Disclaimer
The articles and content provided on this website are for informational purposes only and do not
constitute professional advice. While every effort has been made to ensure the accuracy and
relevance of the information provided, the content is not intended to replace or serve as a
substitute for any accounting, tax, or other professional advice, consultation, or service. You are
encouraged to consult with a professional accountant or certified advisor for specific advice tailored
to your situation.
The views expressed in the articles are those of the author(s) and do not necessarily reflect the
official policy or position of any other agency, organization, employer, or company. Assumptions
made in the analysis are not reflective of the position of any entity other than the author(s) ā and,
since we are critically-thinking human beings, these views are always subject to change, revision,
and rethinking at any time.
Please note that the author(s) is not responsible for any errors or omissions, or for the results
obtained from the use of this information. All information on this site is provided “as is,” with no
guarantee of completeness, accuracy, timeliness, or the results obtained from the use of this
information, and without warranty of any kind, express or implied.
By using this website, you agree to absolve the website and the author(s) from any liability or loss
incurred in connection with the content provided here. This disclaimer is subject to change at any
time without notifications.
FromĀ April 1, 2024, there have been significant changes to theĀ depreciation rules for commercial buildingsĀ in New Zealand. Letās delve into the details:
- Depreciation Removal:
- Commercial building depreciation deductionsĀ can no longer be claimed by taxpayers.
- Technically, buildings are still considered ādepreciable property,ā but theĀ annual depreciation rate is set at 0%, rendering no deduction available.
- This change affectsĀ all commercial buildings with an estimated useful life of 50 years or more.
- Why the Change?:
- Before 2010, commercial buildings were depreciable for tax purposes.
- The restoration of commercial building depreciation in 2020 was initially deemed permanent.
- However, both major political parties campaigned on removing it to fund other tax policies.
- Inland Revenue estimates that this change will bring inĀ $2.31 billion of additional taxĀ over the forecast period (2024/25 ā 2027/28).
- Key Details:
- Effective Date: FromĀ April 1, 2024Ā (for standard balance date taxpayers).
- Buildings remain subject to depreciation rules, includingĀ depreciation recovery incomeĀ if sold above tax book value.
- Useful Life Determination: The estimated useful life of a building is determined based on a whole-of-life approach, considering the materials used in construction.
- Inland Revenueās Depreciation Rates: Taxpayers should refer to these rates to determine the correct estimated useful life for specific building types.
In summary, while this change increases tax revenue, it may prove costly for commercial building owners due to lost depreciation and compliance costs.
