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IRD Calculation for Diminishing Value (DV) and Straight Line (SL).
New Zealand's Inland Revenue Department publishes depreciation rates for over 1,500 individual asset types in its comprehensive guide IR265, directly providing both the diminishing value (DV) and straight-line (SL) rate for each category. Computers and related items attract 50% DV or 40% SL. Motor vehicles are set at 30% DV or 21% SL. Photocopiers sit at 40% DV or 30% SL. Office furniture runs at 20% DV or 13.5% SL. The DV rate is approximately 1.5 times the SL rate — reflecting the mathematical relationship between declining-balance and straight-line when total depreciable amounts are equal. A New Zealand architecture firm acquiring NZD 80,000 of workstations and design software choosing 50% DV receives NZD 40,000 in year one, falling to NZD 20,000 in year two; the 40% SL alternative gives a predictable NZD 32,000 per year. Once a method is selected for an asset group it cannot be changed without IRD approval.
New Zealand's decision to set the depreciation rate for long-lived buildings (50+ year estimated life) to 0% from the 2011-12 income year was a landmark tax policy change, implemented as part of the GST/income tax reform package in Budget 2010. The rationale was that residential and commercial property had been appreciating in value, making depreciation deductions economically unjustified from a government revenue perspective. The change affected all buildings — residential rental properties, commercial offices, factories — with structural lives of 50 years or more. Short-life buildings (expected life under 50 years) and building components such as carpet, blinds, partitioning, and air conditioning retain their depreciation rates. This distinction requires property investors to decompose acquisition costs into depreciable fit-out versus non-depreciable structure — a task typically performed by quantity surveyors producing a tax depreciation schedule at the time of purchase.
Assets costing NZD 1,000 or less (GST exclusive) can be immediately expensed in the year of acquisition, bypassing the normal depreciation schedule entirely. This threshold was raised from NZD 500 in 2020 (temporarily NZD 5,000 during the COVID-19 period in 2020–21) to simplify bookkeeping for small purchases. A NZD 950 office chair is immediately deductible; a NZD 1,050 chair must be capitalised and depreciated. For GST-registered businesses, the threshold applies to the GST-exclusive price: an item invoiced at NZD 1,150 including 15% GST has a tax cost of NZD 1,000 exactly — sitting on the boundary. The low-value threshold applies per item, not to groups of similar assets, so a business buying 20 identical chairs at NZD 950 each cannot pool them to exceed the threshold; each chair qualifies individually for immediate deduction.