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Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 59: Market value substituted

You could also call this:

“Limits on deductions when prices don't match market value”

You may not be allowed to claim a deduction in some cases. This can happen if you pay too much for something, as explained in [section GC 7].

There are also times when you might be treated as if you provided a certain amount of money. This can happen in two situations:

  1. When you buy or sell trading stock (things you trade as part of your business) for less than they’re worth, as described in [section GC 1].

  2. When you rent out a property for less than it should be rented for, as explained in [section GC 5].

These rules can change how the general permission for deductions works. The first rule can stop you from getting a deduction, while the second rule adds to the general permission. However, the general limitations on deductions still apply in all cases.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513755.

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

DB 59Market value substituted

  1. A person may be denied a deduction under section GC 7 (Excess amount payable by person).

  2. A person may be treated as providing an amount—

  3. for acquisition of trading stock, under section GC 1 (Certain disposals of trading stock at below market value):
    1. for lease of a property, under section GC 5 (Leases for inadequate rent).

      1. Subsection (1) overrides, and subsection (2) supplements, the general permission. The general limitations still apply.

      Compare
      Notes
      • Section DB 59(2)(a): amended, on , by section 39 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).