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Income Tax Act 2007

Timing and quantifying rules - Terminating provisions

EZ 10: Pool items accounted for by globo method for 1992–93 income year

You could also call this:

“Rules for income from selling items accounted for by old globo method”

If you have a group of items that you’ve been accounting for using a special method called the globo accounting method, this law applies to you. The globo method was used before the 1993-94 tax year, with the Commissioner’s permission.

When you sell or get rid of these items, you might make some income. This law puts a limit on how much of that income you have to report for tax purposes.

The most income you need to report is found by doing a simple math calculation. You take the total amount of depreciation you’ve been allowed to claim as a tax deduction in the past for all the items in the group. Then, you subtract any income you’ve already reported from selling or getting rid of items in this group in previous years.

The result of this calculation is the maximum amount of income you need to report when you sell or get rid of these items. This helps make sure you’re not taxed twice on the same money.

Remember, this only applies to items you’ve been accounting for using the globo method since before the 1993-94 tax year. If you’re not sure if this applies to you, it’s a good idea to ask for help from someone who knows about tax rules.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516017.

Topics:
Money and consumer rights > Taxes
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EZ 9: Pool method for items accounted for by globo method for 1992–93 income year, or

“Rules for grouping similar property items into a single pool for accounting purposes from 1992-93”

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EZ 11: Amounts of depreciation recovery income and depreciation loss for part business use up to 2004–05 income year, or

“Rules for calculating depreciation on partly business-used items owned before 2004-05”

Part E Timing and quantifying rules
Terminating provisions

EZ 10Pool items accounted for by globo method for 1992–93 income year

  1. If a person’s pool consists solely of items of depreciable property accounted for at the end of the person’s 1992–93 income year using, with the Commissioner’s permission, the globo accounting method, the amount of income under section EE 22(5)(a) (Cases affecting pool) is no more than the amount calculated using the formula—

    depreciation allowed − income.

    Where:

    • In the formula,—

    • depreciation allowed is the total of deductions for amounts of depreciation loss that the person has been allowed in all earlier income years for all items in the pool, including amounts allowed before the person’s 1993–94 income year under the globo accounting method:
      1. income is all amounts of income under section EE 22(5)(a) in all previous income years.

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