The Inland Revenue Department (IRD) provides formal guidelines through "determinations" to set depreciation rates and asset classifications, ensuring taxpayers comply with tax legislation.
What is a Determination?
The IRD uses determinations to provide clarity and set standards for various tax issues, including:
- Accrual expenditure.
- Depreciation (e.g., DEP80).
- Financial arrangements.
- Foreign currency.
- Livestock valuations.
- Standard costs for service providers (e.g., boarding or childcare).
These determinations ensure consistent tax treatment and simplify compliance for businesses and individuals.
Determination DEP80 (2011)
DEP80 introduces a comprehensive list of asset classes specific to the Residential Rental Property Chattels industry. These assets, such as carpets, dishwashers, and furniture, meet the three-point test, qualifying them as separate depreciable properties. The determination provides:
Estimated Useful Life: The expected duration of use for each asset.
Depreciation Rates: Includes both diminishing value (DV) rates and straight-line (SL) rates.
How DEP80 Helps Residential Rental Property Owners
- Clearly distinguishes between chattels (separately depreciable items) and non-depreciable assets like structural components.
- Provides an industry-specific guide, reducing ambiguity around depreciation claims.
- Accurate classification ensures all allowable deductions are utilized without risking non-compliance.
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