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Determination DEP 83: Depreciation Rates for machinery used for grading, sorting and packing produce

Notes to Determination DEP 83

The Commissioner has been asked to set a depreciation rate for machinery used for grading, sorting and packing food and agricultural products.

These machines grade and sort a range of produce by scanning the items for defects such as size, colour and quality. The produce then passes further along the production line where they are weighed and packed into containers.

There is a range of machines, some more mechanically operated and some computerised and software dependent. Some of the machines are used in a person's own produce operation and some of the machines are hired on a short term basis.

The proposed new economic depreciation rates are aimed at covering the range of machines described above. We have also rationalised the Commissioner's table of depreciation rates by deleting those asset classes that are no longer necessary as they would come within the new asset classes.


This determination may be cited as "Determination DEP83: Machinery used for grading, sorting and packing produce".

1. Application

This determination applies to taxpayers who own items of depreciable property of the kind/s listed in the tables below:

The proposed new economic rates apply for the 2012 and subsequent income years. The rates being deleted continue to apply up to the date this determination is published in the Gazette.

2. Determination

Pursuant to section 91AAF of the Tax Administration Act 1994 I set in this determination the economic rate/s to apply to the kind/s of items of depreciable property listed in the table below by:

Deleting from the category AGRICULTURE, HORTICULTURE AND AQUACULTURE industry category, the assets class, estimated useful life and diminishing value rate and straight-line depreciation rate listed below:

Asset class Estimateduseful life(years) DV rate(%) SL rate (%)
Grading machinery
15.5
13
8.5
Grader (capsicums)
8
25
17.5
Graders (tomatoes)
8
25
17.5
Sorting machinery
15.5
13
8.5

Adding into the category AGRICULTURE, HORTICULTURE AND AQUACULTURE industry category, the new provisional asset class, estimated useful life, and diminishing value rate and straight-line depreciation rate listed below:

Asset class Estimated useful life DV rate (%) SL rate (%)
Grading machinery (computerised)
8
25
17.5
Grading machinery (non-computerised)
15.5
13
8.5
Sorting machinery (computerised)
8
25
17.5
Sorting machinery (non-computerised)
15.5
13
8.5
Packing machinery (computerised)
8
25
17.5
Packing machinery (non-computerised)
15.5
13
8.5

Deleting from the category FOOD PROCESSING industry category, the assets class, estimated useful life and diminishing value rate and straight-line depreciation rate listed below:

Asset class Estimated useful life (years) DV rate (%) SL rate (%)
Grader (capsicums)
8
25
17.5
Graders
15.5
13
8.5
Graders (tomatoes)
8
25
17.5
Sorters
15.5
13
8.5
Packing machines
(not elsewhere specified)
15.5
13
8.5

Adding into the category FOOD PROCESSING industry category, the new provisional asset class, estimated useful life, and diminishing value rate and straight-line depreciation rate listed below:

Asset class Estimated useful life (years) DV rate (%) SL rate (%)
Grading machinery (computerised)
8
25
17.5
Grading machinery (non-computerised)
15.5
13
8.5
Sorting machinery (computerised)
8
25
17.5
Sorting machinery (non-computerised)
15.5
13
8.5
Packing machinery (computerised) (not elsewhere specified)
8
25
17.5
Packing machinery (non-computerised) (not elsewhere specified)
15.5
13
8.5

Adding into the category HIRE EQUIPMENT (SHORT-TERM HIRE OF 1 MONTH OR LESS ONLY) asset category, the new provisional asset class, estimated useful life, and diminishing value rate and straight-line depreciation rate listed below:

Asset class Estimated useful life (years) DV rate (%) SL rate (%)
Agriculture, horticulture and aquaculture machines for hire with a general DV rate based on an estimated useful life of 8 years
5
40
30

3. Interpretation

In this determination, unless the context otherwise requires, words and terms have the same meaning as in the Income Tax Act 2007 and the Tax Administration Act 1994.

This determination is signed by me on the 3rd day of April 2013.

 

Rob Wells

LTS Manager, Technical Standards