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Income Tax Act 2007

Timing and quantifying rules - Valuation of livestock

EC 12: Interests in livestock

You could also call this:

“Rules for valuing livestock owned by multiple people for tax purposes”

If you own specific types of livestock with other people, you all need to agree on how to value the animals. This is important for figuring out taxes.

If you and the other owners can’t agree, there are rules about how to value the livestock. If you rent out the animals or share the profits with someone else, you have to use the market value method. For any other situation, you use something called the national standard cost scheme.

Sometimes, when you’re sharing profits from livestock, the law treats several people as if they were one owner. This includes the person who owns the animals, the person using them, and anyone else who has provided similar animals for the profit-sharing arrangement.

If you own livestock as part of a partnership, you need to make separate decisions about how to value those animals compared to any other livestock you own. You don’t have to use the same method for both.

The same rule applies if you own livestock through a special type of company called a look-through company. You need to decide separately how to value those animals compared to any other livestock you own. Again, you don’t have to use the same method for both.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514367.

Topics:
Money and consumer rights > Taxes
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“Rules for valuing farm animals when partnerships change”

Part E Timing and quantifying rules
Valuation of livestock

EC 12Interests in livestock

  1. When specified livestock is owned jointly by 2 or more persons, the owners must choose a valuation method. For the election to be effective, it must be made jointly by all the owners.

  2. If there is no effective election, specified livestock owned jointly is valued as follows:

  3. if the owners bail or lease the livestock to another person during the income year, under the market value method; or
    1. if the owners enter into a profit-sharing arrangement for the livestock, under the market value method; or
      1. in any other case, under the national standard cost scheme.

        1. If the method used in an income year to calculate the value of livestock under a profit-sharing arrangement is the national standard cost scheme or the cost price method, all the following are treated as the single owner of the livestock:

        2. the person who owns the livestock; and
          1. the person who has the use of the livestock; and
            1. any other person who has made livestock of the same type available to the person referred to in paragraph (b) under a profit-sharing arrangement.

              1. For the purpose of an election under this section, a person’s interest in a partnership that owns livestock is treated separately from any other interest that the person has in livestock. Separate elections are required for the person’s partnership interest and for their other livestock interests. The person is not required to choose the same valuation method in both cases.

              2. For the purposes of an election under this section, a person's interest for a look-through company that owns livestock is treated separately from any other interest that the person has in livestock. Separate elections are required for the person's owner's interest and for their other livestock interests. The person is not required to choose the same valuation method in both cases.

              Compare
              Notes
              • Section EC 12(5) heading: added, on (applying for income years beginning on or after 1 April 2011), by section 46(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
              • Section EC 12(5): added, on (applying for income years beginning on or after 1 April 2011), by section 46(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
              • Section EC 12 list of defined terms look-through company: inserted, on , by section 46(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
              • Section EC 12 list of defined terms owner's interests: inserted, on , by section 46(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).