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Income Tax Act 2007

Timing and quantifying rules - Spreading of specific expenditure

EJ 15: Disposal of petroleum mining asset

You could also call this:

“Rules for tax deductions when selling a petroleum mining asset”

When you sell a petroleum mining asset, part of the money you spent on developing it can be deducted from your taxes in the year you sell it. This part is the amount that relates to the asset and hasn’t already been deducted in earlier years.

If you get money from selling the asset over more than one year, the deduction is split across those years. The amount you can deduct each year depends on how much of the sale money you get that year.

You can find more information about petroleum development expenditure in section DT 5. There are also other rules about when you can deduct these costs in section EJ 12 and EJ 12B.

Sometimes, there might be different rules that apply instead of these ones. You can find those in section EJ 16.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515134.

Topics:

Money and consumer rights > Taxes

EJ 14: Spreading deduction backwards, or

“This rule about spreading tax deductions to earlier years has been removed”

EJ 16: Disposal of petroleum mining asset to associate, or

“Rules for selling petroleum mining assets to related parties or their representatives”

Part E Timing and quantifying rules
Spreading of specific expenditure

EJ 15Disposal of petroleum mining asset

This section applies when a petroleum miner disposes of a petroleum mining asset.
Part of a deduction under section DT 5 (Petroleum development expenditure) is allocated to the income year in which the miner disposes of the asset. The part is that to which both the following apply:
it is attributable to the asset; and
it has not been allocated under section EJ 12 or EJ 12B to the income year in which the miner disposes of the asset or to an earlier income year.

If the petroleum miner’s income from disposing of the asset is derived in 2 or more income years,—
the amount of the deduction is allocated among the income years in which the miner derives the income; and
the amount allocated to each income year bears the same relation to the total amount of the deduction as the income that the miner derives in that income year bears to the total amount of income that the miner derives from the disposal.

This section is overridden by section EJ 16.

Compare

2004 No 35 s EJ 13

Notes

Section EJ 15(2)(b): substituted (with effect on 1 April 2008), on 6 October 2009, by section 130(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).