Supplementary Order Paper No 257

New clause 55B

After clause 55 (page 49, after line 12), insert:

55B New heading and sections EZ 65 to EZ 69 inserted
  • (1) After section EZ 64, insert:

    Damage from Canterbury earthquakes

    EZ 65 Insurance for Canterbury earthquake damage of property: deemed sale and purchase
    • When this section applies

      (1) This section applies for a person and an item of depreciable property and an income year before the 2019–20 income year when—

      • (a) the item is damaged by a Canterbury earthquake as that term is defined in section 4 of the Canterbury Earthquake Recovery Act 2011; and

      • (b) the person is entitled to an amount of insurance or compensation for the damage to the item; and

      • (c) the item is assessed by the payer of the insurance or compensation (the insurer) as uneconomic to repair; and

      • (d) the damage does not meet the requirements of section EE 47(4) (Events for purposes of section EE 44).

      Deemed sale and repurchase of item

      (2) The person is treated as, on the date of the Canterbury earthquake,—

      • (a) disposing of the item for the amount of insurance or compensation; and

      • (b) reacquiring the item for zero consideration.

      Relationship with section EE 52

      (3) This section overrides section EE 52 (Amount of depreciation recovery income when compensation received).

      Defined in this Act: amount, depreciable property, income year

    EZ 66 Insurance for Canterbury earthquake damage of property: limit on depreciation recovery income
    • When this section applies

      (1) This section applies for a person and an item of depreciable property and an income year before the 2019–20 income year when—

      • (a) the item is damaged by a Canterbury earthquake as that term is defined in section 4 of the Canterbury Earthquake Recovery Act 2011; and

      • (b) the person is entitled to an amount of insurance or compensation for the damage to the item; and

      • (c) the damage does not meet the requirements of section EE 47(4) (Events for purposes of section EE 44); and

      • (d) section EZ 65 does not apply for the item.

      Limit on depreciation recovery income under section EE 52

      (2) If the person would derive depreciation recovery income under section EE 52 (Amount of depreciation recovery income when compensation received) in an income year for the item in the absence of this section, the person derives in the income year an amount of depreciation recovery income equal to the lesser of—

      • (a) the amount of depreciation recovery income under section EE 52 that the person would derive in the income year for the item in the absence of this section:

      • (b) the total of the amounts of depreciation loss for which the person has been allowed deductions for the item.

      Relationship with section EE 52

      (3) This section overrides section EE 52.

      Defined in this Act: amount, deduction, depreciable property, depreciation loss, depreciation recovery income, income year

    EZ 67 Item treated as available for use if access restricted due to Canterbury earthquake
    • An item of depreciable property is treated for an income year as being available for use while access to the item is affected by a restriction imposed due to the effects of a Canterbury earthquake (as defined in section 4 of the Canterbury Earthquake Recovery Act 2011), if—

      • (a) the item was used or available for use immediately before the restriction was imposed; and

      • (b) the item would be used or available for use in the absence of the restriction; and

      • (c) the income year is the 2018–19 or an earlier income year.

      Defined in this Act: depreciable property, income year

    EZ 68 Insurance for Canterbury earthquake damage causing disposal: optional timing rule for income, deductions
    • When this section applies

      (1) This section applies for a person and an item of depreciable property when—

      • (a) the item is damaged by a Canterbury earthquake as that term is defined in section 4 of the Canterbury Earthquake Recovery Act 2011; and

      • (b) the damage—

        • (i) results in the item being affected by a disposal and reacquisition under section EZ 67; or

        • (ii) meets the requirements of section EE 47(4) (Events for purposes of section EE 44); and

      • (c) the person is entitled to an amount of insurance or compensation for the damage to the item; and

      • (d) the person chooses to apply this section for all items of depreciable property meeting the requirements of paragraphs (a) to (c).

      Attribution of income from insurance and disposal

      (2) If the amount of insurance or compensation for the damage (the insurance receipt) is derived or able to be reasonably estimated before the end of the 2018–19 income year, the person's income from the insurance receipt and the consideration derived from the disposal of the item is attributed to the earlier of—

      • (a) the 2018–19 income year:

      • (b) the first income year in which—

        • (i) the amount of the cost of disposing of the item (the disposal cost) is or has been incurred or able to be reasonably estimated; and

        • (ii) the insurance receipt is or has been derived or able to be reasonably estimated; and

        • (iii) the consideration from the disposal of the item is or has been derived or able to be reasonably estimated.

      Attribution of deductions

      (3) If the disposal cost is incurred or able to be reasonably estimated before the end of the 2018–19 income year, the person's deductions for the disposal cost and for depreciation loss under section EE 48 (Effect of disposal or event) are attributed to the earlier of—

      • (a) the 2018–19 income year:

      • (b) the first income year in which—

        • (i) the disposal cost is or has been incurred or able to be reasonably estimated; and

        • (ii) the insurance receipt is or has been derived or able to be reasonably estimated; and

        • (iii) the consideration from the disposal of the item is or has been derived or able to be reasonably estimated.

      Relationship with other sections

      (4) This section overrides sections EE 1, EE 22, and EE 48 (which state when depreciation loss and depreciation recovery income arise) in relation to the timing of the person's—

      • (a) income from the insurance receipt and consideration from the disposal of the item:

      • (b) deductions for the disposal cost and depreciation loss.

      Defined in this Act: amount, deduction, grandparented structure, income, income year

    EZ 69 Insurance for repairs of Canterbury earthquake damage: optional timing rule for income, deductions
    • When this section applies

      (1) This section applies for a person and an item of depreciable property when—

      • (a) the item is damaged by a Canterbury earthquake as that term is defined in section 4 of the Canterbury Earthquake Recovery Act 2011; and

      • (b) the damage—

        • (i) does not result in the item being subject to a disposal and reacquisition under section EZ 65; and

        • (ii) does not meet the requirements of section EE 47(4) (Events for purposes of section EE 44); and

      • (c) the person is entitled to an amount of insurance or compensation for the damage to the item; and

      • (d) the person chooses to apply this section for all items of depreciable property meeting the requirements of paragraphs (a) to (c).

      Attribution of income from insurance

      (2) If the amount of insurance or compensation for the damage (the insurance receipt) is derived or able to be reasonably estimated before the end of the 2018–19 income year, the person's income from the insurance receipt is attributed to the earlier of—

      • (a) the 2018–19 income year:

      • (b) the first income year in which—

        • (i) the amount of expenditure for total repair of the damage (the repair cost) is or has been incurred or able to be reasonably estimated; and

        • (ii) the insurance receipt is or has been derived or able to be reasonably estimated.

      Attribution of deductions for repairs

      (3) If the repair cost is incurred or able to be reasonably estimated before the end of the 2018–19 income year, the person's deductions for the repair cost are attributed to the earlier of—

      • (a) the 2018–19 income year:

      • (b) the first income year in which—

        • (i) the repair cost is or has been incurred or able to be reasonably estimated; and

        • (ii) the insurance receipt is or has been derived or able to be reasonably estimated.

      Relationship with other sections

      (4) This section overrides sections CG 4, EE 22, and EE 52 (which provide for receipts of insurance or indemnity payments) in relation to the timing of the person's—

      • (a) income from the insurance receipt:

      • (b) deductions for the repair cost.

      Defined in this Act: amount, deduction, income, income year.

    (2) Subsection (1) applies for the 2016–17 and later income years.