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Depreciation

IRD - 20 January 2012

Depreciation allows for the wear and tear on a fixed asset and must be deducted from your income.

Generally you must claim depreciation on fixed assets used in your business that have a useful lifespan of more than 12 months, but not all fixed assets can be depreciated. Land is a common example of a fixed asset that cannot be depreciated.

From the 2011/2012 income year, buildings with an estimated useful life of 50 years or more can no longer be depreciated if they were acquired after 20 May 2010.

You will have to keep a fixed asset register to show assets you will be depreciating. This should show the depreciation claimed and adjusted tax value of each asset. The adjusted tax value is the asset's cost price, less all depreciation calculated since purchase.

To view prevailing depreciation rates and methods of calculating depreciation, please check the IRD Depreciation Guide.

To calculate depreciation on a business asset please use the IRD Depreciation Rate Finder.

All information is correct at the date of article publication. Please note we provide the information as a service only. Accordingly, the contents are not intended as a substitute for specific professional advice and should not be relied upon for that purpose.

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