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New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Farming and aquacultural business expenditure

DO 12: Improvements to aquacultural business

You could also call this:

“Tax deductions for aquaculture business improvements”

If you run a fish, mussel, oyster, scallop, or salmon farm in New Zealand, you can get money back for improvements you make to your business. These improvements must be listed in schedule 20, parts B to F of the law.

You can claim this money back if you own the improvement or if someone else owns it. The money you spent must have been used to develop your business and must help your business in the same year you’re claiming it.

To figure out how much money you can claim back, you use a simple math formula. You multiply the percentage listed in schedule 20, parts B to F by the current value of the improvement.

You can claim this money back even if it’s usually considered a capital expense (something that lasts a long time). But you still need to follow the other rules about claiming expenses.

Remember, you can only claim for money spent from the 1995-96 tax year onwards, and not in the year you stop running your business.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513968.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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Part D Deductions
Farming and aquacultural business expenditure

DO 12Improvements to aquacultural business

  1. This section applies when—

  2. a person carries on an aquacultural business in New Zealand; and
    1. the aquacultural business is—
      1. fish farming under a licence issued under the Freshwater Fish Farming Regulations 1983; or
        1. mussel farming; or
          1. rock oyster farming; or
            1. scallop farming; or
              1. sea-cage salmon farming; and
              2. an improvement described in any of schedule 20, parts B to F (Expenditure on farming, horticultural, aquacultural, and forestry improvements) is made for the purposes of the business.

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

                2. it is incurred on making the improvement; and
                  1. it is incurred by the person or by another person; and
                    1. 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, the income year being the income year of the person who owns the improvement; and
                      1. it is incurred in developing the business; and
                        1. it is of benefit to the business in the income year in which the person is allowed the deduction.

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

                          2. it is incurred on making the improvement; and
                            1. it is incurred by the person; and
                              1. 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; and
                                1. it is incurred in developing the business; and
                                  1. it is of benefit to the business in the income year in which the person is allowed the deduction.

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

                                      schedule 20 percentage × diminished value.

                                      Where:

                                      • In the formula,—

                                      • schedule 20 percentage is the percentage set out opposite the description of the improvement in any of schedule 20, parts B to F:
                                        1. diminished value is the diminished value of the improvement.

                                          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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