Section EE 30 — Income Tax Act 2007: Economic rate for plant, equipment, or building, with high residual value

EE 30 Economic rate for plant, equipment, or building, with high residual value What this section is about (1) This section is about setting the economic depreciation rate that applies to items of a kind of depreciable property if— (a) the kind of depreciable property is not fixed life intangible property, or excluded depreciable property, for which an economic rate cannot be set; and (b) the estimated residual market value for the item is more than 13.5% of cost; and (c) the items are— (i) plant or equipment acquired on or after 1 April 2005: (ii) buildings acquired on or after 19 May 2005. Rate set by Commissioner (2) The Commissioner sets the rate from time to time by— (a) following the procedure set out in this section; and (b) issuing a determination under section 91AAF of the Tax Administration Act 1994. Procedure for setting economic rate (3) To set the diminishing value rate for a kind of item of depreciable property, the Commissioner— (a) obtains a figure by applying the formula in subsection (4) to items of that kind; and (b) rounds the figure up or down to the nearest rate specified in schedule 11 , column 1 (New banded rates of depreciation); and (c) sets the same rate for some or all of the kinds of items of depreciable property that are similar to one another, if the Commissioner thinks it is appropriate to do so having regard to— (i) the rate calculated for each kind; and (ii) the reduction in compliance costs that is likely to be achieved. Formula (4) The formula is— ( ( ) 1 ) . 1 − residual value estimated useful life cost Definition of items in formula (5) In the formula,— (a) residual value is the greater of— (i) estimated residual market value, which is defined in section EE 67 : (ii) 13.5% of cost: (b) cost is the cost of items of the kind to which the formula is applied: (c) estimated useful life is defined in section EE 63 . Defined in this Act: building , Commissioner , depreciable property , diminishing value rate , economic rate , estimated residual market value , estimated useful life , excluded depreciable property , fixed life intangible property , Compare: 2004 No 35 s EE 25E Section EE 30(1)(b): amended (with effect on 1 April 2008), on 6 October 2009, by section 118 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EE 30(3)(b): substituted (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 30(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section EE 30 list of defined terms building : inserted (with effect on 30 July 2009), on 28 May 2010, by section 84 of the Taxation (Budget Measures) Act 2010 (2010 No 27).