Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Exempt income

CW 2: Forestry encouragement agreements

You could also call this:

“Tax exemptions for forestry agreements”

If you make a forestry encouragement agreement under the Forestry Encouragement Act 1962, there are some special rules about money you get or owe.

Any money you get in advance because of this agreement is exempt income. This means you don’t have to pay tax on it. This is true even if you later don’t have to pay back all or some of the money.

There’s also a rule about interest on the money you get. If you owe interest on the advance, but you haven’t paid it, and you weren’t allowed to deduct this interest from your taxes, and then you don’t have to pay some or all of this interest, the amount you don’t have to pay is also exempt income.

This means that in both cases - getting money in advance or not having to pay interest you owe - you don’t have to pay tax on that money.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513129.

Topics:
Money and consumer rights > Taxes
Environment and resources > Farming and fishing
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CW 1B: Treaty of Waitangi claim settlements: rights to take timber, or

“Tax-free timber rights in Treaty settlements”

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CW 3: Forestry companies and Maori investment companies, or

“Tax-free interest on special loans from forestry and Māori investment companies”

Part C Income
Exempt income

CW 2Forestry encouragement agreements

  1. This section applies when a person makes a forestry encouragement agreement under the Forestry Encouragement Act 1962.

  2. An amount of income advanced to the person under the agreement is exempt income, even if the person is later relieved from some or all of their liability to repay the principal.

  3. The amount from which the person is relieved in the circumstances described in subsection (4) is exempt income.

  4. The circumstances are that—

  5. the person is liable to pay interest on an advance made under the agreement; and
    1. the interest has not been paid; and
      1. the person has been denied a deduction for the interest; and
        1. the person is relieved from some or all of their liability to pay the interest.

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