Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Timing and quantifying rules - Valuation of livestock - Definitions

EC 47D: Change of prospective bloodstock breeders’ expectation or intention after earlier deductions

You could also call this:

“Tax rules for racehorses bought for breeding but no longer used for that purpose”

If you own expensive racehorses that you bought because you planned to breed them, this law might apply to you. It’s important if you’ve claimed tax deductions for these horses but haven’t used them for breeding in New Zealand to make money.

The law says that if you no longer think your horse can be used for breeding in the future, or if you’ve changed your mind about using it for breeding in New Zealand to make money, something important happens. The government will treat it as if you’ve sold the horse, even though you still own it.

They’ll consider that you ‘sold’ the horse on the day you changed your mind or realised it couldn’t be used for breeding. The ‘sale price’ they’ll use is whatever the horse was worth on that day.

This matters because it might affect how much tax you need to pay, especially if you’ve already claimed deductions for the horse in the past.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS178906.

Topics:
Money and consumer rights > Taxes
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EC 47C: When prospective breeders treated as being in breeding business, or

“Rules for treating prospective horse breeders as operating a breeding business”

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EC 47E: Prospective breeders commencing actual breeding businesses, or

“Starting a bloodstock breeding business with previously purchased stud-founding bloodstock”

Part E Timing and quantifying rules
Valuation of livestock: Definitions

EC 47DChange of prospective bloodstock breeders’ expectation or intention after earlier deductions

  1. This section applies when—

  2. a person owns high-priced bloodstock that they acquired as a prospective bloodstock breeder; and
    1. the person has been allowed a deduction in relation to the high-priced bloodstock; and
      1. the person has not used the high-priced bloodstock for breeding bloodstock in New Zealand for profit; and
        1. the person—
          1. no longer expects that the high-priced bloodstock will be able to be used for future breeding:
            1. no longer intends to use the high-priced bloodstock for breeding bloodstock in New Zealand for profit.

            2. The person is treated as having disposed of the high-priced bloodstock. The disposal is treated as having occurred at the high-priced bloodstock’s market value on the day on which the person’s expectation or intention first changed.

            Notes
            • Section EC 47D: inserted (with effect on 1 January 2019), on , by section 162(1) (and see section 162(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).