Section EC 34 — Income Tax Act 2007: General rule

EC 34 General rule Value in income year of purchase and later income years (1) The closing value of high-priced livestock at the end of the income year in which it is bought is its cost price minus the reduction applying in the income year. In a later income year, the value is its opening value minus the reduction applying in the income year until the value reaches or falls below the national average market value for the class to which the livestock belongs. Straight-line method (2) When a person has chosen to use the straight-line method, the reduction is calculated using the formula— cost price × depreciation percentage. Diminishing value method (3) When a person has chosen to use the diminishing value method, the reduction is calculated as follows: (a) in the first income year in which the election applies, the cost price multiplied by the diminishing value equivalent of the depreciation percentage for the income year: (b) in later income years, the opening value of the livestock multiplied by the diminishing value equivalent of the depreciation percentage for the income year. Meaning of diminishing value equivalent (4) In this section, diminishing value equivalent , for a depreciation percentage, means the diminishing value depreciation rate in schedule 12 , column 1 (Old banded rates of depreciation) to which the amount in column 2 equal to the depreciation percentage is the straight-line equivalent. Two qualifications are— (a) if no amount in column 2 is equal to the depreciation percentage, the amount closest to it is taken; and (b) if 2 amounts in column 2 are equidistant from the depreciation percentage, the depreciation percentage is rounded down. Exclusions (5) This section does not apply in the cases described in sections EC 35 and EC 36 . Defined in this Act: amount , class , cost price , depreciation percentage , diminishing value equivalent , high-priced livestock , income year , national average market value , Compare: 2004 No 35 s EC 34