EE 38 Items of low value
When this section applies

(1)

This section applies for an item of property that a person acquires, in an income year, when—

(a)

the total cost for the item is equal to or less than the threshold value given for the item by subsection (2); and

(b)

the person uses the item, or has the item available for use, in the income year; and

(c)

the item would be depreciable property if the person did not deal with it under this section; and

(d)

the item has not been and will not become part of any other property that is depreciable property; and

(e)

the person is denied a deduction for the cost of the item if the person does not deal with the item under this section; and

(f)

the item is one of a group of items, acquired at the same time and from the same supplier, to which the same depreciation rate would apply if they were all treated as items of depreciable property,—

(i)

if subparagraph (ii) does not apply, the total cost for all the items in the group is equal to or less than the threshold value given for the item by subsection (2):

(ii)

if the items generally constitute the person’s trading stock, the total cost for all the items in the group not treated by the person solely as trading stock is equal to or less than the threshold value given for the item by subsection (2).

Threshold value for item

(2)

The threshold value for an item is—

(a)

$200, if the item is acquired before 19 May 2005:

(b)

$500, if the item is acquired on or after 19 May 2005 and before 17 March 2020:

(c)

$5,000, if the item is acquired on or after 17 March 2020 and before 17 March 2021:

(d)

$1,000, if the item is acquired on or after 17 March 2021.

Amount of depreciation loss

(3)

If the person chooses to deal with the item under this section, the amount of depreciation loss that the person has for the item for the income year is the item’s cost.

How election made

(4)

The person makes the election by claiming, in their return of income for the income year for which the election is made, a deduction for the amount of depreciation loss described in subsection (3).

Amount of depreciation recovery income

(5)

If the person disposes in an income year of an item for which they have been allowed a deduction on a claim under subsection (3), the consideration they derive from the disposal is an amount of depreciation recovery income for the income year.

Change of use treated as disposal

(6)

Subsection (7) applies when—

(a)

a person has been allowed a deduction on a claim under subsection (3) for an item; and

(b)

at a later time, the person stops using the item, or having the item available for use, mainly in deriving assessable income or carrying on a business for the purpose of deriving assessable income; and

(c)

the use to which the item is put at the later time is not subject to fringe benefit tax.

Disposal

(7)

The person is treated as having disposed of the item for its market value at the later time.

Increase in specified sum

(8)

The Governor-General may make an Order in Council increasing the sum specified in subsection (1)(a) and (f).

Defined in this Act: acquire, amount, assessable income, business, deduction, depreciable property, depreciation loss, depreciation recovery income, dispose, fringe benefit tax, income year, property, return of income, trading stock

Compare: 2004 No 35 s EE 31

Section EE 38(2)(b): amended (with effect on 17 March 2020), on 25 March 2020, by section 8(1) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).

Section EE 38(2)(c): inserted (with effect on 17 March 2020), on 25 March 2020, by section 8(2) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).

Section EE 38(2)(d): inserted (with effect on 17 March 2020), on 25 March 2020, by section 8(2) of the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 (2020 No 8).