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Clarifying the meaning of "building" for depreciation purposes


Under the current depreciation rules, depreciation can be claimed on “non-residential buildings” but not “residential buildings”. The terms “residential building” and “non-residential building” are defined in the ITA however, the word “building” is not defined.

In the recently published Interpretation Statement IS 22/04 in a depreciation context, a “building” will, among other things:

  • be enclosed by walls and a roof,
  • be able to function independently of any other structure, and
  • have an appearance and function that fits with the idea of what a conventional building looks like and is ordinarily used for.

This leads to the conclusion that a part of a building owned under a unit title is not a “building” in its own right and is therefore not depreciable, even though it may be used predominantly for “non-residential” purposes. This outcome is not consistent with the of the depreciation rules.

Proposed Amendments 2024

The amendment will add a new definition of “building” into section YA 1 of the Income Tax Act 2007 (ITA) to clarify that, for the purposes of the depreciation rules, a “building” includes a part of a building owned under a unit title.


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New Zealand Tax Accountant.