How does depreciation work for NZ sole trader assets?

When you buy a business asset costing more than NZ$1,000, you generally cannot claim the full cost immediately. Instead, you must claim the depreciation — the reduction in value — each year over the asset's useful life. **How to calculate depreciation:** Inland Revenue publishes depreciation rates for different types of assets at ird.govt.nz. For example: - Laptop computer: typically 50% diminishing value (DV) or 33% straight-line (SL) per year - Motor vehicle: 30% DV or 21% SL per year - Office furniture: 13.5% DV or 9.5% SL per year **Diminishing Value vs Straight Line:** - Diminishing Value (DV): apply the percentage to the asset's declining book value each year (higher deductions in early years) - Straight Line (SL): apply the percentage to the original cost each year (even deductions) For assets only partly used for business, you can only claim the business proportion of depreciation. For assets costing NZ$1,000 or less, you can immediately deduct the full cost (low-value asset threshold).

• Assets over NZ$1,000: must depreciate over useful life
• IR publishes depreciation rates for each asset type
• Choose Diminishing Value (DV) or Straight Line (SL) method
• Only business proportion claimable for mixed-use assets
• Assets under NZ$1,000: immediately deductible in full