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Income Tax Act 2007

Timing and quantifying rules - Valuation of livestock - Definitions

EC 35: Livestock reaching national average market value and livestock no longer used for breeding

You could also call this:

“Valuing livestock that reaches market value or is no longer used for breeding”

The law talks about something called high-priced livestock. If you have high-priced livestock, this law applies to you in two situations:

First, if the value of your high-priced livestock at the end of a tax year becomes equal to or less than the average market value for that type of animal.

Second, if you have high-priced livestock that you don’t plan to use for breeding anymore, and you don’t intend to sell to someone else for breeding.

In these cases, you need to work out the closing value of your livestock at the end of the tax year. How you do this depends on how you usually value your livestock:

If you use the herd scheme, you use the value under that scheme.

If you use the national standard cost scheme or cost price method for livestock older than 1 year, you use the average market value for that type of animal.

If you use the market value or replacement price method for livestock older than 1 year, you use the market value or replacement price at the end of the tax year.

In future tax years, you treat this animal like your other livestock and value it using whatever method you choose for that type of animal.

There’s a special rule if you start using the herd scheme in a later year. If you use the herd scheme for any animals of the same type in one year, and then use it for this specific animal the next year, you treat it as if it was valued under the herd scheme at the end of the first year.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514440.

Topics:
Money and consumer rights > Taxes
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EC 34: General rule, or

“How to calculate the value of expensive livestock for tax purposes”

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EC 36: Immature livestock and recently acquired livestock, or

“Valuing young or newly purchased high-priced livestock”

Part E Timing and quantifying rules
Valuation of livestock: Definitions

EC 35Livestock reaching national average market value and livestock no longer used for breeding

  1. This section applies to a person’s high-priced livestock whose value at the end of an income year is equal to or less than the national average market value for the class to which the livestock belongs.

  2. This section also applies to high-priced livestock that, in an income year, a person—

  3. does not expect to use for breeding for that or any later income year; and
    1. does not intend to dispose of to any other person to use for breeding.

      1. The closing value of the high-priced livestock at the end of the income year is determined as follows:

      2. when the person values any specified livestock of that type under the herd scheme for the income year, the value of the animal under the herd scheme; and
        1. when the person values all specified livestock of that type that is older than 1 year under the national standard cost scheme or the cost price method, the national average market value for the income year of livestock of the class to which the animal belongs; and
          1. when the person values all specified livestock of that type that is older than 1 year under the market value method or the replacement price method, the market value or replacement price of the animal at the end of the income year.

            1. In later income years, the animal that was high-priced livestock is treated as the person’s specified livestock and is valued under the valuation method the person chooses for specified livestock of the type to which the animal belongs.

            2. This subsection applies if, in a later income year (year A), the person values any specified livestock of the same type as the animal under the herd scheme and, in the next year, values the animal under the herd scheme. The animal is treated as if it were valued under the herd scheme at the end of year A.

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