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Technical tax area Ngā tūmomo whakataunga me ngā aratohu

Election to depreciate plant and equipment at old rates

Section EE 26B of the Income Tax Act 2004

The rules covering the election to continue to depreciate plant and equipment at the old depreciation rates have been clarified for plant and equipment that has its depreciation rate set under a method other than section EE 25B.

Section EE 26B allows taxpayers to elect not to apply the new depreciation rates to plant and equipment acquired on or after 1 April 2005 and before the beginning of the 2006-07 income year. There was some uncertainty about whether section EE 26B applies to types of plant and equipment when the depreciation rate is not calculated under the new double declining balance method. The legislation has been amended to remove any uncertainty. This change applies for the 2005-06 and later income years.