Section EE 36 — Income Tax Act 2007: Using economic rate or provisional rate instead of special rate

EE 36 Using economic rate or provisional rate instead of special rate Allowed to use economic or provisional rate (1) A person may depreciate an item to which a special rate applies by applying, instead, the economic rate applicable to the item or a provisional rate applicable to the item. This subsection is overridden by subsection (2). Not allowed to use economic or provisional rate (2) The person must not depreciate the item by applying the economic rate or the provisional rate, if— (a) a special rate applies to the item; and (b) the special rate is higher than the economic rate; and (c) the person applies the special rate to the item for an income year; and (d) in a later income year, the item’s market value declines at a rate equal to or greater than the special rate; and (e) it is a reasonable conclusion from all the circumstances of the case that the person’s purpose, or 1 of the person’s purposes, in wanting to change from the special rate to the economic rate or the provisional rate for the later income year is to enable the person to defer the deduction that the person is allowed for the amount of depreciation loss for the item’s decline in value. Defined in this Act: amount , deduction , depreciation loss , economic rate , income year , provisional rate , special rate , Compare: 2004 No 35 s EE 29