Section EZ 5 — Income Tax Act 2007: Reduction: bloodstock not previously used for breeding in New Zealand: pre-1 August 2006

EZ 5 Reduction: bloodstock not previously used for breeding in New Zealand: pre-1 August 2006 Bloodstock to which this section applies (1) This section applies to bloodstock that— (a) was not used for breeding in New Zealand before 16 December 1991; and (b) before a person ( person A ) acquired it, was not used for breeding in New Zealand by any other person, unless— (i) the other person transferred the bloodstock to person A under a matrimonial agreement to which section FB 18 (Bloodstock) applies; or (ii) the other person and person A were companies in the same wholly-owned group at the time person A acquired the bloodstock from the other person; and (c) section EC 39(1) or (2) (First income year in breeding business) applies to,— (i) before 1 August 2006; or (ii) for an income year ending on or after 1 August 2006, if a requirement of paragraphs (a) to (c) of section EC 39(1) or (2) is first met before 1 August 2006. Stallion (2) For the purposes of sections EC 39 and EC 40 (which relate to bloodstock), the reduction applying to the value of a stallion is 25% of the cost price of the stallion unless person A chooses to value the stallion by the reducing value method. Stallion valued by reducing value method (3) When person A chooses to value the stallion by the reducing value method, the reduction applying to the value of the stallion is 37.5% of its cost price in the first income year and 37.5% of its opening value in each later income year. Person A must give notice to the Commissioner of their election in their return of income for the first income year. Broodmare when first used before 1 April 2001 (4) For the purposes of sections EC 39 and EC 40 , the reduction applying to the value of a broodmare is calculated using the formula— 1.25 × cost price of broodmare 15 − age of broodmare. Definition of item in formula (5) In the formula in subsection (4), age of broodmare is— (a) 12 years of age; or (b) the actual age in years, if the broodmare is 11 years of age or less at the end of the income year. Broodmare when first used on or after 1 April 2001 but before 1 August 2006 (6) For the purposes of sections EC 39 and EC 40 , the reduction applying to the value of a broodmare to which section EC 39(2) applies is calculated using the formula— 1.25 × cost price of broodmare 11 − age of broodmare. Definition of item in formula (7) In the formula in subsection (6), age of broodmare is— (a) 8 years of age; or (b) the actual age in years, if the broodmare is 7 years of age or less at the end of the income year. Defined in this Act: bloodstock , broodmare , Commissioner , company , cost price , income year , matrimonial agreement , New Zealand , notice , return of income , stallion , wholly-owned group , year , Compare: 2004 No 35 s EZ 4B