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Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 49: Adjustment for opening values of trading stock, livestock, and excepted financial arrangements

You could also call this:

“Tax deductions for opening values of business assets and financial items”

This law explains how you can get a tax deduction for certain things you own at the start of a tax year. These things include:

  1. Trading stock (items you buy to sell)
  2. Livestock (farm animals)
  3. Some special financial arrangements
  4. Share-lending rights (if they’re related to the special financial arrangements)

You can get a deduction for the value these items had at the end of the previous tax year. The law tells you how to calculate this value:

For trading stock, you use the rules in subpart EB.

For livestock, you use the rules in subpart EC.

For the special financial arrangements and share-lending rights, you use the rules in subpart ED.

This law adds to the general permission for deductions, but you still need to follow the general limitations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513726.

Topics:
Money and consumer rights > Taxes
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Part D Deductions
Specific rules for expenditure types

DB 49Adjustment for opening values of trading stock, livestock, and excepted financial arrangements

  1. This section applies when a person has some or all of the following at the start of an income year:

  2. trading stock valued under subpart EB (Valuation of trading stock (including dealer’s livestock)):
    1. livestock valued under subpart EC (Valuation of livestock):
      1. excepted financial arrangements that are revenue account property valued under subpart ED (Valuation of excepted financial arrangements):
        1. a share supplier’s share-lending right, if the original shares that relate to the right are excepted financial arrangements described in paragraph (c).

          1. The person is allowed a deduction in the income year for the value that the trading stock had at the end of the previous income year, as calculated under section EB 3 (Valuation of trading stock).

          2. The person is allowed a deduction in the income year for the value that the livestock had at the end of the previous income year, as calculated under section EC 2 (Valuation of livestock).

          3. The person is allowed a deduction in the income year for the value that the excepted financial arrangements or share-lending right had at the end of the previous income year, as calculated under section ED 1 (Valuation of excepted financial arrangements).

          4. This section supplements the general permission. The general limitations still apply.

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