You cannot claim the cost of a tangible asset as a business
expense against your income. Instead, you must depreciate the item
- similar to allocating the cost of an item over its useful life,
allowing for its wear and tear each year.
For tax and accounting purposes, depreciation must be deducted
from your income forall fixed assets that you expect to use for
business purposes for a year or more.
Not all fixed assets can be depreciated. Land, for example,
You will need to keep a fixed asset register, to show all the
assets you will be depreciating - showing the depreciation claimed
and the adjusted tax value of each asset.
The adjusted tax value is the asset's cost price, minus all the
depreciation you have calculated (year on year) since it was
There are two methods of depreciating assets - the diminishing
value method and the straight-line method. You are able to choose
what method you use to depreciate each asset, each financial year.
Your accountant can advise the best method for each asset.
In special circumstances, you may also elect not to depreciate
an asset by applying to the IRD.
To view depreciation rates and the methods for calculating
depreciation, please refer to the IRD Depreciation
The IRD recommend consulting a tax agent when accounting
for depreciation. To find a Staples Rodway tax specialist near you,