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New Zealand law explained for everyone

Income Tax Act 2007

Timing and quantifying rules - Terminating provisions

EZ 19: Section EZ 17 amount of depreciation loss when person previously exempt from tax acquires item

You could also call this:

“Calculating depreciation for items acquired when you were tax-exempt”

When you start making money that isn’t tax-free, this law might apply to you. It’s about things you own that lose value over time, like equipment or buildings.

If you used to only make tax-free money, but now you’re making money that can be taxed, you need to know about this. It matters if you bought something or made big improvements to it when you were only making tax-free money.

The law treats it as if you had been losing money on that item all along, even when you weren’t paying taxes. This helps figure out how much the item is worth now for tax purposes.

You can find more details about this in section EZ 17. That section explains how to work out the money you’ve lost on the item over time, which is called depreciation loss.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516051.

Topics:
Money and consumer rights > Taxes
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EZ 18: Section EZ 17 amount of depreciation loss when items transferred between companies in wholly-owned group before 1 April 1993, or

“Depreciation rules for items sold between related companies before April 1993”

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EZ 20: Adjusted tax value for software acquired before 1 April 1993, or

“How to calculate the tax value of software purchased before April 1993”

Part E Timing and quantifying rules
Terminating provisions

EZ 19Section EZ 17 amount of depreciation loss when person previously exempt from tax acquires item

  1. This section applies when a person who has derived nothing but exempt income—

  2. starts in an income year to derive income that is not exempt income; and
    1. would have had an amount of depreciation loss under section EZ 17 for an item and an income year if the person had been deriving income that was not exempt income at the time they acquired the item to which section EZ 17 applies or made a qualifying improvement to the item to which section EZ 17 applies.

      1. The item’s qualifying capital value is determined as if the person had had an amount of depreciation loss for the period during which they derived nothing but exempt income.

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