Section FB 13 — Income Tax Act 2007: Trading stock

FB 13 Trading stock When this section applies (1) This section applies for the purposes of subpart EB (Valuation of trading stock (including dealer’s livestock)) when trading stock is transferred on a settlement of relationship property. When transferor holds and uses trading stock in business (2) If the transferor used trading stock in carrying on a business and held the trading stock at the start of the year of transfer, the transfer is treated as a disposal by the transferor and an acquisition by the transferee for an amount equal to the greater of— (a) the value of the trading stock under section EB 3 (Valuation of trading stock) for the transferor at the end of the income year before the year of transfer; or (b) the value of the trading stock under section EB 3 for the transferee at the end of the year of transfer. When transferor acquires and uses trading stock in business (3) If the transferor used the trading stock in carrying on a business and acquired the trading stock during the year of transfer, the transfer is treated as a disposal by the transferor and an acquisition by the transferee for an amount equal to the cost of the trading stock to the transferor. When transferor has not used trading stock in business (4) If the transferor did not use the trading stock in the carrying on of a business, the transfer is treated as a disposal by the transferor and acquisition by the transferee for an amount equal to the cost of the trading stock to the transferor. When transferee disposes of trading stock (5) If, after a transfer under subsection (2) or (3), the trading stock was not used by the transferee in the carrying on of a business and they dispose of the trading stock at any time, the disposal is treated as a disposal of trading stock used by the transferee in the carrying on of a business. Specified livestock in dealing operation (6) For the purposes of subsection (2), trading stock does not include specified livestock unless it is used in a dealing operation and sections FB 14 and FB 17 apply. Relationship with sections GC 1 and GC 2 (7) This section overrides sections GC 1 and GC 2 (which relate to the disposal of trading stock for inadequate consideration). Defined in this Act: amount , business , consideration , income year , settlement of relationship property , specified livestock , trading stock , year of transfer , Compare: 2004 No 35 s FF 13