- 7 May - PAYE (5th on weekend)
- 7 May - GST, Prov Tax
- 21 May - PAYE, RWT, N-RWT (20th on weekend)
- 28 May - GST, Prov Tax
- 31 May - RWT, FBT
Building Depreciation Update
Legislation passed as a result of the May 2010 Budget eliminated depreciation for most buildings that had a useful life of over 50 years.
After the legislation was passed there was considerable uncertainty in a commercial context regarding what part of a structure would be classified as “building” versus “fit-out” (which can continue to be depreciated). The IRD had previously provided its view on the issue, but in a residential rental context, and commented that the principles could also be applied in a commercial context. The principles would have favoured the classification of some fit-outs as part of a building. Stepping away from those principles, the Government has amended the Income Tax Act 2007 in favour of the taxpayer.
Specifically, the changes enacted include:
- A new definition of “building” which specifically excludes “commercial fit-out”.
- The insertion of a commercial fit-out definition, which includes an item attached to a “commercial building” that is non-structural and not part of a building’s weather-proofing.
The clarification of these definitions enable items that could otherwise be considered part of a commercial building, such as internal non-load bearing walls, suspended ceilings, plumbing and electrical reticulation to be depreciated as fit-out.
Where items of fit-out are shared between both residential and commercial structures (e.g. lifts, fire protection, sewerage), the principle purpose of the building will determine whether the fit-out is depreciable property. For example, if a building is used principally for commercial purposes, then the fit-out will be depreciable property.
If upon construction or purchase a person has not separately identified and depreciated fit-out, a new provision allows the owner of a commercial building to amortise 15% of the building’s book value at a rate of 2% straight-line per year. The building’s adjusted tax book value is reduced by any fit-out purchased and depreciated separately after the building was purchased.