Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Timing and quantifying rules - Spreading of specific expenditure

EJ 1: Spreading backward of deductions for costs of timber

You could also call this:

“How to spread timber costs over time when selling timber or forested land”

When you make money from selling timber or land with timber on it, you need to be careful about how you handle your expenses. You must spread out the costs of the timber over the same time period as you spread out the income from selling it. This means that if you spread your income over several years, you must also spread your expenses over those same years. You need to do this in the same proportions as your income. For example, if you spread 30% of your income to one year, you must also spread 30% of your expenses to that same year. This rule helps to make sure that your income and expenses match up fairly over time.

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 It might be out of date or be missing some parts.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=DLM1515086.

Topics:
Money and consumer rights > Taxes
Previous

EI 9: Matching rule for employment income of shareholder-employee, or

“When shareholder-employees count their income from the company for tax”

Next

EJ 2: Spreading forward of deductions for repairs to fishing boats, or

“Spreading out tax deductions for fishing boat repairs over multiple years”

Part E Timing and quantifying rules
Spreading of specific expenditure

EJ 1Spreading backward of deductions for costs of timber

  1. This section applies when a person derives income under section CB 24 (Disposal of timber or right to take timber) or CB 25 (Disposal of land with standing timber).

  2. The person must allocate every amount allowed as a deduction for a cost of timber to the income years to which the income is allocated under section EI 1 (Spreading backward of income from timber), and in the same proportions as it is allocated.

Compare