Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
EC 38: Application of sections EC 39 to EC 48
or “Rules for valuing bloodstock for tax purposes”
You could also call this:

“Rules for valuing horses in the first year of a breeding business”

This law is about bloodstock, which means horses used for breeding. It talks about what happens in the first year you start using a horse for breeding in your business.

The law applies to horses that are at least 2 years old at the end of your first year of using them for breeding, planning to use them for breeding, or buying them to use for breeding in your business.

For broodmares (female horses used for breeding), the same rules apply if you start using them, plan to use them, or buy them for breeding after 1 April 2001.

There’s also a rule for special bloodstock called “stud-founding bloodstock”. This applies in the first year when this type of horse turns 2 years old.

At the end of the first year, you need to work out the value of the horse. You do this by taking the cost price of the horse and subtracting an amount called a reduction. The reduction is calculated using rules in other parts of the law, which you can find in section EC 41, EC 42, EZ 5, or EZ 6.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: EC 39B: Stud-founding bloodstock and related terms

or “Defining terms for special horses used in breeding and racing”
Next

Part E Timing and quantifying rules
Valuation of livestock: Definitions

EC 39First income year in breeding business

  1. This section applies to bloodstock that is 2 years of age or older at the end of the first income year in which a person—

  2. uses the bloodstock for breeding in their breeding business; or
    1. forms the intention of using the bloodstock for breeding in their breeding business; or
      1. acquires the bloodstock, with the intention of using it for breeding in their breeding business.

        1. This section also applies to a broodmare that is 2 years of age or older at the end of a person’s first income year after 1 April 2001 in which the person—

        2. first uses the broodmare for breeding in their breeding business; or
          1. first forms the intention of using the broodmare for breeding in their breeding business; or
            1. acquires the broodmare, with the intention of using it for breeding in their breeding business.

              1. This section also applies to stud-founding bloodstock at the end of the prospective bloodstock breeder’s first income year in which the stud-founding bloodstock is 2 years of age.

              2. The closing value of the bloodstock at the end of the first income year is its cost price minus the reduction applying in that income year.

              3. The reduction that applies is determined under section EC 41, EC 42, EZ 5, or EZ 6 (which relate to bloodstock).

              Compare
              Notes
              • Section EC 39(1)(c): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
              • Section EC 39(2)(c): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
              • Section EC 39(2B) heading: inserted (with effect on 1 January 2019), on , by section 158(1) (and see section 158(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section EC 39(2B): inserted (with effect on 1 January 2019), on , by section 158(1) (and see section 158(3) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section EC 39 list of defined terms prospective bloodstock breeder: inserted (with effect on 1 January 2019), on , by section 158(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section EC 39 list of defined terms stud-founding bloodstock: inserted (with effect on 1 January 2019), on , by section 158(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).