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Income Tax Act 2007

Timing and quantifying rules - Income equalisation schemes - Refunds: on application

EH 18: Income when refund given on retirement, and election to allocate amount to earlier year

You could also call this:

“Refund on retirement: choose to count earlier deposits as income in the year you made them”

When you retire and get a refund from an income equalisation scheme, it’s usually counted as income in the year you retire. This is based on section CB 27.

However, you have a choice if your refund includes money you deposited in a year before the tax year when you retire. You can choose to count some or all of that earlier deposit as income in the year you originally put it in, instead of the year you retire.

If you make this choice, the amount you decide to count in the earlier year will be treated as income for that earlier year, again based on section CB 27.

To make this choice, you need to tell the Commissioner. You can do this when you file your tax return for the year you retire, or at a later time if the Commissioner allows it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514858.

Topics:
Money and consumer rights > Taxes
Money and consumer rights > Savings and retirement
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EH 17: Refund on retirement, or

“Farmers and fishers can get their income equalisation account refunded when they retire”

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EH 19: Refund on death, or

“Money in your income equalisation account goes to your estate when you die”

Part E Timing and quantifying rules
Income equalisation schemes: Refunds: on application

EH 18Income when refund given on retirement, and election to allocate amount to earlier year

  1. A refund under section EH 17 is income, under section CB 27 (Income equalisation schemes), derived by the person in the income year in which they retire.

  2. However, subsection (3) applies instead of subsection (1) if—

  3. the refund includes a deposit made for an accounting year earlier than the tax year in which the person retires; and
    1. the person chooses to allocate some or all of the deposit to the earlier accounting year.

      1. The amount allocated by the person to the earlier accounting year is income, under section CB 27, derived by them in the corresponding income year.

      2. A person makes an election under this section by giving the Commissioner notice within 1 of the following times:

      3. the time within which the person is required to file a return of income for the tax year corresponding to the accounting year in which they retire:
        1. a further time allowed by the Commissioner in a case or class of cases.

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