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The Government of New Zealand passed urgent bill (COVID-19 Response: Taxation and Social Assistance Urgent Measures), which effectively brings the depreciation back into New Zealand tax regime

Depreciation on non-residential buildings is being brought back. The depreciation on building was disallowed from 2011 onwards. The depreciation rate would be 2% declining value or 1.5% straight line, and the application date is year 2020-21. The ability to receive a special depreciation rate from the Commissioner would be restored for non-residential buildings.

It only includes non-residential buildings. A non-residential building is any building that is not a residential building. Residential building is already defined in the act section YA1. The definition is extended to include Bach, and short-term accommodation such as Air BNZ to ensure they are included in the residential building. But it excludes the larger commercial operations such as motels from being treated as a residential building.

This measure will help lot of businesses such as property investors and large companies. However, small businesses generally don’t own the commercial buildings so they may not receive the direct benefit of this change. There may be some indirect benefits such as they can negotiate lower rent on their building lease.

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