Income Tax Act 2007

Income - Terminating provisions

CZ 22: Geothermal wells between 31 March 2003 and 17 May 2006

You could also call this:

“Tax rules for geothermal wells constructed or acquired during a specific period”

This law is about geothermal wells that were built or bought between 31 March 2003 and 17 May 2006. If you have one of these wells, there are some rules you need to know about.

If you use the well to make money after its proving period, or if you sell it, you might have to pay tax on some money. This is because you were allowed to claim some tax deductions for the well before.

If you use the well to make money, you’ll need to count as income all the deductions you were allowed to claim for the well under some old tax laws. This happens in the first year this rule applies to you.

If you sell the well, you’ll need to count as income either the amount you got from selling it, or all the deductions you were allowed to claim for the well, whichever is less. This also happens in the first year this rule applies to you.

The old tax laws that gave you these deductions are section DZ 15 of the Income Tax Act 2004, section DZ 16 of this Act, and an older law called section DZ 7 of the Income Tax Act 1994.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513551.

Topics:
Money and consumer rights > Taxes

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Part C Income
Terminating provisions

CZ 22Geothermal wells between 31 March 2003 and 17 May 2006

  1. This section applies to a person’s geothermal well when—

  2. the well is—
    1. both started and completed between 31 March 2003 and 17 May 2006:
      1. acquired between 31 March 2003 and 17 May 2006; and
      2. the person—
        1. uses the well, or has the well available for use, after the end of the well’s geothermal energy proving period in deriving income or carrying on a business for the purpose of deriving income:
          1. disposes of the well.
          2. For a person to whom subsection (1)(b)(i) applies, the person has, for the first income year in which this section applies, an amount of income equal to the total amount of deductions that the person is allowed for the well under section DZ 7 of the Income Tax Act 1994, section DZ 15 of the Income Tax Act 2004, and section DZ 16 (Geothermal wells between 31 March 2003 and 17 May 2006) for all income years.

          3. For a person to whom subsection (1)(b)(ii) applies, the person has, for the first income year in which this section applies, an amount of income equal to the lesser of—

          4. the amount derived from disposing of the well; and
            1. the total amount of deductions that the person is allowed for the well under section DZ 7 of the Income Tax Act 1994, section DZ 15 of the Income Tax Act 2004, and section DZ 16 for all income years.
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