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Income Tax Act 2007

Recharacterisation of certain transactions - Tax relief for emergencies - When certain items of depreciable property damaged

FP 14: When property uneconomic to repair

You could also call this:

“When it's not worth fixing damaged property after a disaster”

If you have an item of depreciable property that gets damaged in an emergency event, this law applies to you. You must be getting some compensation for the damage and think it’s not worth fixing the item. The damage must not meet the requirements of section EE 47(4) for the purposes of section EE 44. You are treated as if you got rid of the item on the day of the emergency event, and you got the compensation for it. You are also treated as if you got the item back, but you didn’t have to pay anything for it. This law overrides section EE 52, which is about how much depreciation recovery income you get when you receive compensation.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS1432199.

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Part F Recharacterisation of certain transactions
Tax relief for emergencies: When certain items of depreciable property damaged

FP 14When property uneconomic to repair

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

  2. the item is damaged by an emergency event; and
    1. the person is entitled to an amount of compensation for the damage to the item; and
      1. the person reasonably assesses that the item is 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 emergency event,—

          2. disposing of the item for the amount of 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 FP 14: inserted, on , by section 65 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).