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Change in depreciation rates for used motor vehicles

08.27am 14 February 2020

Important Notice Duty, GST and taxes Motor vehicles

Currently a range of depreciation rates are applied by Customs for valuation of used vehicles, which have been owned and used overseas by importers.

It has been decided that, from 1 March 2020, Customs will follow the straight line rate used by Inland Revenue where depreciation is applicable when valuing imported used vehicles.

The rates used by Inland Revenue are based on the determined estimated useful life of the vehicle. Inland Revenue (IR) allows a straight-line depreciation formula. The current IR depreciation rate for passenger motor vehicles personally owned and used overseas by the importer for more than three months is 21% (residual value of 25%)(per year, or apportioned for part year), and the depreciation rate for campervans is 13.5% per year.

The rates can be found on the Inland Revenue website - search for "General depreciation rates - IR 265".

The benefits of changing to the rates used by Inland Revenue is that it will be less confusing for importers, and improve consistency across government agencies. It will also provide consistency in the source of depreciation rates used for imported goods for importers, and also enable Customs to be able to justify and explain the basis of the rates.

Customs currently does not allow for depreciation for less than three months ownership and the maximum depreciation that can be applied is 75%. These minimum and maximum thresholds will remain unchanged.

One aspect that will change is the provision for tropical depreciation. Customs had the discretion to apply additional depreciation, if the motor vehicle had operated in the region between the Tropic of Cancer and the Tropic of Capricorn. From 1 March 2020, tropical depreciation will no longer be applied.

Correction: the original email address for further information was modified on 17 September 2020.

If you have a query about the depreciation of imported motor vehicles, please contact feedback@customs.govt.nz

For queries specifically related to the change in the rate of depreciation, please contact voc@customs.govt.nz

This information has now been superceded, visit the Vehicles, Boats and Planes webpage for up-to-date information.