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Income Tax Act 2007

Recharacterisation of certain transactions - Tax relief for emergencies - Certain optional timing rules for depreciable property

FP 17: Insurance for emergency event damage causing disposal: optional timing rule for income, deductions

You could also call this:

“Special rules for telling the government about money from emergency damage to things that lose value over time”

When you have something that can lose value over time, like a building, and it gets damaged in an emergency, you might get money to fix it. You can choose to follow some special rules about when you tell the government about the money you got and the costs of fixing the damage. The rules say you can tell the government about the money and costs in the same year you got the money or in the last year of the emergency.

If you get the money before the emergency is over, you can tell the government about it in the first year you know how much the damage will cost and how much money you will get. You can also tell them in the last year of the emergency. You do the same thing when you are working out how much the damage cost you and how much you lost because the thing was damaged.

These special rules override some other rules that normally apply to things that lose value over time. The other rules are in sections EE 1, EE 22, and EE 48. These rules are about when you tell the government about money you get from damaged things and when you can claim costs for fixing them.

You can find more information about what happens when something is damaged in an emergency in section FP 14 and section EE 44. There are also rules about what counts as an emergency in section EE 47(4) and how it affects things that lose value over time in section EE 48.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS1432207.

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FP 18: Insurance for repairs of emergency event damage: optional timing rule for income, deductions, or

"Special rules for telling the government about money to fix damage from emergencies"

Part F Recharacterisation of certain transactions
Tax relief for emergencies: Certain optional timing rules for depreciable property

FP 17Insurance for emergency event 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 an emergency event; and
    1. the damage—
      1. results in the item being affected by a disposal and reacquisition under section FP 14; 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 compensation for the damage to the item; and
          1. the person chooses to apply this section for all items of depreciable property to which paragraphs (a) to (c) apply.

            1. When the amount of compensation for the damage is derived or able to be reasonably estimated before the end of the emergency event period, the person’s income from the compensation and the consideration derived from the disposal of the item are attributed to the earlier of—

            2. 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 amount of compensation 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; and
                  2. the final income year in the emergency event period.

                    1. When the disposal cost is incurred or able to be reasonably estimated before the end of the emergency event period, 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—

                    2. the first income year in which—
                      1. the disposal cost is, or has been, incurred or able to be reasonably estimated; and
                        1. the amount of compensation 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; and
                          2. the final income year in the emergency event period.

                            1. This section overrides sections EE 1, EE 22, and EE 48 (which relate to the timing of depreciation loss and depreciation recovery income) in relation to the timing of the person’s—

                            2. income from the compensation and consideration from the disposal of the item:
                              1. deductions for the disposal cost and depreciation loss.

                                Notes
                                • Section FP 17: inserted, on , by section 65 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).