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Income Tax Act 2007

Timing and quantifying rules - Valuation of livestock - Definitions

EC 42: Reduction: bloodstock previously used for breeding in New Zealand

You could also call this:

“How to reduce the tax value of bloodstock used for breeding in New Zealand”

When you have a stallion or broodmare that was used for breeding in New Zealand, you need to reduce its value for tax purposes. This reduction is different for stallions and broodmares.

For stallions, you reduce the value by 20% of what you paid for it. This applies when section EC 41 doesn’t apply to the stallion.

For broodmares, you use a special calculation to work out the reduction. You divide what you paid for the broodmare by (9 minus the broodmare’s age). This applies when section EC 39(2) applies to the broodmare, but section EC 41 doesn’t.

When you’re figuring out the broodmare’s age for this calculation, you use 8 if the broodmare is older than 8 years. If the broodmare is 7 years old or younger at the end of the tax year, you use its actual age.

Remember, these rules might not apply if the broodmare was used for breeding before 1 August 2006. In that case, you need to check section EZ 6 instead.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514460.

Topics:
Money and consumer rights > Taxes
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EC 41: Reduction: bloodstock not previously used for breeding in New Zealand other than as shuttle stallions, or

“Reducing tax value for certain horses not previously bred in New Zealand”

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EC 43: Accident, birth deformity, or infertility, or

“Valuing bloodstock affected by health issues or accidents”

Part E Timing and quantifying rules
Valuation of livestock: Definitions

EC 42Reduction: bloodstock previously used for breeding in New Zealand

  1. For the purposes of sections EC 39 and EC 40, the reduction applying to the value of a stallion to which section EC 41 does not apply is 20% of its cost price.

  2. For the purposes of sections EC 39 and EC 40, the reduction applying to the value of a broodmare to which section EC 39(2) applies and section EC 41 does not apply is calculated using the formula—

    cost price of broodmare ÷ (9 − age of broodmare).

    Where:

    • In the formula, age of broodmare is—

    • 8 years of age; or
      1. the actual age in years, for a broodmare that is 7 years of age or less at the end of the income year.

        1. This section is overridden by section EZ 6 (Reduction: broodmare previously used for breeding in New Zealand: pre-1 August 2006).

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