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Income Tax Act 2007

Deductions - Forestry expenditure

DP 4: Improvement destroyed or made useless

You could also call this:

“Tax deduction for forestry improvements destroyed or made unusable”

If you operate a forestry business on land where an improvement has been made, you might be able to get a tax deduction in certain situations. This applies when the improvement is destroyed or damaged beyond repair, making it useless for earning income. This must happen in the 2005-06 tax year or later, and it can’t be because of something you, your agent, or someone associated with you did or didn’t do.

You can only claim this deduction if you would have been able to claim a deduction under section DP 3 for the cost of the improvement if it hadn’t been destroyed or made useless.

If you meet these conditions, you can deduct the amount that the value of the improvement has decreased by in that income year.

This rule overrides the general permission and the capital limitation in tax law, but other general limitations still apply.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513985.

Topics:
Money and consumer rights > Taxes
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DP 3: Improvements to forestry land, or

“Tax deductions for improving forestry land”

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“Getting money back for costs under a forestry agreement”

Part D Deductions
Forestry expenditure

DP 4Improvement destroyed or made useless

  1. This section applies when, in an income year of a person,—

  2. the person operates a forestry business on land, to which there has been made an improvement; and
    1. the improvement is destroyed or irreparably damaged and made useless for the purpose of deriving income—
      1. in an income year that corresponds to the 2005–06 tax year or a later tax year; and
        1. other than as a result of the action or failure to act of the person, an agent of the person, or an associated person; and
        2. the person would be entitled for the income year to a deduction under section DP 3 for expenditure on the improvement if the improvement had not been destroyed or made useless.

          1. The person is allowed a deduction of the amount of the diminished value, for the income year, of the expenditure on the improvement.

          2. This section overrides the general permission and the capital limitation. The other general limitations still apply.

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          Notes
          • Section DP 4 list of defined terms forestry business: inserted (with effect on 1 April 2008), on , by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).