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May 2010
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May 2006
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April 2006
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July 2005
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May 2005
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Feb 2005
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Sep 2004
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Aug 2004
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July 2004
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April 2004
EVEN MORE BENEFIT!
Well, changes to the depreciation rates have been announced in the 2005 Budget and these were covered in detail in the June 2005 issue of KPI.
Lets look at what it will do to your depreciation
The changes Summarised
-
Building Depreciation Rates to reduce
From 4% Diminishing Value
To 3% Diminishing Value
Effective for buildings purchase from 19 May 2005
(Not current properties)
-
Rates for other assets to be calculated on the double declining balance method
This will mean that rates for all other assets will change, the great news is that they will go up!
|
Economic life (years)
|
|
2
|
3
|
4
|
5
|
6.66
|
8
|
10
|
12.5
|
15.5
|
20
|
25
|
33.3
|
50
|
100
|
|
Old Provisions
|
DV Rate
|
64%
|
50%
|
40%
|
33%
|
26%
|
22%
|
18%
|
15%
|
12%
|
10%
|
8%
|
6%
|
4%
|
2%
|
|
New Provisions
|
DV Rate
|
100%
|
67%
|
50%
|
40%
|
30%
|
25%
|
20%
|
16%
|
13%
|
10%
|
8%
|
6%
|
4%
|
2%
|
Example - Appliances were 26% now 30%
Effective for items purchased from 1 April 2005
Examples
New property
Location: Dannemora Auckland
Age: New
Condition: New
Purchase Price: $445,000
|
|
FIRST YEAR DEPRECIATION |
|
|
|
|
|
|
|
USING RATES PRIOR TO BUDGET |
USING RATES POST BUDGET |
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASE PRICE APPORTIONED AS |
|
|
|
|
|
|
| LAND |
$128,947 |
|
|
|
|
|
|
| BUILDING STRUCTURE |
$176,280 |
$7,051.20 |
$5,288.40 |
|
|
|
|
| FIT OUT & CHATTELS INCLUDING |
|
$23,084.50 |
$26,101.20 |
|
|
|
|
| Partitions (Non Load Bearing) |
$46,097 |
|
|
|
|
|
|
| Electrical Reticulation |
$10,114 |
|
|
|
|
|
|
| Telecommunications Cabling (Land Based) |
$443 |
|
|
|
|
|
|
| Light Fittings |
$2,680 |
|
|
|
|
|
|
| Furniture (Fitted) |
$12,122 |
|
|
|
|
|
|
| Carpets |
$10,603 |
|
|
|
|
|
|
| Tiles |
$9,848 |
|
|
|
|
|
|
| Blinds |
$3,780 |
|
|
|
|
|
|
| Plumbing Fixtures |
$13,343 |
|
|
|
|
|
|
| Plumbing |
$11,526 |
|
|
|
|
|
|
| Stove (Domestic Type) |
$2,450 |
|
|
|
|
|
|
| Waste Disposal |
$340 |
|
|
|
|
|
|
| Dishwasher |
$1,000 |
|
|
|
|
|
|
| Ventilating Fan |
$194 |
|
|
|
|
|
|
| Ventilating Fan (Roof Mounted) |
$1,167 |
|
|
|
|
|
|
| Heater (Electric) |
$450 |
|
|
|
|
|
|
| Water Heater |
$1,536 |
|
|
|
|
|
|
| Smoke Detectors |
$243 |
|
|
|
|
|
|
| Mirrors |
$533 |
|
|
|
|
|
|
| Handrails |
$340 |
|
|
|
|
|
|
| Burglar Alarm |
$1,167 |
|
|
|
|
|
|
| Door (Roller Or Similar) |
$875 |
|
|
|
|
|
|
| Motor (For Roller Door) |
$486 |
|
|
|
|
|
|
| Clotheslines |
$340 |
|
|
|
|
|
|
| Fences |
$1,522 |
|
|
|
|
|
|
| Aerials (For Televisions) |
$243 |
|
|
|
|
|
|
| Mailboxes |
$194 |
|
|
|
|
|
|
| Driveways And Paths |
$2,735 |
|
|
|
|
|
|
| Watering Systems |
$3,402 |
|
|
|
|
|
|
|
$445,000 |
|
|
|
|
|
|
|
TOTAL FIRST YEAR DEPRECIATION |
$30,135.70 |
$31,389.60 |
|
INCREASED DEPRECIATION |
|
$1,253.91 |
|
|
|
|
|
INCREASED CASH FLOW (@39% tax rate) |
|
$489.02 |
Older Property
Location: Glenfield Auckland
Age: 20 Years old
Condition: This property was in average condition at date of settlement, providing 3 bedroom accommodation. The property has been partially refurbished, this including window furnishings, some floor coverings and kitchen.
Purchase Price: $295,000
|
|
FIRST YEAR DEPRECIATION |
|
|
|
|
|
|
|
USING RATES PRIOR TO BUDGET |
USING RATES POST BUDGET |
|
|
|
|
|
|
|
|
|
|
|
|
|
PURCHASE PRICE APPORTIONED AS |
|
|
|
|
|
|
| LAND |
$105,829 |
|
|
|
|
|
|
| BUILDING STRUCTURE |
$119,471 |
$4,778.68 |
$3,584.13 |
|
|
|
|
| FIT OUT & CHATTELS INCLUDING |
|
$6,942.00 |
$7,480.00 |
|
|
|
|
| Partitions (Non Load Bearing) |
$26,188 |
|
|
|
|
|
|
| Electrical Reticulation |
$5,492 |
|
|
|
|
|
|
| Telecommunications Cabling (Land Based) |
$166 |
|
|
|
|
|
|
| Light Fittings |
$372 |
|
|
|
|
|
|
| Furniture (Fitted) |
$1,492 |
|
|
|
|
|
|
| Carpets |
$881 |
|
|
|
|
|
|
| Vinyl Flooring |
$215 |
|
|
|
|
|
|
| Curtains |
$1,858 |
|
|
|
|
|
|
| Blinds |
$63 |
|
|
|
|
|
|
| Plumbing Fixtures |
$5,514 |
|
|
|
|
|
|
| Plumbing |
$5,311 |
|
|
|
|
|
|
| Stove (Domestic Type) |
$441 |
|
|
|
|
|
|
| Water Heater |
$340 |
|
|
|
|
|
|
| Handrails |
$2,264 |
|
|
|
|
|
|
| Door (Roller Or Similar) |
$741 |
|
|
|
|
|
|
| Motor (For Roller Door) |
$278 |
|
|
|
|
|
|
| Decks |
$2,837 |
|
|
|
|
|
|
| Clotheslines |
$263 |
|
|
|
|
|
|
| Fences |
$1,304 |
|
|
|
|
|
|
| Aerials (For Televisions) |
$691 |
|
|
|
|
|
|
| Pavers |
$760 |
|
|
|
|
|
|
| Mailboxes |
$103 |
|
|
|
|
|
|
| Driveways And Paths |
$4,882 |
|
|
|
|
|
|
| Retaining Wall (Wooden) |
$3,466 |
|
|
|
|
|
|
| Air Conditioners (Split System) |
$3,778 |
|
|
|
|
|
|
|
$295,000 |
|
|
|
|
|
|
|
TOTAL FIRST YEAR DEPRECIATION |
$11,720.68 |
$11,064.13 |
|
DECREASE DEPRECIATION |
|
$656.55 |
|
|
|
|
|
DECREASED CASH FLOW (@39% tax rate) |
$256.05 |
|
