IRD Depreciation Calculator
Calculate tax depreciation for New Zealand businesses — modelled on IRD depreciation rules (Income Tax Act 2007)
Asset Details
Depreciation Method
Value
Line
Both
Summary
Depreciation Curve — Book Value Over Time
Managing more than one asset?
AssetAccountant automates IRD-compliant depreciation across your entire register — no spreadsheets required.
Disclaimer: This calculator is provided for general information and demonstration purposes only. Results are estimates based on the inputs provided and the methodology modelled on New Zealand IRD depreciation rules (Income Tax Act 2007). AssetAccountant does not guarantee the accuracy, completeness or suitability of these results for any particular purpose. This calculator does not constitute tax advice and should not be relied upon as such. IRD depreciation rates and rules change — always verify calculations with a qualified tax professional or chartered accountant before making any financial or tax decisions.
How to Use This IRD Depreciation Calculator
To get started, select your asset category, enter your purchase date, and enter the asset cost. This IRD depreciation calculator instantly shows your deductions under both the Diminishing Value (DV) and Straight Line (SL) methods. In addition, Year 1 is automatically pro-rated by months held. Any portion of a month counts as a full month, in line with IRD rules.
Furthermore, use the Override button to enter your own DV and SL rates instead of the IRD published rates. For assets purchased on or after 22 May 2025, an Investment Boost checkbox also appears. Specifically, tick it to see the impact of the optional 20% immediate deduction on your schedule.
What Is IRD Tax Depreciation?
Simply put, IRD tax depreciation is the process of deducting the cost of a business asset over its useful life. Under the Income Tax Act 2007, businesses can depreciate most tangible assets used to produce income. For example, this covers everything from laptops and vehicles to manufacturing equipment. Instead of deducting the full cost in the year of purchase, you therefore spread the deduction across each income year.
The IRD publishes standard depreciation rates for common asset types in IR265 — Depreciation — a guide for businesses. IR260 is the explanatory guide that supports these rates.
However, in some cases you may self-assess a rate if there are reasonable grounds. As a result, this New Zealand depreciation calculator uses IRD published rates as defaults. You can override them at any time.
How IRD Depreciation Is Calculated
It is worth noting that New Zealand tax depreciation uses months held — not days — for the Year 1 pro-rata. Specifically, any portion of a month counts as a full month. Furthermore, the IRD depreciates assets to zero — there is no residual or scrap value in the formula. Therefore, if you sell an asset above its written-down tax value, the IRD treats the difference as depreciation recovered. Consequently, that amount becomes taxable income in the year of sale.
one asset?
Diminishing Value vs Straight Line — Which Method Is Better?
Both methods produce the same total deduction over the life of the asset. However, they differ significantly in timing — and timing has a direct impact on your cash flow.
- Diminishing Value (DV) applies the rate to the asset’s reducing written-down value each year. Deductions are higher in early years and taper off over time.
- Straight Line (SL) applies the rate to the original cost every year. Deductions stay equal throughout the asset’s life — predictable and straightforward.
The right choice depends on your cash flow needs and expected income in future years. Always discuss this with your chartered accountant before deciding, because changing methods later requires professional advice.
Low Value Asset Write-Off
The low-value asset write-off allows businesses to immediately expense assets below a certain threshold instead of depreciating them over time.
The applicable thresholds have changed over time:
- For assets acquired before 17 March 2020 — the threshold is $500 or less
- For assets acquired between 17 March 2020 and 16 March 2021 — the threshold is $5,000 or less
- For assets acquired after 16 March 2021 — the threshold is $1,000 or less
This write-off applies per asset and removes the need to track depreciation for low-value items.
Investment Boost — 20% Immediate Deduction
From 22 May 2025, New Zealand businesses can claim an optional Investment Boost of 20% on new, or new to New Zealand depreciating assets. After that, normal depreciation continues on the remaining 80% of the cost.
- Available to all businesses — there is no turnover threshold
- Applies only to assets that are new, or new to New Zealand, at the time of purchase
- You decide whether to apply it for each qualifying asset
- Investment Boost and the low-value asset write-off cannot be applied to the same asset
Always confirm eligibility with your tax advisor or at ird.govt.nz/investment-boost before claiming.
Disclaimer: This calculator is provided for general information purposes only and does not constitute tax advice. Results are estimates based on the inputs provided and the methodology modelled on New Zealand IRD depreciation rules (Income Tax Act 2007). IRD depreciation rates and rules change — always verify your depreciation calculations with a qualified tax professional or chartered accountant before making financial or tax decisions.
