Section ED 1B — Income Tax Act 2007: Valuation of emissions units issued for zero price

ED 1B Valuation of emissions units issued for zero price What this section applies to (1) This section applies to emissions units held by a person in an income year that— (a) are transferred to the person at a price of zero— (i) under sections 80 to 86F of the Climate Change Response Act 2002: (ii) under section 64 of the Climate Change Response Act 2002 for a removal activity listed in Schedule 4 , Part 2 of that Act: (iii) by a public authority under a supplementary agreement to a negotiated greenhouse agreement: (iv) by a public authority as a rebate, under a negotiated greenhouse agreement, for an indirect emissions charge; and (b) have been held continuously by the person from the time of the transfer; and (c) have not been valued under either of subsections (4)(a) and (8)(a) before the income year; and (d) [Repealed] (e) [Repealed] (f) [Repealed] Value of units transferred to person if no earlier emissions unit shortfall year (2) If an emissions unit is transferred to the person in the income year and there is no earlier income year that is an emissions unit shortfall year for the person under subsections (9) and (10), the emissions unit is assigned a value of zero at the time of the transfer. Value of units transferred to person in income year after emissions unit shortfall year (3) If an earlier income year is an emissions unit shortfall year for the person immediately before an emissions unit (the transferred unit ) is transferred to the person in the income year, the value of the transferred unit at the time of the transfer is given by the application of the paragraphs in subsection (4) in alphabetical order to transferred units until all the transferred units are assigned a value. Valuation method at transfer for transferred units (4) If emissions units are transferred to the person in an income year when there is a unit shortfall under subsections (9) and (10) for an earlier emissions unit shortfall year,— (a) for each emissions unit shortfall year in date order, transferred units, up to the number corresponding to the unit shortfall relating to the emissions unit shortfall year, are each assigned a value equal to the market value of an emissions unit at the end of the emissions unit shortfall year: (b) transferred units are each assigned a value equal to zero. Value of units with zero value immediately before end of income year (5) If the value of an emissions unit (the revalued unit ) held by the person immediately before the end of the income year is zero, the value of the revalued unit at the end of the year is given by the application of the paragraphs in subsection (8) in alphabetical order to revalued units until all the revalued units are assigned a value. Limit on application of subsection (8)(a) (6) The maximum number of units valued under subsection (8)(a) for the income year is the greater of zero and the number calculated using the formula— unit entitlement − disposals at zero value. Definition of items in formula (7) In the formula,— (a) unit entitlement is the total for the income year of amounts, each of which the person would have for the period of overlap between a calendar year ending 31 December and the income year if the period of overlap were treated as a year, of— (i) final allocation entitlement under section 83 of the Climate Change Response Act 2002: (ii) allocation entitlement under section 85 of that Act: (iii) allocation entitlement under section 64 of the Climate Change Response Act 2002 for a removal activity listed in Schedule 4 , Part 2 of that Act: (iv) emissions units corresponding to the actual emissions amount under a supplementary agreement to a negotiated greenhouse agreement: (v) emissions units corresponding to a rebate, under a negotiated greenhouse agreement, for an indirect emissions charge: (b) disposals at zero value is the number of emissions units disposed of by the person in the income year that had a value of zero at the disposal. Valuation method at end of income year for revalued units (8) If the person holds revalued units immediately before the end of the income year, the units are each assigned a value— (a) equal to the market value of an emissions unit at the end of the income year: (b) equal to zero. Emissions unit shortfall year (9) If the number of units assigned a market value for an income year under subsection (8)(a) is less than the maximum number given by subsection (6) for the income year, at the end of the income year— (a) the income year is an emissions unit shortfall year and has 2 numbers (the unit shortfall and the unit shortfall value ) associated with it: (b) the unit shortfall relating to the emissions unit shortfall year is the difference between the maximum number given by subsection (6) for the income year and the number of zero value units assigned a market value under subsection (8)(a) for the income year: (c) the unit shortfall value relating to the emissions unit shortfall year is the unit shortfall multiplied by the market value of an emissions unit at the end of the income year. Reductions in unit shortfall and unit shortfall value (10) When an emissions unit held by a person is assigned a value under subsection (4)(a) in relation to a year that is an emissions unit shortfall year for the person,— (a) the unit shortfall relating to that year is reduced by the number of emissions units assigned a value in relation to that year: (b) the unit shortfall value relating to that year is reduced by an amount equal to the number of emissions units assigned a value in relation to that year multiplied by the value assigned to each of those emissions units: (c) the year ceases to be an emissions unit shortfall year, if the unit shortfall relating to the year is reduced to zero. Unit shortfall values treated as values of additional emissions units for purposes of adjustments (11) For the purposes of sections CH 1 and DB 49 (which relate to adjustments for values of excepted financial arrangements), the person is treated as holding at the end of the income year additional emissions units with a value equal to the total of the unit shortfall values relating to emissions unit shortfall years for the person. Defined in this Act: amount , emissions unit , emissions unit shortfall year , fishing quota emissions units , forest land emissions units , income year , public authority , replacement forest land emissions units , year Section ED 1B: substituted (with effect on 1 July 2010), on 21 December 2010, by section 48 of the Taxation (GST and Remedial Matters) Act 2010 (2010, No 130). Section ED 1B(1)(a)(i): replaced (with effect on 1 July 2010), on 2 November 2012, by section 32(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section ED 1B(1)(a)(ii): replaced (with effect on 1 July 2010), on 2 November 2012, by section 32(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section ED 1B(1)(a)(iii): inserted (with effect on 1 July 2010), on 2 November 2012, by section 32(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section ED 1B(1)(a)(iv): inserted (with effect on 1 July 2010), on 2 November 2012, by section 32(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section ED 1B(1)(d): repealed (with effect on 1 July 2010), on 2 November 2012, by section 32(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section ED 1B(1)(e): repealed (with effect on 1 July 2010), on 2 November 2012, by section 32(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section ED 1B(1)(f): repealed (with effect on 1 July 2010), on 2 November 2012, by section 32(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section ED 1B(7)(a)(iii): replaced (with effect on 1 July 2010), on 2 November 2012, by section 32(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section ED 1B(7)(a)(iv): inserted (with effect on 1 July 2010), on 2 November 2012, by section 32(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section ED 1B(7)(a)(v): inserted (with effect on 1 July 2010), on 2 November 2012, by section 32(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).