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Income Tax Act 2007

Timing and quantifying rules - Valuation of livestock

EC 8: Restrictions arising from use of herd scheme

You could also call this:

“Rules for using the herd scheme to value livestock”

If you choose to use the herd scheme for valuing a type of livestock after the 2011-12 income year, you can’t use other valuation methods for that type of livestock. This rule applies if you told the government you wanted to use the herd scheme before 18 August 2011.

However, you can use a different valuation method if:

  • You decide to stop breeding all your female livestock of that type and start using them for fattening instead.
  • You have more animals of a certain class than you had last year plus any animals transferred to you.

If you use the herd scheme for a type of livestock, you must use it for all male breeding animals of that type if you’re also using the national standard cost scheme or cost price method for any of that type of livestock.

The government calculates how many animals you can value using a different method by looking at how many you had last year and adding any animals transferred to you, as described in section EC 4B(5).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514359.

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EC 7: Valuation methods, or

“How to choose and use methods for valuing farm animals for tax purposes”

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EC 9: Restrictions on use of national standard cost scheme, or

“Rules for using the national standard cost scheme for valuing livestock”

Part E Timing and quantifying rules
Valuation of livestock

EC 8Restrictions arising from use of herd scheme

  1. A valuation method other than the herd scheme is not available to a person, in an income year after the 2011–12 income year, for a type of specified livestock if the person—

  2. gives a notice of election, with application beginning for or before the income year, to use the herd scheme for the type of specified livestock; and
    1. does not give before 18 August 2011 a later notice of election, with application beginning for or before the income year, to use another valuation method for the type of specified livestock.

      1. Despite subsection (1), a valuation method other than the herd scheme is available to a person in an income year after the 2011–12 income year, if—

      2. the person gives a notice of election as described in subsection (1)(a); and
        1. the person gives, on or after 18 August 2011, a later notice of election to use another valuation method for the relevant type of specified livestock (the livestock); and
          1. the later notice is given, with application beginning for the income year (the starting income year) in which all female breeding livestock cease being intended to be used for breeding purposes; and
            1. the livestock are used in a fattening farming business for and after the starting income year.

              1. Despite subsection (1), a valuation method other than the herd scheme is available to a person in an income year, to the extent of a person's animals of a class, in an income year (the current year), that are in excess of the person's class closing animal balance.

              2. Class closing animal balance means the number of animals of a class calculated using the formula—

                last year’s class amount + associated class transfers.

                Where:

                • In the formula,—

                • last year's class amount is the animals of the relevant class that the person valued under the herd scheme at the end of the year before the current year:
                  1. associated class transfers is the amount, if positive, calculated under section EC 4B(5), for the relevant class, that are transferred in the current year to the person to the extent to which section EC 4B(4) applies to the type of animals transferred.

                    1. A person who values livestock of a particular type under the herd scheme must value all male breeding stock of that type under the herd scheme in an income year if, in the income year, they also value any livestock of that type under the national standard cost scheme or under the cost price method.

                    Notes
                    • Section EC 8: replaced (with effect on 18 August 2011), on , by section 41(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8(3) heading: replaced (with effect on 28 March 2012), on , by section 41(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8(3): replaced (with effect on 28 March 2012), on , by section 41(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8(4) heading: replaced (with effect on 28 March 2012), on , by section 41(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8(4): replaced (with effect on 28 March 2012), on , by section 41(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8(5) heading: inserted (with effect on 28 March 2012), on , by section 41(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8(5): inserted (with effect on 28 March 2012), on , by section 41(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8(6) heading: inserted (with effect on 28 March 2012), on , by section 41(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8(6): inserted (with effect on 28 March 2012), on , by section 41(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8 list of defined terms amount: inserted (with effect on 28 March 2012), on , by section 41(3) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8 list of defined terms class closing animal balance: inserted (with effect on 28 March 2012), on , by section 41(3) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                    • Section EC 8 list of defined terms notice: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).