Depreciation Allowances

Depreciation allows for the wear and tear on a fixed asset and is claimed as a deducted against your income.

Generally you can 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 Inland Revenue.

Not all fixed assets can be depreciated. Land is a common example of a fixed asset that cannot be depreciated.

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 the depreciation rates and the methods for calculating depreciation, please refer to the Inland Revenue Depreciation Guide.

To find out more on how to calculate depreciation on a business asset please give us a call or refer to the Inland Revenue Depreciation Rate Finder.

Depreciation of buildings

Depreciation on buildings with an estimated useful life of over 50 years ceased from the 2012 financial year.

Examples of buildings with an estimated useful life of less than 50 years that can still be depreciated are

  • Chicken shed
  • Cow shed
  • Wintering barns
  • Barns
  • Temporary buildings

Commercial buildings

The fit-out of commercial buildings is still depreciable.  It is therefore advisable to separate fit-out at the time of purchase.  Please contact us if you require assitance in identifying what can be treated as fit-out rather than the building itself.



Return to Tax Facts