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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 73: Insurance for Canterbury earthquake damage causing disposal: optional timing rule for income, deductions

You could also call this:

“Optional timing for reporting income and deductions from Canterbury earthquake-damaged property disposal”

This section applies to you if you have an item of property that can lose value over time and was damaged by a Canterbury earthquake. The damage must have caused you to get rid of and buy back the item, or meet certain other conditions. You also need to be entitled to insurance or compensation for the damage, and you must choose to apply this section to all your eligible items.

If you know how much insurance money you’ll get (or can make a good guess) before the end of the 2023-24 tax year, you’ll need to report this income in your tax return. You’ll report it in the 2023-24 tax year or earlier if you know the costs of getting rid of the item, how much insurance money you’ll get, and how much you’ll get for selling the item.

If you know how much it will cost to get rid of the item (or can make a good guess) before the end of the 2023-24 tax year, you can claim this cost as a tax deduction. You’ll claim it in the 2023-24 tax year or earlier if you know the disposal cost, how much insurance money you’ll get, and how much you’ll get for selling the item.

This section changes when you need to report your income from insurance and selling the item, and when you can claim deductions for getting rid of the item and its loss in value. It overrides other sections of the law that usually decide when these things should be reported.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6820052.

Topics:
Money and consumer rights > Taxes
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EZ 74: Insurance for repairs of Canterbury earthquake damage: optional timing rule for income, deductions, or

“Optional timing for Canterbury earthquake insurance income and repair deductions”

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

EZ 73Insurance for Canterbury earthquake damage causing disposal: optional timing rule for income, deductions

  1. This section applies for a person and an item of depreciable property 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 damage—
      1. results in the item being affected by a disposal and reacquisition under section EZ 70; or
        1. meets the requirements of section EE 47(4) (Events for purposes of section EE 44); and
        2. the person is entitled to an amount of insurance or compensation for the damage to the item; and
          1. the person chooses to apply this section for all items of depreciable property meeting the requirements of paragraphs (a) to (c).

            1. If the amount of insurance or compensation for the damage (the insurance receipt) is derived or able to be reasonably estimated before the end of the 2023–24 income year, the person's income from the insurance receipt and the consideration derived from the disposal of the item is attributed to the earlier of—

            2. the 2023–24 income year:
              1. the first income year in which—
                1. the amount of the cost of disposing of the item (the disposal cost) is or has been incurred or able to be reasonably estimated; and
                  1. the insurance receipt is or has been derived or able to be reasonably estimated; and
                    1. the consideration from the disposal of the item is or has been derived or able to be reasonably estimated.

                    2. If the disposal cost is incurred or able to be reasonably estimated before the end of the 2023–24 income year, the person's deductions for the disposal cost and for depreciation loss under section EE 48 (Effect of disposal or event) are attributed to the earlier of—

                    3. the 2023–24 income year:
                      1. the first income year in which—
                        1. the disposal cost is or has been incurred or able to be reasonably estimated; and
                          1. the insurance receipt is or has been derived or able to be reasonably estimated; and
                            1. the consideration from the disposal of the item is or has been derived or able to be reasonably estimated.

                            2. This section overrides sections EE 1, EE 22, and EE 48 (which state when depreciation loss and depreciation recovery income arise) in relation to the timing of the person's—

                            3. income from the insurance receipt and consideration from the disposal of the item:
                              1. deductions for the disposal cost and depreciation loss.

                                Notes
                                • Section EZ 73: 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 73(2): amended (with effect on 1 April 2016), on , by section 189 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                • Section EZ 73(2)(a): amended (with effect on 1 April 2016), on , by section 189 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                • Section EZ 73(3): amended (with effect on 1 April 2016), on , by section 189 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                • Section EZ 73(3)(a): amended (with effect on 1 April 2016), on , by section 189 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                • Section EZ 73 list of defined terms grandparented structure: repealed (with effect on 1 April 2016), on , by section 102 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).