Section EE 41 — Income Tax Act 2007: Transfer of depreciable property on certain amalgamations on or after 14 May 2002

EE 41 Transfer of depreciable property on certain amalgamations on or after 14 May 2002 When this section applies (1) This section applies when, on or after 14 May 2002, an amalgamated company acquires, directly or indirectly, an item of property from an amalgamating company, and— (a) the amalgamated company’s acquisition of the item is part of an amalgamation that is not a resident’s restricted amalgamation; and (b) the amalgamating company is an associated person of the amalgamated company, treating the amalgamating company as existing at the time that the amalgamated company is treated under section FO 11(1)(b) or FO 15(3) (which relate to property passing on certain amalgamations) as having acquired the property from the amalgamating company. Cost of item to person (2) For the purposes of determining the amount of depreciation loss that the amalgamated company has, the cost of the item to it is treated as 1 of the following: (a) if section EE 58 applies for the amalgamating company and the item, the lesser of— (i) the value given under section FO 11 or FO 15 , as applicable; and (ii) the item’s market value when the amalgamating company starts to use it, or to have it available for use, for the purpose of deriving assessable income or carrying on a business for the purpose of deriving assessable income; or (b) if section EE 58 does not apply for the amalgamating company and the item, the lesser of— (i) the value given under section FO 11 or FO 15 , as applicable; and (ii) the cost of the item to the amalgamating company. Exclusions (3) Subsection (2) does not apply if— (a) the item is not depreciable intangible property, and the Commissioner decides that it is appropriate to use the cost of the item to the amalgamated company for the purposes of determining the amount of depreciation loss that it has for the item: (b) the cost to the amalgamated company is income of the amalgamating company, other than under section EE 48(1) . Rate (4) The annual rate that the amalgamated company applies to the item must be 1 of the following: (a) when the amalgamated company uses the same depreciation method for the item as that used by the amalgamating company for it, the annual rate that the amalgamated company applies to it must be no more than the annual rate that the amalgamating company applied to it: (b) when the amalgamated company uses a depreciation method for the item that is different from the method the amalgamating company used for it, the annual rate that the amalgamated company applies to it must be no more than a rate equivalent to the rate that the amalgamating company applied to it, as determined by schedule 10 (Straight-line equivalents of diminishing value rates of depreciation). Fixed life intangible property (5) Subsection (4) does not apply to an item of fixed life intangible property whose rate is set in section EE 33 . Defined in this Act: acquire , amalgamated company , amalgamating company , amalgamation , amount , annual rate , assessable income , business , Commissioner , depreciable intangible property , depreciation loss , depreciation method , fixed life intangible property , income , income year , property , resident’s restricted amalgamation , Compare: 2004 No 35 s EE 34