Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Timing and quantifying rules - Terminating provisions - Entry to new life insurance regime: transitional and miscellaneous provisions

EZ 87: Insurance for repairs of North Island flooding event damage: optional timing rule for income, deductions

You could also call this:

“Optional delay for reporting flood insurance and repair costs until 2027-28”

This section is about what happens when your property is damaged by flooding in the North Island. It applies to you if your property was damaged, but not so badly that you had to get rid of it completely. You also need to have insurance or some other compensation for the damage.

If you choose to use this rule, it changes when you have to report the money you get from insurance and when you can claim the costs of repairs. You can wait until the 2027-28 tax year to report these, or you can report them earlier if you know how much you’ll get from insurance and how much the repairs will cost.

This rule is different from the usual rules about insurance payments. It gives you more time to sort out your insurance and repair costs before you have to report them for tax purposes.

Remember, you can only use this rule if the flooding happened in the North Island, and you choose to use it for all your damaged property that fits these conditions.

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 It might be out of date or be missing some parts.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

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS952999.

Topics:
Money and consumer rights > Taxes
Housing and property > Home safety and repairs
Previous

EZ 86: Insurance for North Island flooding event damage causing disposal: optional timing rule for income, deductions, or

“Choose when to report insurance payouts and costs for North Island flood-damaged property in your taxes”

Next

FA 1: What this subpart does, or

“This subpart explains how certain business transactions are taxed and treated”

Part E Timing and quantifying rules
Terminating provisions: Entry to new life insurance regime: transitional and miscellaneous provisions

EZ 87Insurance for repairs of North Island flooding event damage: 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 a North Island flooding event; and
    1. the damage—
      1. does not result in the item being subject to a disposal and reacquisition under section EZ 83; and
        1. does not meet the requirements of section EE 47(4) (Events for purposes of section EE 44); and
        2. the person is entitled to an amount of insurance or compensation for the damage to the item; and
          1. the person chooses to apply this section for all items of depreciable property meeting the requirements of paragraphs (a) to (c).

            1. If the amount of insurance or compensation for the damage (the insurance receipt) is derived or able to be reasonably estimated before the end of the 2027–28 income year, the person’s income from the insurance receipt is attributed to the earlier of—

            2. the 2027–28 income year:
              1. the first income year in which—
                1. the amount of expenditure for total repair of the damage (the repair cost) is, or has been, incurred or able to be reasonably estimated; and
                  1. the insurance receipt is, or has been, derived or able to be reasonably estimated.

                  2. If the repair cost is incurred or able to be reasonably estimated before the end of the 2027–28 income year, the person’s deductions for the repair cost are attributed to the earlier of—

                  3. the 2027–28 income year:
                    1. the first income year in which—
                      1. the repair cost is, or has been, incurred or able to be reasonably estimated; and
                        1. the insurance receipt is, or has been, derived or able to be reasonably estimated.

                        2. This section overrides sections CG 4, EE 22, and EE 52 (which provide for receipts of insurance or indemnity payments) in relation to the timing of the person’s—

                        3. income from the insurance receipt:
                          1. deductions for the repair cost.

                            Notes
                            • Section EZ 87: inserted (with effect on 1 April 2022), on , by section 73(1) (and see section 73(2) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).