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Income Tax Act 2007

Income - Recoveries

CG 6: Receipts from insurance, indemnity, or compensation for trading stock

You could also call this:

“Money received for lost or damaged trading stock or production items may be taxable income”

You might get money from insurance, compensation, or an indemnity if your trading stock or things you use to make goods for sale are lost, damaged, or destroyed. This money can be considered income in some cases.

If you’ve been allowed to deduct the cost of the item in your taxes (but not for depreciation), then the part of the money you get that’s for that item is counted as income.

You need to include this income in your tax return for the year when you receive the money.

This rule applies to trading stock and also to things you bought, made, or got to help with making goods that you sell or trade.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512840.

Topics:
Money and consumer rights > Taxes
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CG 5B: Receipts from insurance, indemnity, or compensation for interruption or impairment of business activities, or

“Insurance or compensation for lost business income”

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CG 7: Recoveries after deduction of payments under lease, or

“Income from selling a leased asset you later bought”

Part C Income
Recoveries

CG 6Receipts from insurance, indemnity, or compensation for trading stock

  1. This section applies when a person receives an amount of insurance, indemnity, or compensation for the loss or destruction of, or damage to,—

  2. trading stock:
    1. anything acquired, manufactured, or produced for a purpose ancillary to a business of manufacturing or producing goods for sale or exchange.

      1. The part of the insurance, indemnity, or compensation that is attributable to the asset is income if—

      2. the person is allowed a deduction in an income year for the cost of the asset; and
        1. the deduction is not for an amount of depreciation loss.

          1. The income is allocated to the income year in which the amount is received.

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