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Income Tax Act 2007

Timing and quantifying rules - Terminating provisions

EZ 21: Sections EE 45 and EE 47: permanent removal: allowance before 1 April 1995

You could also call this:

“Tax rules for items with special allowances that are no longer used or moved overseas before April 1995”

When you stop using something that was given a special tax allowance before 1 April 1995, you need to work out how much it’s worth. This is called the ‘market value’. If you’re selling it and need to charge GST, you take the GST off the market value. But if you’re giving it to someone as part of a relationship agreement, you don’t use the market value rule.

There’s also a rule about taking things out of New Zealand. If you got a special tax allowance in the first year for something, and you stop using it in New Zealand and take it overseas to use there, that’s treated as a special event. But this doesn’t count if you’re only taking it out of the country for a short time and you’ll bring it back to use in a New Zealand business.

These rules are linked to section EE 45(11), section EE 44, and section EE 47(10) of the law. They help figure out what happens with your taxes when you stop using or move certain items that had special tax treatment.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516056.

Topics:
Money and consumer rights > Taxes
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EZ 20: Adjusted tax value for software acquired before 1 April 1993, or

“How to calculate the tax value of software purchased before April 1993”

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EZ 22: Base value and total deductions in section EE 56: before 1 April 1995, or

“Rules for calculating depreciation on pre-1995 assets”

Part E Timing and quantifying rules
Terminating provisions

EZ 21Sections EE 45 and EE 47: permanent removal: allowance before 1 April 1995

  1. For the purposes of section EE 45(11) (Consideration for purposes of section EE 44), the consideration that a person derives from the event described in subsection (2) is the item’s market value. Two qualifications are—

  2. if the person makes a taxable supply, market value means the market value minus any goods and services tax (GST) that would be charged on the supply; and
    1. this subsection does not apply to a transfer under a relationship agreement.

      1. For the purposes of section EE 47(10) (Events for purposes of section EE 44), the ninth event is the cessation of use in New Zealand, and the taking out of New Zealand for use outside New Zealand, of an item of property for which a first-year allowance has been granted under section 112(1) to (7) of the Income Tax Act 1976, except when the item—

      2. has been taken out of New Zealand temporarily; and
        1. will, after its return to New Zealand, be used in or for the purpose of a business in New Zealand.

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