EZ 5Reduction: bloodstock not previously used for breeding in New Zealand: pre-1 August 2006

1. This section applies to bloodstock that—

2. was not used for breeding in New Zealand before 16 December 1991; and
3. before a person (person A) acquired it, was not used for breeding in New Zealand by any other person, unless—
   1. the other person transferred the bloodstock to person A under a relationship agreement to which section FB 18 (Bloodstock) applies; or
   2. the other person and person A were companies in the same wholly-owned group at the time person A acquired the bloodstock from the other person; and
4. section EC 39(1) or (2) (First income year in breeding business) applies to,—
   1. before 1 August 2006; or
   2. for an income year ending on or after 1 August 2006, if a requirement of paragraphs (a) to (c) of section EC 39(1) or (2) is first met before 1 August 2006.

5. For the purposes of sections EC 39 and EC 40 (which relate to bloodstock), the reduction applying to the value of a stallion is 25% of the cost price of the stallion unless person A chooses to value the stallion by the reducing value method.

6. When person A chooses to value the stallion by the reducing value method, the reduction applying to the value of the stallion is 37.5% of its cost price in the first income year and 37.5% of its opening value in each later income year. Person A must give notice to the Commissioner of their election in their return of income for the first income year.

7. For the purposes of sections EC 39 and EC 40, the reduction applying to the value of a broodmare is calculated using the formula—

   $1.25\; \times \; cost\; price\; of\; broodmare\; ÷\; (15\; -\; age\; of\; broodmare).$

   Where:

8. In the formula in subsection (4), age of broodmare is—

9. 12 years of age; or
10. the actual age in years, if the broodmare is 11 years of age or less at the end of the income year.

11. 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 is calculated using the formula—

    $1.25\; \times \; cost\; price\; of\; broodmare\; ÷\; (11\; -\; age\; of\; broodmare).$

    Where:

12. In the formula in subsection (6), age of broodmare is—

13. 8 years of age; or
14. the actual age in years, if the broodmare is 7 years of age or less at the end of the income year.