COVID-19: Commercial Building Depreciation Changes

As the world faces such unprecedented times, the New Zealand Government and the Inland Revenue Department have rolled out a number of initiatives to cushion this economic blow.

One of the initiatives under the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Bill was to reintroduce commercial building depreciation from 1 April 2020.

Depreciation allows for more taxable deductions, resulting in lower tax payable by businesses. Thus, supporting the cashflow position for many businesses. This change is also intended to encourage investments in commercial buildings and revive the wider NZ economy.

It is important to note that these changes do not extend to residential building. This may seem simple enough; however, there are a number of grey areas such as AirBnB which can either be classified as a commercial or residential property, depending on various factors. Inland Revenue or your accountant can help you ascertain this.

Whilst the above is true at the time of writing (3 May 2020), we do note that tax is an evolving matter and things may have changed since the publication of this blog. Again, it is advised that you speak to Inland Revenue or your accountant to understand the latest rules and how they apply to your specific circumstances. The intent of this blog is only to raise awareness in the NZ business community around the support that is available.

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RDAA Ltd strongly recommend that before a reader undertakes or implements any financial, investment, taxation or business decision flowing from information or content of this blog or anything else on our website, they procure professional advice from a suitably qualified adviser, on which they may rely on their specific opinion. Such advice should be comprehensive in character and appropriate to the individual's personal circumstances and financial affairs.