If you have spent money on something that you haven’t fully used up by the end of the tax year, this is called an ‘unexpired amount’. This might happen if you pay for something in advance, like rent for next year.
When this happens, you need to treat the unexpired amount as income for the current tax year. This means you’ll need to include it when you’re working out how much income you’ve earned.
This rule is linked to [section EA 3], which talks about prepayments in more detail. If you want to know more about how prepayments work, you can look at that section.
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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512848.
CH 1: Adjustment for closing values of trading stock, livestock, and excepted financial arrangements, or
“Calculating end-of-year values for stock, livestock, and certain financial items”
CH 3: Adjustment for deferred payment of employment income, or
“Rules for counting unpaid wages as income”
This section applies when a person has, under section EA 3 (Prepayments), an unexpired amount of expenditure at the end of an income year.
The unexpired amount is income of the person in the income year.
