Tax Facts

Depreciation Allowances

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 lifespan of more than 12 months. However in special circumstances you can elect not to depreciate an asset by applying to the IRD.

Not all fixed assets can be depreciated. Land is a common example of a fixed asset that cannot be depreciated. Also, from the 2011/2012 income year, buildings with an estimated useful life of 50 years or more can not be depreciated if they were acquired after 20 May 2010.

You will need 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 the depreciation rates and the methods for calculating depreciation, please refer to the IRD Depreciation Guide.

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