Depreciation loading relating to two amortisation regimes, horticultural plants and land improvements by farmers, is removed from 2013-14 onwards.

Section DO 5 and Schedule 20 of the Income Tax Act 2007

Summary of proposed amendment

As part of Budget 2010, it was announced that depreciation loading would be removed on a prospective basis from 21 May 2010. Depreciation loading was a policy that increased the amortisation rate of most depreciable assets by 20%.

When depreciation loading was first introduced, a 20% loading was also applied to two special amortisation regimes: one that applies to certain horticultural plants and one that applies to certain land improvements made by a person involved in an agricultural business (such as a farmer). Due to an oversight, this loading was not removed from these two special regimes as part of Budget 2010.

To correct this, the Act will remove this depreciation loading from the beginning of the 2013-14 income year. Note that the amortisation rate for the regrassing and fertilising of pasture (schedule 20, part A, row 2) is not being changed as it does not have the loading.

Application date

The amendment applies from the beginning of the 2013-14 income year.