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EK 7: Deduction for payment
or “How to calculate your deduction for payments to an environmental restoration account”
You could also call this:

“You can claim a tax deduction for money put into an environmental restoration account”

This law explains how you can get a tax deduction when you put money into your environmental restoration account. Here’s what you need to know:

You can get this deduction when you transfer money to your account as described in sections EK 15, EK 16, or EK 19 of the law.

To figure out how much you can deduct, you use a simple formula. You divide the amount you transferred by the highest tax rate that applies to you.

The ‘transfer’ is the amount of money you put into your account. The ‘tax rate’ is the highest rate of income tax you would pay if you earned enough money to reach that rate. You can find these rates in schedule 1 of the law.

You get to claim this deduction in the same year that you make the transfer to your account.

Remember, this only applies if you’re allowed to make these transfers according to section DQ 4 of the law.

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Next up: EK 9: Refund of payment if excess, lacking details

or “Refunds for overpayments or incomplete information when contributing to a special fund”
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Part E Timing and quantifying rules
Environmental restoration accounts

EK 8Deduction for transfer

  1. This section applies when a person is allowed a deduction under section DQ 4 (Environmental restoration accounts scheme) for a transfer to their environmental restoration account under section EK 15, EK 16, or EK 19.

  2. The amount of the deduction is calculated using the formula—

    transfer ÷ tax rate.

    Where:

    • The items in the formula are defined in subsections (4) and (5).

    • Transfer is the amount of the transfer to the person’s environmental restoration account that is treated as a payment by the person under section EK 15(3), EK 16, or EK 19.

    • Tax rate is the highest rate of income tax on taxable income that—

    • is set out in schedule 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits); and
      1. would apply to the person for the tax year if the person had sufficient taxable income.

        1. The person is allowed the deduction for the income year for which the transfer is made.

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        Notes
        • Section EK 8(5)(a): amended, on , by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).