Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Timing and quantifying rules - Income equalisation schemes

EH 1: Income equalisation schemes

You could also call this:

“Deposit schemes to spread income across tax years”

Income equalisation schemes help you reduce your net income for a tax year. You can do this by making a deposit with the Commissioner for the income year that matches the tax year.

There are two types of income equalisation schemes:

  1. The main income equalisation scheme: You can find details about this in sections EH 3 to EH 36 and EZ 80.

  2. The thinning operations income equalisation scheme: You can read about this in sections EH 63 to EH 79.

If you want to understand specific terms used in these schemes, you can look them up:

  • For the main income equalisation scheme, check sections EH 34 to EH 36.
  • For the thinning operations income equalisation scheme, look at sections EH 78 and EH 79.

These schemes are designed to help you manage your income over different tax years.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514810.

Topics:
Money and consumer rights > Taxes
Previous

EG 3: Allocation of income, deductions, and tax credits by portfolio tax rate entity, or

“This section about how portfolio tax rate entities allocate income, deductions, and tax credits has been removed”

Next

EH 2: Deposits to be paid into Crown Bank Account, or

“Money deposited with the Commissioner goes into a government account”

Part E Timing and quantifying rules
Income equalisation schemes

EH 1Income equalisation schemes

  1. An income equalisation scheme allows a person to reduce their net income for a tax year by making a deposit with the Commissioner for the corresponding income year.

  2. The 2 income equalisation schemes are—

  3. the main income equalisation scheme, described in sections EH 3 to EH 36 and EZ 80:
      1. the thinning operations income equalisation scheme, described in sections EH 63 to EH 79.

        1. Terms used in the 2 schemes are defined as follows:

        2. terms used specifically in the main income equalisation scheme are defined in sections EH 34 to EH 36:
            1. terms used specifically in the thinning operations income equalisation scheme are defined in sections EH 78 and EH 79.

              Compare
              Notes
              • Section EH 1(2) heading: amended, on , by section 166(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section EH 1(2): amended (with effect on 18 March 2019), on , by section 61 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
              • Section EH 1(2)(a): amended (with effect on 1 April 2017), on , by section 36(1) (and see section 36(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
              • Section EH 1(2)(b): repealed, on , by section 166(2) (and see section 166(5) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section EH 1(3): amended, on , by section 166(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section EH 1(3)(b): repealed, on , by section 166(4) (and see section 166(5) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).