A tax specialist and member of the Tax Working Group has welcomed the Government's clarification about which parts of a commercial building can be depreciated.
Tax changes announced in May's budget effectively stop property companies and business owners claiming depreciation allowances for buildings.
The IRD and Treasury released a discussion paper late last week suggesting changes, which PricewaterhouseCoopers chairman John Shewan has welcomed.
Mr Shewan says there's been a lot of uncertainty in the property market over the last few years because of market conditions and the effects of possible tax changes, and the revisions will create more certainty.
He says it's broadly good news for commercial and industrial building owners.
Mr Shewan says it's proposed that fitouts for non-residential properties will be able to be separated from the building itself and will be able to be depreciated.
He says fitouts like suspended ceilings, internal petitions, plumbing and electrical reticulation will be able to be depreciated separately.
Mr Shewan says there is also a proposal to deal with people who have not separately identified the fitout from the structural part of the building.
They will have a one-off opportunity in the 2011-2012 year to take 15% of the taxable value of a building and treat that as fitout and depreciate it at a flat rate of 2%.
Mr Shewan says building owners should make submissions where the suggested rules are impractical, but he expects about 85% of the changes in the issues paper to become legislation.
