IRD's views on depreciation challenged

In an Exposure Draft released late last year the department argued "that the breaking down of a residential rental property into such separate items is not an approach that can be universally applied."

It first raised this view in 2007 and provoked a strong, negative reaction from investors and their professional advisers.

Institute of Chartered Accountants Tax Director Craig Macalister says the issue is still a mess and the department is "stubbornly" sticking to its view that investors should not be allowed to split out parts of a building for depreciation purposes.

The institute has a view that IRD's legal analysis of the situation is a little wanting and "ain't that strong."