Section EZ 26 — Income Tax Act 2007: Meaning of qualifying capital value

EZ 26 Meaning of qualifying capital value Meaning (1) Qualifying capital value means, for an income year,— (a) for a qualifying asset that a person owns, the amount calculated for the income year using the formula in subsection (2); or (b) for an item that a person owns that is not a qualifying asset but to which they have made a qualifying improvement, the amount calculated for the income year using the formula in subsection (7). Formula (2) The formula referred to in subsection (1)(a) is— (acquisition cost + improvement cost) − item's depreciation. Definition of items in formula (3) The items in the formula in subsection (2) are defined in subsections (4) to (6). Acquisition cost (4) Acquisition cost is the amount of capital expenditure the person incurs in acquiring the asset or item. In the case of a constructed item, the amount of capital expenditure is reduced by the amount of capital expenditure the person incurs on the construction on or after 1 April 1993, other than under a binding contract that the person entered into before 1 April 1993. Improvement cost (5) Improvement cost is the amount of capital expenditure, if any, the person incurs in making a qualifying improvement to the asset or item. Item’s depreciation (6) Item’s depreciation is the amount of depreciation loss for which the person has been allowed a deduction for the qualifying capital value of the asset or item in earlier income years, not including an amount of depreciation loss calculated using the straight-line method. Formula (7) The formula referred to in subsection (1)(b) is— capital expenditure − improvement’s depreciation. Definition of items in formula (8) The items in the formula in subsection (7) are defined in subsections (9) and (10). Capital expenditure (9) Capital expenditure is the amount of capital expenditure the person incurs for the improvement. Improvement’s depreciation (10) Improvement’s depreciation is the amount of depreciation loss for which the person has been allowed a deduction for the qualifying capital value of the improvement in earlier income years, not including an amount of depreciation loss calculated using the straight-line method. Defined in this Act: acquire , amount , depreciation loss , income year , qualifying asset , qualifying capital value , qualifying improvement , straight-line method , Compare: 2004 No 35 s EZ 24