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Income Tax Act 2007

Timing and quantifying rules - Depreciation - Definitions

EE 61: Meaning of annual rate

You could also call this:

"What 'annual rate' means for things that lose value over time"

Illustration for Income Tax Act 2007

When you own something that can depreciate, like a building or a machine, you need to know its annual rate. The annual rate is the rate at which the item depreciates each year. This rate is set by different sections of the Income Tax Act, such as section EE 31, section EE 33, or section EE 34, depending on what the item is and when you got it. If you got the item after 1995, the rate might be set by section EE 31. If the item is a special kind of property, like an international aircraft or a building, the rate might be set by a different section. Some items, like certain kinds of property, have a rate of 0%. In some cases, other sections of the Act, like section FA 11B, can override this section. You can find more information about the annual rate in the Income Tax Act. The rate you use depends on what kind of item you own and when you got it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514721.

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Part ETiming and quantifying rules
Depreciation: Definitions

EE 61Meaning of annual rate

  1. Annual rate means the annual depreciation rate applying to an item of depreciable property that a person owns. The rate is 1 of the rates described in subsections (2) to (5B).

  2. The rate is the rate set by section EE 31(2)(a) or (b), or by section EE 31(3)(a), as applicable, if both the following apply to the item:

  3. the person acquires it in their 1995–96 income year or a later income year; and
    1. the item is not dealt with in any of subsections (3) to (5).

      1. The rate is the rate set by section EE 31(2)(c), or by section EE 31(3)(b), as applicable, if the item is an international aircraft that the person acquires in their 1995–96 income year or a later income year.

      2. The rate is the rate set by section EE 31(2)(d), or by section EE 31(3)(c), as applicable, if the item is a building that—

      3. has an economic rate or provisional rate of more than 0% due to an estimated useful life of 50 years or more; and
        1. the person acquires in their 1995–96 income year or a later income year.

          1. The rate is the rate set by section EE 33 if both the following apply to the item:

          2. the item is an item of fixed life intangible property; and
            1. the item is not an item of excluded depreciable property.

              1. The rate is the rate set by section EE 34 if the item is a patent and section EE 34 applies to the item and the person.

              2. The rate is the rate set by section EE 34B if the item is a design registration and section EE 34B applies to the item and the person.

              3. The rate is the rate set by section EZ 13 (Annual rate for item acquired on or after 1 April 1993 and before end of person’s 1994–95 income year) if all the following apply to the item:

              4. the person acquired it before the end of their 1994–95 income year; and
                1. the item is not an item of fixed life intangible property; and
                  1. the item is not an item of excluded depreciable property.

                    1. The rate is the rate set by section EZ 15 (Annual rate for excluded depreciable property: 1992–93 tax year) if the item is an item of excluded depreciable property.

                    2. The rate is 0% for all depreciation methods if the item is an item of special excluded depreciable property that would be an item of excluded depreciable property but for the exclusion in section EE 64(3).

                    3. Section FA 11B(7) (Adjustments for certain operating leases) overrides this section.

                    Compare
                    Notes
                    • Section EE 61(1): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 127(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                    • Section EE 61(2): amended (with effect on 20 May 2010), on , by section 81(1) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
                    • Section EE 61(3): amended (with effect on 20 May 2010), on , by section 81(2) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
                    • Section EE 61(3B) heading: inserted, on (applying for the 2011–12 and later income years), by section 81(3) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
                    • Section EE 61(3B) heading: amended, on , by section 60(1) (and see section 60(5) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                    • Section EE 61(3B): inserted, on (applying for the 2011–12 and later income years), by section 81(3) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
                    • Section EE 61(3B): amended, on , by section 60(2) (and see section 60(5) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                    • Section EE 61(5B) heading: inserted (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 127(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                    • Section EE 61(5B): inserted (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 127(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                    • Section EE 61(7B) heading: replaced, on , by section 60(3) (and see section 60(5) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                    • Section EE 61(7B): replaced, on , by section 60(3) (and see section 60(5) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                    • Section EE 61(8) heading: inserted, on , by section 358 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                    • Section EE 61(8): inserted, on , by section 358 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                    • Section EE 61 list of defined terms building: inserted, on , by section 60(4)(b) (and see section 60(5) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                    • Section EE 61 list of defined terms building: repealed, on , by section 10(4)(a) (and see section 10(5) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).
                    • Section EE 61 list of defined terms design registration: inserted (with effect on 1 April 2015), on , by section 127(3) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                    • Section EE 61 list of defined terms economic rate: inserted, on (applying for the 2011–12 and later income years), by section 81(5) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
                    • Section EE 61 list of defined terms estimated useful life: inserted, on (applying for the 2011–12 and later income years), by section 81(5) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
                    • Section EE 61 list of defined terms provisional rate: inserted, on (applying for the 2011–12 and later income years), by section 81(5) of the Taxation (Budget Measures) Act 2010 (2010 No 27).
                    • Section EE 61 list of defined terms residential building: repealed, on , by section 60(4)(a) (and see section 60(5) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                    • Section EE 61 list of defined terms special excluded depreciable property: inserted, on , by section 60(4)(b) (and see section 60(5) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                    • Section EE 61 list of defined terms special excluded depreciable property: repealed, on , by section 10(4)(a) (and see section 10(5) for application) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).