A New Zealand business has a taxation balance date of 31 March. On the 30 Januar

Question

A New Zealand business has a taxation balance date of 31 March. On the 30 January this year the business purchased a new asset for $56191. Installation costs were $9317. The allowable straight-line depreciation rate is 21.5% per annum for tax purposes. What is the maximum depreciation the business will be able to claim in its tax return this year? (The allowed rounding error for this question is within 1%. Please round your answer to the nearest dollar but exclude $ and , when typing your answer.)

Explanation / Answer

PURCHASE COST OF THE ASSET = $56191

ADD INSTALLATION COST = $9317

CAPITALIZED COST OF ASSET = $65508

DEPERICATION CLAIM IN TAX RETURN FOR 30 MARCH

= CAPITALIZED COST * RATE * 2/12

= ($65508 * 21.5%) * 2/12

= $2347

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