Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

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

FP 24: Calculation of income for section FP 23

You could also call this:

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

When you choose to allocate your income under section FP 23(3), you use a formula to calculate the amount of that income. The formula is: the sum of the number of livestock times the sale proceeds plus livestock compensation, all divided by the culled stock. You calculate this for each class of livestock.

The symbol Σ means you add up the amounts calculated for each class of livestock. The number of livestock is the smaller of two numbers: the number from the formula in section FP 25(2), or the number of livestock you valued in the previous income year. Sale proceeds are the income you get from selling the destroyed livestock.

Livestock compensation is the income you get as compensation under section 162A of the Biosecurity Act 1993 for the destroyed livestock. Culled stock is the number of livestock that were destroyed. You use these definitions to calculate your income using the formula.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS1432226.

Previous

FP 23: Livestock destroyed because of emergency events, or

"Help with tax when livestock are destroyed in an emergency"

Next

FP 25: Livestock number for section FP 24, or

"How to work out your total number of livestock for tax purposes"

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

FP 24Calculation of income for section FP 23

  1. When a person chooses to allocate their income under section FP 23(3), this section provides the formula to calculate the amount of that income.

  2. The amount of income is calculated under the following formula:

    Σ(number × (sale proceeds + livestock compensation) ÷ culled stock).

    Where:

    • The items in the formula in subsection (2) are defined in subsections (4) to (8).

    • Σ is the symbol for the summation of the amounts calculated using the formula in the brackets that follow that symbol for each of the classes of livestock.

    • Number, for a class of livestock, is the number that is the lesser of the following 2 numbers, or the first number if they are the same:

    • the number that is the greater of zero and the number calculated using the formula in section FP 25(2); and
      1. the number of livestock of that class that—
        1. were breeding stock or stock that the person expected to be capable of, and intended to be used for, breeding upon reaching maturity; and
          1. the person valued under the national standard cost scheme or the cost price method in the income year before the cull year.

          2. Sale proceeds, for a class of livestock, is the amount of income the person derives as consideration for the disposal of livestock of that class, including their carcasses, that are part of the destroyed livestock referred to in section FP 23(1)(b) (the destroyed livestock).

          3. Livestock compensation, for a class of livestock, is the amount of income the person derives as compensation to which they are entitled under section 162A of the Biosecurity Act 1993 and that they receive by the end of the income year following the cull year, but only to the extent to which the compensation relates to—

          4. an excess of the value of the destroyed livestock that belong to that class used in the calculation of that compensation over the amount of income described in subsection (6) for that class; and
            1. an excess of the cost of replacement livestock of the same class that the person acquires and intends to be used for breeding over the amount of income that would, in the absence of this paragraph, be described in this subsection.

              1. Culled stock, for a class of livestock, is the number of livestock of that class that are part of the destroyed livestock.

              Notes
              • Section FP 24: inserted, on , by section 65 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).