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Income Tax Act 2007

Timing and quantifying rules - Environmental restoration accounts

EK 12: Refund if application or excess balance

You could also call this:

“Getting money back from your environmental restoration account”

You can get a refund from your environmental restoration account in two situations. The first is when you want to take out some or all of the money, and certain other rules don’t apply. The second is when you have more money in the account than the maximum allowed for a year.

To get a refund, you need to apply to the Commissioner. You must have spent money on things that help the environment, like stopping pollution or noise. The amount you spent should be at least as much as the refund you’re asking for. You can only claim for money you spent after you first put money into the account.

The Commissioner will give you the smallest of these three amounts: the refund you asked for, the total amount in your account, or the amount that matches what you spent on helping the environment.

If your account has more than the maximum allowed, the Commissioner will refund the extra amount to you at the end of the tax year.

There’s a special calculation to work out how much you need to spend to get a certain refund. You divide the refund amount by the highest tax rate that would apply to you if you earned enough money.

Remember, there are some other rules that might change how these refunds work.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515190.

Topics:

Money and consumer rights > Taxes

Environment and resources > Conservation

EK 11: Application for refund, or

“How to ask for money back from your environmental restoration account”

EK 13: Income when refund given on application, or

“Refunds from environmental restoration accounts are counted as income”

Part E Timing and quantifying rules
Environmental restoration accounts

EK 12Refund if application or excess balance

This section applies when—
a person wants a refund of some or all of the amount in the person’s environmental restoration account and none of sections EK 9, EK 15, EK 16, and EK 19 applies:
the amount in the person’s environmental restoration account is more than the maximum account balance for an income year.

The Commissioner must make a refund under this section to a person if—
the person applies for a refund and has incurred expenditure—
1. of a kind that is listed in schedule 19, part B (Expenditure in avoiding, remedying, or mitigating detrimental effects of discharge of contaminant or making of noise) and not in schedule 19, part C; and
2. of an amount equal to or greater than the amount given by subsection (3) for the amount of the refund; and
3. after the first date on which the person made to the Commissioner a payment under section EK 2 for entry in the person’s environmental restoration account or a transfer under section EK 15, EK 16, or EK 19 was made to the person’s environmental restoration account:
the maximum account balance for the latest complete income year for the person’s environmental restoration account is less than the amount in the environmental restoration account at the end of that income year.

The amount of expenditure incurred that corresponds to the amount of a refund is calculated using the formula—
$amount ÷ tax rate.$

Where:
In the formula,—
amount is the amount of the refund:
tax rate is the highest rate of income tax on taxable income that—
1. is set out in schedule 1 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits); and
2. would apply to the person for the tax year if the person had sufficient taxable income.

If a person is entitled to a refund under subsection (2)(a), the amount that the Commissioner must refund to the person is the smallest of—
the refund for which the person applies:
the contents of the person’s environmental restoration account at the time of the refund:
the refund corresponding to the person’s expenditure that meets the requirements of subsection (2)(a)(i) to (iii).

If a person is entitled to a refund under subsection (2)(b), the amount that the Commissioner must refund is the difference at the end of the latest complete income year between—
the amount in the person’s environmental restoration account after any transfer under section EK 15, EK 16, or EK 19 for the income year:
the person’s maximum account balance for the income year.

Section EK 17 overrides subsections (5) and (6).

Compare

2004 No 35 s EK 12

Notes

Section EK 12 heading: amended, on 2 June 2016, by section 30(1) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section EK 12(2) heading: amended, on 2 June 2016, by section 30(2) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).
Section EK 12(2)(a)(i): amended (with effect on 1 April 2018), on 18 March 2019, by section 172 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section EK 12(4)(b)(i): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
Section EK 12 list of defined terms apply: inserted, on 2 June 2016, by section 30(3) of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).