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Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 50: Adjustment for prepayments

You could also call this:

“How to claim deductions for prepaid expenses in the next tax year”

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. You can claim this unexpired amount as a deduction in the next tax year. This rule is part of section EA 3 about prepayments.

You’re allowed to deduct this leftover amount in the following tax year. This is in addition to the usual rules about what you can deduct. The normal limits on deductions still apply, but they won’t stop you from claiming this deduction if it was originally allowed under any part of the tax law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513728.

Topics:
Money and consumer rights > Taxes
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Part D Deductions
Specific rules for expenditure types

DB 50Adjustment for prepayments

  1. This section applies when a person has, under section EA 3 (Prepayments), an unexpired amount of expenditure at the end of an income year.

  2. The person is allowed a deduction for the unexpired amount for the following income year.

  3. This section supplements the general permission. The general limitations still apply, but not to the extent to which any relevant general limitation was overridden by a provision that initially allowed a deduction for the expenditure, whether in this Act or an earlier Act.

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