Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Farming and aquacultural business expenditure

DO 3: Trees on farms

You could also call this:

“Farmers can claim money for planting and maintaining certain trees on their land”

If you own a farm or run an agricultural business on land in New Zealand, you might be able to get some money back for planting and looking after trees. Here’s how it works:

You can claim money back if you plant or take care of trees on your farm, but only if farming or agriculture is the main thing you do on that land. However, this doesn’t apply to all trees. You can’t claim for fruit trees, trees that are covered by another rule called section DO 2, or trees you planted because of an agreement under the Forestry Encouragement Act 1962.

When it comes to getting money back, there are two ways:

  1. If you spend money on planting trees in a year, you can claim up to $7,500 or the amount you spent, whichever is less.

  2. If you spend money on looking after trees in a year, you can also claim up to $7,500 or the amount you spent, whichever is less.

It’s important to know that even though you can claim this money for trees, which are usually seen as long-term investments, you still need to follow the general rules about what you can claim for in your taxes.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513919.

Topics:
Money and consumer rights > Taxes
Environment and resources > Farming and fishing
Business > Industry rules
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DO 2: Plantings for erosion, shelter, and water protection purposes, or

“Tax deductions for protective plantings on farmland”

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DO 4: Improvements to farm land, or

“Claiming money back for certain farm improvements”

Part D Deductions
Farming and aquacultural business expenditure

DO 3Trees on farms

  1. This section applies when—

  2. a person carries on, on land in New Zealand, a farming or agricultural business that is the principal business carried on on the land; and
    1. they plant or maintain trees on the land; and
      1. the trees are not—
        1. trees for which the person is allowed a deduction under section DO 2; or
          1. trees planted mainly to produce fruit; or
            1. trees planted under a forestry encouragement agreement under the Forestry Encouragement Act 1962.

            2. The person is allowed the following deductions:

            3. in an income year in which the person incurs expenditure on planting trees on the land, they are allowed a deduction of the lesser of $7,500 and the expenditure that they incur; and
              1. in an income year in which the person incurs expenditure on maintaining trees on the land, they are allowed a deduction of the lesser of $7,500 and the expenditure that they incur.

                1. This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

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