DO 4Improvements to farm land

1. This section applies when—

2. a person carries on a farming or agricultural business on land in New Zealand; and
3. an improvement described in schedule 20, part A (Expenditure on farming, horticultural, aquacultural, and forestry improvements) has been made to the land; and
4. the expenditure on the improvement is not expenditure to which sections DO 5 to DO 7 apply.

5. A person who owns the land is allowed a deduction for expenditure to which all the following apply:

6. it is incurred on making the improvement; and
7. it is incurred by the person or by another person; and
8. it is not incurred on anything described in any of sections DO 1 to DO 3; and
9. it is incurred in the 1995–96 income year or in a later income year, not including the income year in which the person disposes of the land, the income year being the income year of the person who owns the land; and
10. it is incurred in developing the land; and
11. it is of benefit to the business in the income year in which the person is allowed the deduction.

12. A person who does not own the land is allowed a deduction for expenditure to which all the following apply:

13. it is incurred on making the improvement; and
14. it is incurred by the person; and
15. it is not incurred on anything described in any of sections DO 1 to DO 3; and
16. it is incurred in the 1995–96 income year or in a later income year, not including the income year in which the person ceases to carry on the business on the land; and
17. it is incurred in developing the land; and
18. it is of benefit to the business in the income year in which the person is allowed the deduction.

19. The amount of the deduction is calculated using the formula—

    $schedule\; 20\; percentage\; \times \; diminished\; value.$

    Where:

20. In the formula,—

21. schedule 20 percentage is the percentage set out opposite the description of the improvement in schedule 20, part A:
22. diminished value is the diminished value of the improvement.

23. When non-listed horticultural plants described in schedule 20, part A, clause 9 have ceased to exist, or to be used in deriving income, on or after 16 December 1991,—

24. subsection (4) does not apply; and
25. the amount of the deduction is the diminished value of the non-listed horticultural plants at the time they ceased to exist or to be used in deriving income; and
26. the deduction is allocated to the income year in which the non-listed horticultural plants ceased to exist or to be used in deriving income.

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

28. The Governor-General may by Order in Council make regulations amending schedule 20 to vary the categories of improvements and percentages of diminished value of those improvements allowed as a deduction.

29. An Order in Council under subsection (8) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

Compare

• 2004 No 35 s DO 4

Notes

• Section DO 4(9) heading: inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
• Section DO 4(9): inserted, on 28 October 2021, by section 3 of the Secondary Legislation Act 2021 (2021 No 7).