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Income Tax Act 2007

Timing and quantifying rules - Spreading of specific expenditure

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

You could also call this:

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

If you run a fishing business in New Zealand, you can get money back for fixing your fishing boat. This applies when you need to make repairs or changes to your boat’s equipment, hull, or machinery because of certain maritime rules.

You have different choices for how to claim this money back:

You can claim all the money in the same year you spent it. Or, you can spread it out over the next four years after you spent the money. You can choose to claim it all in any one of those four years, or split it up over some or all of those years. If you haven’t claimed all the money by the fourth year, you must claim what’s left then.

If you stop your fishing business before the four years are up, you have two choices. You can claim all the leftover money in the year you stop your business. Or, you can split the leftover money equally between the year you spent it and the years you kept running your business.

In this law, a “fishing boat” means a boat that’s officially registered as a fishing vessel. It also includes any small boats that belong to the registered boat. A “fishing business” means catching or taking fish, including shellfish, to sell or trade.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515088.

Topics:
Money and consumer rights > Taxes
Environment and resources > Farming and fishing
Business > Industry rules
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“How to spread timber costs over time when selling timber or forested land”

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“How farmers can spread fertiliser costs over time for tax purposes”

Part E Timing and quantifying rules
Spreading of specific expenditure

EJ 2Spreading forward of deductions for repairs to fishing boats

  1. This section applies when a person who carries on a fishing business in New Zealand is allowed a deduction for expenditure incurred in making repairs or alterations required by Part 19 or 21 of the Maritime Rules made under the Maritime Transport Act 1994 to the equipment, hull, or machinery of a fishing boat used wholly for the purposes of the business.

  2. Subsection (3) applies when the person does not cease to carry on the business before the end of the fourth tax year following the tax year in which the expenditure is incurred.

  3. The person may do 1 of the following to the total amount of expenditure allowed as a deduction:

  4. deduct it in the income year in which the expenditure is incurred; or
    1. allocate it to any 1 of the 4 income years following the income year in which the expenditure is incurred, and deduct it in that income year; or
      1. allocate parts of it over some or all of the 4 income years following the income year in which the expenditure is incurred, and deduct each part allocated in the income year to which it is allocated; or
        1. deduct it, or any part of it that has not already been deducted, in the fourth income year following the income year in which the expenditure is incurred.

          1. Subsection (5) applies when the person ceases to carry on the business before the end of the fourth tax year following the tax year in which the expenditure is incurred.

          2. The person may do 1 of the following to the total amount of expenditure allowed as a deduction:

          3. deduct it, or any part of it that has not already been deducted, in the income year in which the person ceases to carry on the business; or
            1. allocate it, or any part of it that has not already been deducted, equally to the income year in which it is incurred and the following income years in which the person continues to carry on the business.

              1. In this section,—

                fishing boat—

                1. means a boat registered as a fishing vessel under section 103 of the Fisheries Act 1996; and
                  1. includes a small boat belonging to any boat that is so registered

                    fishing business means a business of catching or taking fish, including crustaceans and shellfish, for the purposes of sale or exchange.

                    Compare
                    Notes
                    • Section EJ 2(1): amended (with effect on 1 April 2014), on , by section 68 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                    • Section EJ 2(1): amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 39(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                    • Section EJ 2(6) fishing boat paragraph (a): amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 39(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                    • Section EJ 2(6) fishing business: amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).