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EZ 77: Substituting debentures repeal: transitional rules
or “Rules for handling old substituting debentures after law change”
You could also call this:

“Insurance pay-outs for Hurunui/Kaikōura earthquake damage treated as property sale and repurchase”

This law applies to you if you own property that was damaged in the Hurunui/Kaikōura earthquake. If you’re getting insurance money for your damaged property, and the insurance company says it’s too expensive to fix, this law tells you how to handle it for tax purposes.

Here’s what happens:

The law treats you as if you sold your damaged property on the day of the earthquake. The ‘sale price’ is the amount of insurance money you get. Then, the law says you bought the property again for free.

This law applies even if the damage isn’t bad enough to count as a total loss under section EE 47(4).

This special rule overrides section EE 52, which usually tells you how to deal with insurance money for tax purposes.

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Next up: EZ 79: Insurance for Hurunui/Kaikōura earthquake damage of property: limit on depreciation recovery income

or “Limits on tax for insurance payouts from Hurunui/Kaikōura earthquake property damage”
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Part E Timing and quantifying rules
Terminating provisions: Entry to new life insurance regime: transitional and miscellaneous provisions

EZ 78Insurance for Hurunui/Kaikōura earthquake damage of property: treatment as disposal and reacquisition

  1. This section applies for a person and an item of depreciable property when—

  2. the item is damaged by a Hurunui/Kaikōura earthquake as that term is defined in section 4 of the Hurunui/Kaikōura Earthquakes Recovery Act 2016 (the Hurunui/Kaikōura earthquake); and
    1. the person is entitled to an amount of insurance or compensation for the damage to the item; and
      1. the item is assessed by the payer of the insurance or compensation as uneconomic to repair; and
        1. the damage does not meet the requirements of section EE 47(4) (Events for purposes of section EE 44).

          1. The person is treated as, on the date of the Hurunui/Kaikōura earthquake,—

          2. disposing of the item for the amount of insurance or compensation; and
            1. reacquiring the item for zero consideration.

              1. This section overrides section EE 52 (Amount of depreciation recovery income when compensation received).

              Notes
              • Section EZ 78: inserted, on (applying for the 2015–16 and later income years), by section 93(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).