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Income Tax Act 2007

Timing and quantifying rules - Valuation of livestock - Definitions

EC 48: Replacement breeding stock

You could also call this:

“Rules for replacing breeding stock in a bloodstock breeding business”

If you own bloodstock and use it for breeding in a business where you sell or exchange the offspring, you can replace your breeding stock in certain situations. This applies when you sell your breeding stock or when your breeding stock dies, gets injured, or is lost.

You can ask the Commissioner to work out how much money you’ve spent on getting new breeding stock. This amount can’t be more than what you gained from selling your old breeding stock or from insurance payments for lost or injured stock.

You can lower your income by the amount the Commissioner decides. If you do this, you also need to lower the cost of your new breeding stock by the same amount.

You usually need to get your new breeding stock within 6 months after the end of the income year. Sometimes, the Commissioner might give you more time if you have a good reason.

If your breeding stock died, got injured, or was lost, you might get even more time. But you need to have good business reasons for the delay. You must get the new stock before the end of the second income year after the one when your stock was lost or injured.

When you ask the Commissioner about this, you need to do it within the time limits mentioned. Your request can only be about new breeding stock you’ve already bought.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514475.

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Part E Timing and quantifying rules
Valuation of livestock: Definitions

EC 48Replacement breeding stock

  1. This section applies when—

  2. a bloodstock owner—
    1. disposes of bloodstock (the breeding stock) that they had previously used for breeding in the course of a business of breeding bloodstock for sale or exchange; and
      1. acquires replacement bloodstock (the replacement breeding stock) within the time limits set out in subsections (6) and (7); or
      2. a bloodstock owner—
        1. receives a payment of insurance, indemnity, or compensation for the loss or death of, or permanent injury to, breeding stock that they had previously used for breeding in the course of a business of breeding bloodstock for sale or exchange or that they had acquired for use in the business; and
          1. acquires replacement breeding stock within the time limits set out in subsections (6) and (7).

          2. The bloodstock owner may apply to the Commissioner to determine the amount that the bloodstock owner has applied in acquiring replacement breeding stock.

          3. The amount must not be more than the net gain calculated using the formula—

            gross proceeds − value of breeding stock.

            Where:

            • In the formula,—

            • gross proceeds is—
              1. the amount of the proceeds of disposing of the breeding stock; or
                1. the amount paid by way of insurance, indemnity, or compensation for the breeding stock:
                2. value of breeding stock is the closing value of the breeding stock in the income year before the breeding stock was disposed of or was lost or died or was permanently injured.

                  1. The bloodstock owner may reduce their income by the amount determined under subsection (2). If they reduce their income in this way, they must also reduce the cost of the replacement breeding stock by the same amount.

                  2. Replacement breeding stock must be acquired within 6 months after the end of the income year in which the amount determined under subsection (2) would otherwise be income or, if the Commissioner approves in a case or in a class of cases, a longer period.

                  3. In the case of lost, dead, or permanently injured breeding stock, the Commissioner may extend the time limit under subsection (6). However, valid commercial reasons must exist for the delay in replacing the breeding stock and the replacement breeding stock must have been acquired before the end of the second income year following the income year in which the loss, death, or permanent injury occurred.

                  4. An application under subsection (2) must be made within the relevant time limits described in subsections (6) and (7). The application must relate only to replacement breeding stock acquired before the application is made.

                  Compare
                  Notes
                  • Section EC 48(1)(a)(i): 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 48(1)(a)(ii): 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 48(1)(b)(i): 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 48(1)(b)(ii): 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 48(2): 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 48(8): amended, on , by section 15(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
                  • Section EC 48(8): 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 48 list of defined terms apply: inserted, on , by section 15(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).