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Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 51: Adjustment for deferred payment of employment income

You could also call this:

“Rules for claiming unpaid wages as a tax deduction”

When you have to pay someone for work they’ve done, but you haven’t paid them yet, this is called deferred payment of employment income. If you haven’t paid someone by the end of the tax year, you can still claim it as an expense in the next tax year.

You’re allowed to claim this unpaid amount as a deduction in the following tax year. This means you can reduce your taxable income by that amount.

This rule adds to the general permission for deductions. The usual limits on deductions still apply, but they might not apply as much if another rule already allowed you to deduct the expense.

If you want to know more about deferred payment of employment income, you can check section EA 4.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513730.

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

DB 51Adjustment for deferred payment of employment income

  1. This section applies when a person has, under section EA 4 (Deferred payment of employment income), an unpaid amount of expenditure on employment income in an income year for which the person is to be allowed a deduction in the following income year.

  2. The person is allowed a deduction for the unpaid 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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