Section FB 21 — Income Tax Act 2007: Depreciable property

FB 21 Depreciable property When this section applies (1) This section applies when a person who is allowed a deduction for an amount of depreciation loss for an item of property transfers the item on a settlement of relationship property. Persons to whom section does not apply (2) This section does not apply if the person is a resident mining operator to whom section FB 20 applies. Transfer at cost or adjusted tax value (3) The transfer is treated as a disposal and acquisition for an amount equal to, as applicable,— (a) if the transferor acquired the item in the year of transfer, the cost of the item to them; or (b) in any other case, the adjusted tax value of the item measured at the start of the year of transfer. Treatment of transferee (4) In relation to amounts of depreciation loss for the item, the transferee— (a) has an amount of depreciation loss for the item from the date of transfer, whether or not the transferor has in fact had an amount of depreciation loss: (b) is treated as having had an amount of depreciation loss equal to all amounts of depreciation loss that the transferor had for the item in income years before the year of transfer: (c) does not have a greater amount of depreciation loss than that which the transferor would have had if they had kept the item. When item is building (5) If the item is a building, the transferee’s amount of depreciation loss must be determined having regard to the original cost of the building to the transferor. Activities in year of transfer (6) If the item has been acquired, erected, installed, altered, extended, improved, or attached by the transferor in the year of transfer, the item is treated as if it were acquired, erected, installed, altered, extended, improved, or attached by the transferee in the income year. Conditions applying to item (7) For the purposes of determining the rate that applies to the item under section EE 31(2)(b) or EZ 23(4) (which relate to depreciation rates for new assets), if either of the following conditions applied to the item when the transferor acquired or erected it, the condition is treated as applying to the item at the date of transfer: (a) the item had not previously been used by a person, or acquired or held by a person for their use; and (b) if the item is a building or part of a building, it had not previously been occupied. Defined in this Act: acquire , adjusted tax value , amount , date of transfer , deduction , depreciable property , depreciation loss , dispose , income year , resident mining operator , settlement of relationship property , year of transfer , Compare: 2004 No 35 ss FF 15 , FF 16