Depreciation: Here today, gone tomorrow
In a move flagged earlier this year to head off the prospect of the unpopular capital gains tax, Finance Minister Bill English told Parliament "allowing tax deductions for depreciation provides an unfair tax advantage for [building] assets."
From tomorrow, the existing 20% loading of depreciation will be cut for new buildings, while existing properties with a life span of 50 years or more will brought in from April next year.
"This allowance explicitly departed from the principle of allowing deductions for true economic depreciation," he said. "It results in other taxpayers effectively supporting investments that might to stand up on their own merits."
The move is part of the government's wider tax package and is forecast to net an additional $3.1 billion in revenue over the next four years, and is expected to lift tenants' rents 1.4% above projected increases over the next three to five years.
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