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Income Tax Act 2007

Timing and quantifying rules - Terminating provisions

EZ 6: Reduction: broodmare previously used for breeding in New Zealand: pre-1 August 2006

You could also call this:

“Calculating tax value for older NZ breeding horses”

This law is about how you calculate the value of a broodmare for tax purposes. A broodmare is a female horse used for breeding. The law applies to broodmares that were first used for breeding in New Zealand before 1 August 2006.

To work out the value of the broodmare, you use a special formula. The formula is different depending on how old the broodmare is and when it started breeding.

For most broodmares, you divide the cost price by (15 minus the age of the broodmare). But if the broodmare is older than 12 years, you treat it as if it’s 12 years old for this calculation.

For some broodmares that started breeding later, you use a different formula. You divide the cost price by (11 minus the age of the broodmare). If the broodmare is older than 8 years, you treat it as if it’s 8 years old for this calculation.

These rules help you figure out how much the broodmare’s value has decreased over time, which is important for your taxes.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515999.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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EZ 5: Reduction: bloodstock not previously used for breeding in New Zealand: pre-1 August 2006, or

“ Reducing tax value for bloodstock first used for breeding in New Zealand before 1 August 2006 ”

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EZ 6B: National minimum price threshold for 2019 calendar year, or

“Minimum prices for buying different types of young racehorses in 2019”

Part E Timing and quantifying rules
Terminating provisions

EZ 6Reduction: broodmare previously used for breeding in New Zealand: pre-1 August 2006

  1. This section applies to a broodmare that section EC 39(1) or (2) (First income year in breeding business) applies to,—

  2. before 1 August 2006; or
    1. 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.

      1. For the purposes of sections EC 39 and EC 40 (which relate to bloodstock), the reduction applying to the value of a broodmare to which section EC 39(1) applies and sections EC 41 (Reduction: bloodstock not previously used for breeding in New Zealand) and EZ 5 do not apply is calculated using the formula—

        cost price of broodmare ÷ (15 − age of broodmare).

        Where:

        • In the formula in subsection (2), age of broodmare is—

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

            1. 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 sections EC 41 and EZ 5 do not apply is calculated using the formula—

              cost price of broodmare ÷ (11 − age of broodmare).

              Where:

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

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

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