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Income Tax Act 2007

Recharacterisation of certain transactions - Tax relief for emergencies - Optional rule for valuation of group assets

FP 23: Livestock destroyed because of emergency events

You could also call this:

“Help with tax when livestock are destroyed in an emergency”

If you own a business with livestock and some of them are destroyed because of an emergency event, you might be able to use a special rule to value them. This rule applies if you had livestock at the start of the income year that you used for breeding and had valued them using a certain method the year before. You must have had to destroy them because of the emergency event, and this was done under a power given by the Biosecurity Act 1993, such as section 121 or section 122 of that Act.

You can choose to spread the income from the destroyed livestock over six years if you have enough female breeding animals left. You must have at least 75% of the number of mixed-age female breeding animals you had at the start of the year. Mixed-age female breeding animals include cows, hinds, ewes, does, and breeding sows.

If you choose to spread the income, you must tell the Commissioner by the time you file your tax return for that year. You cannot change your mind once you have made this choice. If you do not have enough female breeding animals left, you will be treated as if you never made the choice.

This rule overrides some other rules, such as sections CG 6 and DB 49. If you stop owning or running the business, any income or deductions that have not been allocated will be allocated to the year you stop. You can find more information about the types of livestock in schedule 17.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS1432223.

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FP 24: Calculation of income for section FP 23, or

"How to work out your income from selling or getting compensation for destroyed livestock"

Part F Recharacterisation of certain transactions
Tax relief for emergencies: Optional rule for valuation of group assets

FP 23Livestock destroyed because of emergency events

  1. This section applies to an income year (the cull year) that falls within an emergency event period when—

  2. a person who owns or carries on a business has livestock on hand at the start of the cull year that they—
    1. use for breeding in the ordinary course of carrying on the business; and
      1. have valued under the national standard cost scheme or the cost price method in the previous income year; and
      2. in the cull year, some or all of the person’s livestock are destroyed, because of the relevant emergency event, pursuant to—
        1. a power exercised under section 121 of the Biosecurity Act 1993:
          1. a direction given under section 122 of that Act; and
          2. the number of mixed-age female breeding animals that the person expects to have on hand at the end of the income year following the cull year, for the type of livestock listed in schedule 17 (Types and classes of livestock), some or all of which were destroyed because of the relevant emergency event, is at least 75% of the number of mixed-age female breeding animals of that type that the person had on hand at the start of the cull year.

            1. When regulations made under section FP 26 provide that this section applies to more than 1 type or class of livestock listed in schedule 17, a person choosing to apply this section must—

            2. apply the formulas in sections FP 24 and FP 25 separately to each type of livestock; and
              1. notify the Commissioner in their election made under subsection (3) as to the type of livestock to which the election applies.

                1. The person may choose to allocate the amount of income calculated using the formula in section FP 24 equally between the 6 income years following the cull year.

                2. When a person makes an election under subsection (3), the amount of the deduction they would have had under section DB 49(3) (Adjustment for opening values of trading stock, livestock, and excepted financial arrangements) at the beginning of the cull year for their livestock that was destroyed is allocated equally between the 6 income years following the cull year.

                3. If the person stops owning or carrying on the business in an income year (the cessation year), any income and deductions that have not yet been allocated to an income year under subsections (3) and (4) are allocated to the cessation year.

                4. A person makes an election under subsection (3) by notifying the Commissioner by the date of filing their return of income for the cull year. The election cannot be revoked.

                5. A person who makes an election under subsection (3) is treated as never having made the election if the number of mixed-age female breeding animals the person has on hand at the end of the income year following the cull year, for the type of livestock listed in schedule 17, some or all of which were destroyed because of the relevant emergency event, is less than 75% of the number of mixed-age female breeding animals that the person had on hand at the start of the cull year.

                6. In this section, mixed-age female breeding animals means, as applicable,—

                7. mixed-age cows:
                  1. mixed-age hinds:
                    1. mixed-age ewes:
                      1. mixed-age does:
                        1. breeding sows.

                          1. This section overrides sections CG 6 (Receipts from insurance, indemnity, or compensation for trading stock) and DB 49.

                          Notes
                          • Section FP 23: inserted, on , by section 65 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).