Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Timing and quantifying rules - Depreciation - Adjusted tax value

EE 59: Base value in section EE 56 when property is petroleum-related depreciable property

You could also call this:

“Calculating the starting value of petroleum-related assets for tax depreciation”

When you own something related to petroleum that can lose value over time, there are special rules about how much it’s worth for tax purposes. These rules apply if you got the item from someone connected to you, like a family member or business partner.

The value of the item is whichever is less: how much you paid for it, or the total of two amounts. The first amount is how much the item cost the person who owned it before you, or the first person in a chain of connected owners. The second amount is any money spent on the item by you or the connected person before you got it.

There are some special rules about what counts as money spent on the item. If someone got a tax deduction for the item losing value under certain parts of the tax law, that money doesn’t count. But if they got a deduction under other parts of the tax law, that money does count. Also, if someone got (or could have got) a tax deduction for the item under any other part of the tax law, that money doesn’t count either.

These rules help figure out the starting value of the item for working out how much it loses value each year for tax purposes.

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 It might be out of date or be missing some parts.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

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514713.

Topics:
Money and consumer rights > Taxes
Previous

EE 58: Base value in section EE 56 when no previous deduction, or

“Calculating value of previously unclaimed items for tax purposes”

Next

EE 60: Total deductions in section EE 56, or

“How to calculate total deductions for an item's adjusted tax value”

Part E Timing and quantifying rules
Depreciation: Adjusted tax value

EE 59Base value in section EE 56 when property is petroleum-related depreciable property

  1. This section applies when the item is an item of petroleum-related depreciable property to which both the following apply:

  2. section EZ 22(1) (Base value and total deductions in section EE 56: before 1 April 1995) does not apply to it; and
    1. the person (person A) acquires it from an associated person.

      1. Base value is the lesser of—

      2. the cost of the item to person A; and
        1. the total of the amounts described in subsections (3) and (4).

          1. The amount is the cost of the item to—

          2. the associated person, if the associated person did not acquire the item from either person A or another person associated with person A; or
            1. whoever owned the item, whether person A or the associated person, at the start of an unbroken chain of ownership made up of person A and 1 or more persons associated with person A.

              1. The amount is all expenditure incurred for the item by person A and the associated person or associated persons before the date on which person A acquired the item.

              2. In this section, cost and expenditure are qualified as follows:

              3. expenditure is excluded from them if it is expenditure for which a person has been allowed a deduction for an amount of depreciation loss they have had under section EE 38(3) or EE 48(2) or the corresponding provision of the Income Tax Act 2004 or the Income Tax Act 1994; and
                1. expenditure is not excluded from them if it is expenditure for which a person has been allowed a deduction for an amount of depreciation loss they have had under any other provision of this subpart or the corresponding provision of the Income Tax Act 2004 or the Income Tax Act 1994; and
                  1. expenditure is excluded from them if it is expenditure for which a person is allowed a deduction under any other subpart or the corresponding provision of the Income Tax Act 2004 or the Income Tax Act 1994; and
                    1. expenditure is excluded from them if it is expenditure for which a person would have been allowed a deduction under any other subpart if this Act had applied or the corresponding provision of the Income Tax Act 2004 or the Income Tax Act 1994 if the Act had applied.

                      Compare