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Income Tax Act 2007

Timing and quantifying rules - Spreading of specific expenditure

EJ 11: Amount paid by lessee for non-compliance with covenant for repair

You could also call this:

“Tax deductions for tenants paying repair costs”

If you’re renting land and you have to pay money for not following the rules about repairs, you might be able to get some money back on your taxes. This is called a deduction.

You can choose to split up this deduction over different years. You can use it for the year you paid the money, or you can use it for up to three years before that. But you can only use it for years when you were using the land to make money.

If you decide to split up the deduction, you can’t use it for the year you paid the money. Instead, you can use it for the earlier years you chose.

To split up your deduction, you need to tell the tax office (called the Commissioner) how you want to divide it up. You have to do this when you file your tax return for the year you paid the money, unless the Commissioner gives you more time.

Once you’ve told the tax office how you want to split up the deduction, you can’t change your mind. You have to stick with what you decided.

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 It might be out of date or be missing some parts.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=DLM1515125.

Topics:
Money and consumer rights > Taxes
Housing and property > Renting
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Part E Timing and quantifying rules
Spreading of specific expenditure

EJ 11Amount paid by lessee for non-compliance with covenant for repair

  1. This section applies when a lessee of land is allowed a deduction under section DB 21 (Amounts paid for non-compliance with covenant for repair).

  2. The lessee may choose to allocate some or all of the amount of the deduction to any 1 or more of the 3 income years before the income year in which the amount is paid or recovered. The lessee may make an allocation only to an income year in which they used the land for deriving income.

  3. If the lessee makes an allocation,—

  4. they are denied a deduction for the allocated amount in the income year in which the amount of the deduction is paid or recovered; and
    1. they are allowed a deduction for the allocated amount in the income year to which it is allocated.

      1. The following provisions apply to an allocation for the purposes of subsection (2):

      2. the lessee makes the election by giving a notice to the Commissioner that specifies how the amount of the deduction has been allocated; and
        1. the lessee must give the notice within the time required to file a return of income for the tax year in which the amount was paid or recovered or within a longer time if the Commissioner agrees; and
          1. the lessee must not revoke the allocation.

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