EZ 4BCattle destroyed because of Mycoplasma bovis: spreading

1. This section applies when—

2. a person who owns or carries on a business has mixed-age cows on hand at the start of an income year (the cull year) before the 2028–29 income year that they—
   1. use for breeding in the ordinary course of carrying on the business; and
   2. valued under the national standard cost scheme or the cost price method in the previous income year; and
3. in the cull year, some or all of the person’s cattle (the destroyed cattle) are destroyed, because of Mycoplasma bovis, pursuant to—
   1. a power exercised under section 121 of the Biosecurity Act 1993:
   2. a direction given under section 122 of that Act; and
4. either,—
   1. if the cull year is before the 2019–20 income year, the number of mixed-age cows valued under the national standard cost scheme or the cost price method that the person has on hand at the end of the income year following the cull year is at least 75% of the number of mixed-age cows valued under the national standard cost scheme or the cost price method that the person had on hand at the start of the cull year; or
   2. in any other case, the number of mixed-age cows valued under the national standard cost scheme or the cost price method that the person expects to have on hand at the end of the income year following the cull year is at least 75% of the number of mixed-age cows valued under the national standard cost scheme or the cost price method that the person had on hand at the start of the cull year.

5. The person may choose to allocate the amount of income calculated using the formula in subsection (5) equally between the 6 income years following the cull year.

6. When a person makes an election under subsection (2), part of any deduction that the person is allowed for the value that their livestock valued under subpart EC (Valuation of livestock) had at the end of the income year before the cull year, as calculated under section EC 2 (Valuation of livestock), is allocated equally between the 6 income years following the cull year. The part must reflect the value, as calculated under that section at the end of the income year before the cull year using whichever of the national standard cost scheme or the cost price method the person used in the income year before the cull year, of the same number of each class of livestock to which the amount of income allocated under subsection (2) relates.

7. If the person stops owning or carrying on the business in an income year (the cessation year) before the seventh income year following the cull year, to the extent to which it has not been allocated to income years before the cessation year,—

8. the amount of income calculated using the formula in subsection (5) is allocated to the cessation year; and
9. the part of any deduction allocated under subsection (3) is allocated to the cessation year.

10. The formula referred to in subsections (2) and (4) is—

    $\Sigma (number\; \times \; (sale\; proceeds\; +\; compensation)\; ÷\; culled\; stock).$

    Where:

11. The items in the formula in subsection (5) are defined in subsections (7) to (11).

12. 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 following classes of each of the beef cattle and dairy cattle types of livestock:

13. rising 1 year heifers:
14. rising 2 year heifers:
15. mixed-age cows:
16. breeding bulls.

17. 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:

18. the number that is the greater of zero and the number calculated using the formula in subsection (12):
19. 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
    2. the person valued under the national standard cost scheme or the cost price method in the income year before the cull year.

20. 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 cattle.

21. Compensation, for a class of livestock, is the amount of income the person derives that is compensation to which the person is entitled under section 162A of the Biosecurity Act 1993 and that the person receives by the end of the income year following the cull year, but only to the extent to which that compensation is for—

22. any excess of the value of the destroyed cattle that belong to that class used in the calculation of that compensation over the amount of income described in subsection (9) for that class; and
23. any excess of the cost of replacement cattle 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.

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

25. The formula referred to in subsection (8) is—

    $valuation\; method\; breeding\; stock\; +\; culled\; stock\; –\; opening\; stock.$

    Where:

26. In the formula in subsection (12), for a class of livestock,—

27. valuation method breeding stock is the number of livestock of that class that—
    1. were breeding stock or stock that the person expected to be capable of, and intended be used for, breeding upon reaching maturity; and
    2. the person valued under the national standard cost scheme or the cost price method in the income year before the cull year:
28. culled stock is the number of livestock of that class that are part of the destroyed cattle:
29. opening stock is the number of livestock of that class that the person had on hand at the start of the cull year.

30. A person makes an election under subsection (2) by notifying the Commissioner,—

31. if the cull year is the 2020–21 income year or an earlier income year, by the date of filing their return of income for the 2020–21 income year; or
32. in any other case, by the date of filing their return of income for the cull year.

33. An election made under subsection (2) cannot be revoked.

34. A person who makes an election under subsection (2) is treated as never having made the election if the number of mixed-age cows valued under the national standard cost scheme or the cost price method that the person has on hand at the end of the income year following the cull year is less than 75% of the number of mixed-age cows valued under the national standard cost scheme or the cost price method that the person had on hand at the start of the cull year.

35. This section overrides sections CG 6 (Receipts from insurance, indemnity, or compensation for trading stock) and DB 49 (Adjustment for opening values of trading stock, livestock, and excepted financial arrangements).

Notes

• Section EZ 4B: inserted (with effect on 1 April 2017), on 30 March 2021, by section 56(1) (and see section 56(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).