includes deductions for patent applications, design registration applications, and geothermal wells in some cases. If you didn’t use the item wholly for business, you need to include the deductions you would have been allowed if you had.

  3. You need to include any deductions for depreciation loss for items not used in your business, but only if you have a deduction under section EE 39.

  4. You need to add any deductions allowed under sections DB 65 and DB 65B, which deal with allowances for commercial buildings.

The calculation uses the depreciation method you used in each relevant income year, or the diminishing value method if you didn’t make deductions for depreciation loss.

The period for this calculation starts at different times depending on the type of item and how you acquired it, and ends at the end of the income year before the current one.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514717.

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Part E Timing and quantifying rules
Depreciation: Adjusted tax value

EE 60Total deductions in section EE 56

  1. Total deductions is the total, calculated as at a particular time, of—

  2. the amount described in subsection (2); and
    1. the amount described in subsection (3); and
      1. the amount of a deduction under section EE 25; and
        1. the total amount of deductions allowed under sections DB 65, as in force before its repeal by section 4 of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020, and DB 65B (which deal with allowances for commercial buildings).

          1. The amount is all amounts that 1 or more of the following provisions has required to be subtracted from the item’s adjusted tax value since the start of the 1993–94 income year:

          2. section EE 52(2):
            1. section EE 44(2) of the Income Tax Act 2004:
              1. section EG 19(5) of the Income Tax Act 1994:
                1. the provision described in section EZ 22(4) (Base value and total deductions in section EE 56: before 1 April 1995); and
                  1. section EZ 23BA(4) (Aircraft acquired before 2017–18 income year: adjusted tax value, base value, reduced; total deductions increased).

                    1. The amount is all deductions for amounts of depreciation loss, calculated using the method described in subsection (4), that, in the period described in subsection (5),—

                    2. the person was allowed for the item and,—
                      1. if the item is a patent, for the patent application in relation to which the item was granted:
                        1. if the item is a design registration, for the design registration application in relation to which the item was granted:
                          1. if the item is a geothermal well that a person acquired under section EE 53(2), for the well before the person acquired it under that section; or
                          2. the person would have been allowed if they had used the item wholly in deriving assessable income or carrying on a business for the purpose of deriving assessable income.

                            1. Subsection (3)(b) does not apply in relation to an amount of depreciation loss for an item that is not available for use in deriving assessable income or carrying on a business for the purpose of deriving assessable income. However, this exclusion does not apply to an amount of depreciation loss for which the person has a deduction under section EE 39.

                            2. The method is—

                            3. the depreciation method that the person used in each relevant income year; or
                              1. the diminishing value method, if the person did not make deductions for amounts of depreciation loss for the item.

                                1. The period ends with the end of the income year before the income year in which the particular time occurs, and starts with,—

                                2. for an item to which section EE 57 applies,—
                                  1. unless subparagraph (ii), (iii), or (iv) applies, the date on which the person acquired the item; or
                                    1. if the item is a geothermal well that a person acquired under section EE 53(2), the earliest date on which the person acquired the well under section EE 6(4) or otherwise; or
                                      1. if the item is a patent and the person acquired the patent application in relation to which the patent was granted, the date on which the person acquired the patent application; or
                                        1. if the item is a design registration and the person acquired the design registration application in relation to which the design registration was granted, the date on which the person acquired the design registration application; or
                                        2. for an item to which section EE 58 applies,—
                                          1. unless subparagraph (ii) or (iii) applies, the beginning of the month in which the person started to use the item, or to have it available for use for the purpose of deriving assessable income or carrying on a business for the purpose of deriving assessable income; or
                                            1. if the item is a patent and the person acquired the patent application in relation to which the patent was granted, the beginning of the month in which the person acquired the patent application; or
                                              1. if the item is a design registration and the person acquired the design registration application in relation to which the design registration was granted, the beginning of the month in which the person acquired the design registration application; or
                                              2. for an item to which section EE 59 applies, the date on which person A or the relevant associated person acquired the item; or
                                                1. for an item to which section EZ 22(1) applies, to the item, the end of the 1992–93 income year.

                                                  Compare
                                                  Notes
                                                  • Section EE 60(1)(d): inserted, on , by section 9 of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
                                                  • Section EE 60(1)(d): amended, on , by section 59(1) (and see section 59(2) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                                                  • Section EE 60(2)(d): amended, on , by section 67(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                                                  • Section EE 60(2)(e): inserted, on , by section 67(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                                                  • Section EE 60(2)(e): amended, on (with effect on 1 April 2017 and applying for the 2017–18 and later income years), by section 69(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                                                  • Section EE 60(3)(a)(ib): inserted (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 126(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                                  • Section EE 60(3B) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 47(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                                                  • Section EE 60(3B): inserted (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 31(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                                  • Section EE 60(3B): amended (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 47(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                                                  • Section EE 60(5)(a)(i): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 126(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                                  • Section EE 60(5)(a)(ii): amended (with effect on 1 April 2008), on , by section 37 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                                                  • Section EE 60(5)(a)(iv): inserted (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 126(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                                  • Section EE 60(5)(b)(i): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 126(4) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                                  • Section EE 60(5)(b)(iii): inserted (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 126(5) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                                  • Section EE 60 list of defined terms design registration: inserted (with effect on 1 April 2015), on , by section 126(6) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                                  • Section EE 60 list of defined terms design registration application: inserted (with effect on 1 April 2015), on , by section 126(6) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).