Changes to tax depreciation rules in November
Hon Dr Michael Cullen Minister of Revenue
22 September 2004
Changes to tax depreciation rules in November legislation
A number of technical improvements to tax depreciation rules are to be included in legislation to be introduced by the Government in November, Revenue Minister Michael Cullen announced today.
“The changes will make the operation of tax depreciation rules more efficient which should reduce compliance costs for business taxpayers,” Dr Cullen said.
“Compliance costs will be reduced by measures that clarify and improve the application of various depreciation provisions and make special depreciation rules more flexible and more accessible to taxpayers,” he said.
The proposed changes are:
Deductions to allow for losses resulting from building and farm land improvements being irreparably damaged as the result of events outside a taxpayer’s control, such as natural disasters;
Depreciation deduction for a patent which is granted will include the period from the date the application was lodged to the date it was actually granted;
A relaxation of special tax depreciation rules to allow Inland Revenue greater flexibility in setting special depreciation rates;
Plant variety rights and the right to use them will be specifically included in law as depreciable intangible property.
The proposed changes are the first to be included in legislation of those canvassed in the July issues paper, ‘Repairs and maintenance to the tax depreciation rules’.
They will be included in a taxation bill planned for introduction in November and are expected to apply from the 2005-06 income year.