Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Taxation of certain entities - Look-through companies

HB 10: Disposal of livestock

You could also call this:

“Rules for selling livestock ownership, especially breeding animals”

If you own livestock and decide to sell some or all of your ownership to someone else, this law might apply to you. It’s important when the animals you’re selling include female breeding livestock, and you use specific methods to value your animals for tax purposes.

These methods are called the national standard cost scheme and the cost price method. You can find more information about these in other parts of the tax law.

When the new owner buys into your livestock, they might be able to use a special rule to figure out how much the animals are worth at the end of the tax year. This rule is similar to one used for business partners, but it’s adapted for this situation. The new owner is treated like a new partner joining a business.

The law says to use this rule, you need to change some words. Instead of talking about “partners,” you should think about “owners.” And when it mentions one part of the law, you should think about a different part that applies to your situation.

This helps make sure the new owner can correctly value the livestock they’ve bought from you for tax purposes.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM3676681.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
Environment and resources > Farming and fishing
Previous

HB 9: Disposal of short-term agreements for sale and purchase, or

“Rules for selling or buying short-term agreements in a look-through company”

Next

HB 11: Limitation on deductions by persons with interests in look-through companies, or

“Limits on tax deductions for look-through company owners”

Part H Taxation of certain entities
Look-through companies

HB 10Disposal of livestock

  1. This section applies when a person disposes of some or all of their owner's interests to an entering owner and section HB 4(2) applies, to the extent to which those interests include specified livestock and that specified livestock includes female breeding livestock and, for the income year, the owners use—

  2. the national standard cost scheme for specified livestock, described in section EC 22 (National standard cost scheme); or
    1. the cost price method for specified livestock, described in section EC 25 (Cost price, replacement price, or market value).

      1. Section EC 26B (Entering partners' cost base) may apply to the entering owner for the purposes of determining the value of the specified livestock at the end of an income year for the purposes of section EC 2 (Valuation of livestock), treating the entering owner as an entering partner and making other necessary modifications to section EC 26B to give effect to the purpose of this section (for example, references in section EC 26B to partners should be modified to references to owners and references to section HG 10 should be modified to references to section HB 10).

      Notes
      • Section HB 10: inserted, on (applying for income years beginning on or after 1 April 2011, and for the purposes of the Commissioner receiving LTC elections, on and after 21 December 2010), by section 78(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).