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Income Tax Act 2007

Timing and quantifying rules - Matching rules: revenue account property, prepayments, and deferred payments

EA 2: Other revenue account property

You could also call this:

“Rules for claiming costs when selling certain types of property for profit”

This section talks about how to deal with certain types of property that you might sell to make money. It doesn’t apply to things like stock you sell in a shop, farm animals, some special financial deals, movies or movie rights, leased items, oil and gas exploration stuff, mining stuff, aircraft engine parts, or some other financial arrangements.

For the property this section does cover, you can claim a deduction for its cost. You do this in the tax year when you either sell the property or when it stops existing, whichever happens first.

Remember, a deduction is something that reduces the amount of tax you have to pay. So, this rule helps you figure out when you can use the cost of this property to lower your taxes.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514270.

Topics:
Money and consumer rights > Taxes
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EA 1: Trading stock, livestock, and excepted financial arrangements, or

“Rules for valuing specific property types for tax purposes”

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EA 3: Prepayments, or

“Rules for handling prepaid expenses in income tax”

Part E Timing and quantifying rules
Matching rules: revenue account property, prepayments, and deferred payments

EA 2Other revenue account property

  1. This section applies to revenue account property that is not—

  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. an excepted financial arrangement valued under subpart ED (Valuation of excepted financial arrangements):
        1. a film or a film right to which sections EJ 4 to EJ 8 (which relate to films) apply:
          1. property under a specified lease or a lease to which section EJ 10 (Personal property lease payments) applies:
            1. property that arises as a result of petroleum development expenditure or petroleum exploration expenditure to which sections DT 1, DT 5, and EJ 12 to EJ 20 (which relate to petroleum mining) apply:
              1. property that arises as a result of mining development expenditure or mining exploration expenditure to which sections EJ 20B to EJ 20E (which relate to mineral mining) apply:
                1. property fitted to an aircraft engine as part of an aircraft engine overhaul to which section DW 5 (Aircraft operators: aircraft engines and aircraft engine overhauls) applies:
                  1. a financial arrangement valued under subpart EW (Financial arrangements rules).

                    1. A deduction for the cost of revenue account property of a person is allocated to the earlier of—

                    2. the income year in which the person disposes of the property; and
                      1. the income year in which the property ceases to exist.

                        Compare
                        Notes
                        • Section EA 2(1)(e): replaced, on (with effect on 1 April 2008), by section 64(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                        • Section EA 2(1)(f): amended, on (with effect on 1 April 2008), by section 64(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                        • Section EA 2(1)(fb): inserted, on , by section 45 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                        • Section EA 2(1)(fc): inserted, on , by section 54(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                        • Section EA 2 list of defined terms aircraft engine: inserted, on , by section 54(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                        • Section EA 2 list of defined terms aircraft engine overhaul: inserted, on , by section 54(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).