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Income Tax Act 2007

Recharacterisation of certain transactions - Transfers of relationship property

FB 17: High-priced livestock

You could also call this:

“Rules for valuing high-priced livestock when settling relationship property”

When you transfer high-priced livestock as part of settling relationship property, there are special rules about how to value it. These rules apply to the sections about valuing high-priced livestock in the Income Tax Act.

The transfer is treated as if you sold the livestock and then bought it again for the same price you originally paid. The new owner is considered to have bought the livestock on the same day you did.

At the end of the year when you transfer the livestock, the new owner needs to work out its value. They start with the price you paid and then reduce it by a percentage. This percentage is found in section EC 34(2).

However, if you chose to use the diminishing value method to value the livestock, the new owner has to use this method too. In this case, they calculate the reduction using section EC 34(3).

If you didn’t use the diminishing value method, the new owner can only choose between the methods in section EC 34(2) and (3) if you bought the livestock in the same year you transferred it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516361.

Topics:

Money and consumer rights > Taxes

Family and relationships > Marriage and partnerships

FB 16: Non-specified livestock, or

“Rules for livestock not on the official list when given in a divorce or separation”

FB 18: Bloodstock, or

“Rules for valuing bloodstock received in relationship property settlements”

Part F Recharacterisation of certain transactions
Transfers of relationship property

FB 17High-priced livestock

This section applies for the purposes of sections EC 32 to EC 37 (which relate to the valuation of high-priced livestock) when high-priced livestock is transferred on a settlement of relationship property.
The transfer is treated as a disposal and acquisition for an amount equal to the cost of the livestock to the transferor. The transferee is treated as having acquired the livestock on the day it was acquired by the transferor.
In determining the value of the livestock at the end of the year of transfer, the transferee must take into account the amount referred to in subsection (2) reduced by the depreciation percentage of its cost price under section EC 34(2) (General rule). Subsection (4) overrides this subsection.
If the transferor had chosen to apply the diminishing value method to the valuation of the livestock, the transferee is treated as also having made that choice, and the reduction is calculated under section EC 34(3). But if the transferor had not chosen to apply the diminishing value method, the transferee may make a choice between the methods set out in section EC 34(2) and (3) only if the livestock was acquired by the transferor in the year of transfer.

Compare

2004 No 35 s FF 11

Notes

Section FB 17 list of defined terms dispose: inserted, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).