Section EC 48 — Income Tax Act 2007: Replacement breeding stock

EC 48 Replacement breeding stock When this section applies (1) This section applies when— (a) a bloodstock owner— (i) disposes of bloodstock (the breeding stock ) that they had previously used for breeding in the course of a business of breeding bloodstock for sale; and (ii) buys replacement bloodstock (the replacement breeding stock ) within the time limits set out in subsections (6) and (7); or (b) a bloodstock owner— (i) receives a payment of insurance, indemnity, or compensation for the loss or death of, or permanent injury to, breeding stock that they had previously used for breeding in the course of a business of breeding bloodstock for sale or that they had bought for use in the business; and (ii) buys replacement breeding stock within the time limits set out in subsections (6) and (7). Amount determined (2) The bloodstock owner may apply to the Commissioner to determine the amount that the bloodstock owner has applied in buying replacement breeding stock. Maximum amount (3) The amount must not be more than the net gain calculated using the formula— gross proceeds − value of breeding stock. Definition of items in formula (4) In the formula,— (a) gross proceeds is— (i) the amount of the proceeds of disposing of the breeding stock; or (ii) the amount paid by way of insurance, indemnity, or compensation for the breeding stock: (b) value of breeding stock is the closing value of the breeding stock in the income year before the breeding stock was disposed of or was lost or died or was permanently injured. Reduction in income (5) The bloodstock owner may reduce their income by the amount determined under subsection (2). If they reduce their income in this way, they must also reduce the cost of the replacement breeding stock by the same amount. Time limit (6) Replacement breeding stock must be acquired within 6 months after the end of the income year in which the amount determined under subsection (2) would otherwise be income or, if the Commissioner approves in a case or in a class of cases, a longer period. Delay in replacing breeding stock (7) In the case of lost, dead, or permanently injured breeding stock, the Commissioner may extend the time limit under subsection (6). However, valid commercial reasons must exist for the delay in replacing the breeding stock and the replacement breeding stock must have been acquired before the end of the second income year following the income year in which the loss, death, or permanent injury occurred. Application to Commissioner (8) An application under subsection (2) must be made in writing within the relevant time limits described in subsections (6) and (7). The application must relate only to replacement breeding stock bought before the application is made. Defined in this Act: amount , bloodstock , business , Commissioner , income , income year , pay , Compare: 2004 No 35 s EC 48