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Income Tax Act 2007

Timing and quantifying rules - Terminating provisions - Entry to new life insurance regime: transitional and miscellaneous provisions

EZ 71: Insurance for Canterbury earthquake damage of property: limit on depreciation recovery income

You could also call this:

“Limits on taxable income from insurance payouts for Canterbury earthquake-damaged property”

This section of the law talks about insurance for property damaged by Canterbury earthquakes. It applies to you if your property was damaged before the 2024-25 income year.

You can use this law if your property was damaged by a Canterbury earthquake, you’re entitled to insurance or compensation for the damage, and the damage doesn’t meet certain other legal requirements.

If this applies to you, there’s a limit on how much “depreciation recovery income” you have to report. Depreciation recovery income is money you get that’s more than the current value of your property. You only have to report the smaller of two amounts: either what you would normally have to report, or the total amount of depreciation deductions you’ve claimed for the property in the past.

This rule overrides another section of the law about depreciation recovery income.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6820048.

Topics:
Money and consumer rights > Taxes
Housing and property > Home safety and repairs
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EZ 70: Insurance for Canterbury earthquake damage of property: treatment as disposal and reacquisition, or

“How to handle insurance payouts for Canterbury earthquake-damaged property”

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EZ 72: Item treated as available for use if access restricted due to Canterbury earthquake, or

“Depreciation allowed for items inaccessible due to Canterbury earthquake restrictions”

Part E Timing and quantifying rules
Terminating provisions: Entry to new life insurance regime: transitional and miscellaneous provisions

EZ 71Insurance for Canterbury earthquake damage of property: limit on depreciation recovery income

  1. This section applies for a person and an item of depreciable property and an income year before the 2024–25 income year when—

  2. the item is damaged by a Canterbury earthquake as that term is defined in section 4 of the Canterbury Earthquake Recovery Act 2011; and
    1. the person is entitled to an amount of insurance or compensation for the damage to the item; and
      1. the damage does not meet the requirements of section EE 47(4) (Events for purposes of section EE 44); and
        1. section EZ 70 does not apply for the item.

          1. If the person would derive depreciation recovery income under section EE 52 (Amount of depreciation recovery income when compensation received) in an income year for the item in the absence of this section, the person derives in the income year an amount of depreciation recovery income equal to the lesser of—

          2. the amount of depreciation recovery income under section EE 52 that the person would derive in the income year for the item in the absence of this section:
            1. the total of the amounts of depreciation loss for which the person has been allowed deductions for the item.

              1. This section overrides section EE 52.

              Notes
              • Section EZ 71: inserted, on (applying for the 2016–17 and later income years), by section 68(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
              • Section EZ 71(1): amended (with effect on 1 April 2016), on , by section 187 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).