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Income Tax Act 2007

Timing and quantifying rules - Valuation of livestock

EC 10: Restrictions on use of cost price method

You could also call this:

“Rules for when you can't use the cost price method for valuing livestock”

You cannot use the cost price method to value your specified livestock in a year if:

  1. You’re using the national standard cost scheme to value other specified livestock in the same year.

  2. In the year before you want to start using the cost price method, you were using the national standard cost scheme. To switch, you need to tell the Commissioner two years before you want to change, as explained in section EC 11.

  3. You’ve let someone else use your specified livestock, unless you’re sharing the profits with them.

  4. You’ve let someone else use your specified livestock for a long time, or for a short time to someone connected to you and they’re not paying you a fair price.

  5. You’ve made your specified livestock available to someone else as part of a profit-sharing deal. In the same year, if that person or anyone else in the deal is using the national standard cost scheme for the same type of livestock, you can’t use the cost price method.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514363.

Topics:
Money and consumer rights > Taxes
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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”

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EC 11: Restrictions on making of elections, or

“Rules for changing how you value livestock for tax purposes”

Part E Timing and quantifying rules
Valuation of livestock

EC 10Restrictions on use of cost price method

  1. The cost price method is not available to a person to value specified livestock in an income year if the person values other specified livestock in the income year under the national standard cost scheme.

  2. The cost price method is not available to a person to value specified livestock if, in the income year before the income year in which their election under section EC 7(2) is to apply, they have valued specified livestock under the national standard cost scheme and have not given 2 income years’ notice in the way described in section EC 11 to the Commissioner of their election to value specified livestock under the cost price method.

  3. The cost price method is not available to a person to value specified livestock in an income year if they have bailed or leased their specified livestock to another person, unless the livestock is bailed or leased under a profit-sharing arrangement.

  4. The cost price method is not available to a person to value specified livestock in an income year if they have bailed or leased their specified livestock to another person—

  5. under a long-term bailment; or
    1. under a short-term bailment made between associated persons in which the consideration paid to the bailee is not a fair market value.

      1. The cost price method is not available to a person to value a type of specified livestock in an income year if they have made specified livestock available to another person under a profit-sharing arrangement and, in the income year, the other person, or another person has also made livestock of the type available under the profit-sharing arrangement, values any livestock of the type under the national standard cost scheme.

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      Notes
      • Section EC 10 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).