Section EH 61 — Income Tax Act 2007: Meaning of adverse event maximum deposit

EH 61 Meaning of adverse event maximum deposit Meaning (1) Adverse event maximum deposit means the maximum deposit that this section says a person may make to their adverse event income equalisation account for an accounting year. Maximum deposit (2) The maximum deposit a person may make is an amount equal to the net income that the person would have in the tax year corresponding to the accounting year if, because of the self-assessed adverse event,— (a) the only income derived by the person in the accounting year were income from their selling the livestock; and (b) the only amount for which the person was allowed a deduction in the accounting year were the cost of the livestock sold. Cost of livestock sold: matters excluded (3) The cost of the livestock sold is an amount determined under subsection (4) or (5)— (a) without applying any provision allocating income derived or expenditure incurred to an income year other than the income year in which the income was in fact derived or the expenditure was in fact incurred; and (b) applying sections DQ 1 (Main income equalisation scheme), EH 7 to EH 33 , and FB 15 to FB 17 (which relate to livestock). Cost of livestock sold: person having livestock of class sold at end of previous accounting year (4) This subsection applies when, at the end of the accounting year before the accounting year in which the livestock is sold, the person had livestock of the class that is sold in which the livestock would, if unsold, have been included at the end of the accounting year in which it is sold. Under this subsection, the cost of livestock sold is determined using the previous accounting year’s closing value for the class of livestock in which the livestock sold would have been included. Cost of livestock sold: other cases (5) This subsection applies when subsection (4) does not. Under this subsection, the cost of livestock sold is calculated using the formula— number at start × value + number bought × price number at start + number bought. Definition of items in formula (6) In the formula,— (a) number at start is the number of livestock of the class sold that the person has at the start of the accounting year in which the livestock is sold: (b) number bought is the number of livestock of the class sold that the person buys in the accounting year in which the livestock is sold, before the sale: (c) price is the average purchase price of the number bought: (d) value is the opening value of the number at the start, determined without applying section EC 16(2) (Valuation under herd scheme). Defined in this Act: accounting year , adverse event income equalisation account , adverse event maximum deposit , amount , corresponding income year , deduction , deposit , income , net income , person , self-assessed adverse event , tax year , Compare: 2004 No 35 s EH 62