Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Timing and quantifying rules - Depreciation

EE 34B: Annual rate for design registrations

You could also call this:

“How to work out the yearly rate for claiming design registration costs”

This section of the law explains how to calculate the annual rate for design registrations. You need to use a formula to figure out this rate. The formula is 1 divided by the ‘legal life’ of the design.

The ‘legal life’ of a design can be different depending on your situation. It might be the remaining legal life from when you first recognised the costs of the design. Or, it could be the remaining legal life of the design application, if that’s what you’ve been using before.

When you use the formula, you’ll get a number. You need to round this number to two decimal places. If the third decimal is 5 or more, round up. If it’s less than 5, round down.

This rule helps you work out how much you can claim each year for the cost of your design registration. It’s a way to spread the cost over the time the design is legally protected.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6766168.

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Part E Timing and quantifying rules
Depreciation

EE 34BAnnual rate for design registrations

  1. This section applies to an item that is a design registration (the design).

  2. The rate is the rate calculated using the formula—

    1 ÷ legal life.

    Where:

    • In the formula, legal life is set out in whichever of subsections (4) to (7) applies to the design.

    • If the design is an item to which section EE 18B or EE 19 applies, legal life is the design’s remaining legal life from the start of the income year in which the relevant costs are recognised under the section.

    • If sections EE 18B and EE 19 do not apply to the design and the person has been denied a deduction for an amount of depreciation loss for the design’s design registration application (the design application), legal life is the design’s remaining legal life from the first time a cost is recognised for the design under this subpart.

    • If sections EE 18B and EE 19 do not apply to the design, and have not applied to the design application while the person has owned it, and the person has been allowed a deduction for an amount of depreciation loss for the design application, legal life is the remaining legal life of the design application from the first time a cost is recognised for the application under this subpart.

    • If sections EE 18B and EE 19 do not apply to the design, but have applied to the design application while the person has owned it, and the person has been allowed a deduction for an amount of depreciation loss for the design application, legal life is the remaining legal life of the design application from the first time a cost is recognised for the design under this subpart.

    • The rate calculated using the formula is expressed as a decimal and rounded to 2 decimal places, with numbers at the midpoint or greater being rounded up and other numbers being rounded down.

    Notes
    • Section EE 34B: inserted (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 123(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).