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Income Tax Act 2007

Timing and quantifying rules - Environmental restoration accounts

EK 23: Other definitions

You could also call this:

“Definitions and calculations for your environmental restoration account”

In this part of the law, you’ll learn about some important terms and how to calculate certain things for your environmental restoration account.

The ‘maximum account balance’ is the most money you can have in your account for a year. If you don’t meet the rules in section EK 2, your maximum balance is zero. But if you do meet those rules, there’s a special calculation to work out your maximum balance.

The calculation uses two main parts. The first part is called ‘provision’. This is money you’ve set aside in your financial records for future spending on things that help the environment. These things are listed in one part of the law (Schedule 19, Part B), but not in another part (Schedule 19, Part C).

The second part is called ‘tax rate’. This is the highest rate of income tax that would apply to you if you earned enough money. You can find this rate in Schedule 1 of the law.

Lastly, your ‘environmental restoration account’ is a special account that the Commissioner of Inland Revenue keeps in your name. You can find more information about this in section EK 4 of the law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515222.

Topics:
Money and consumer rights > Taxes
Environment and resources > Conservation
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EK 22: Meaning of maximum payment, or

“Explains how to calculate the most you can put into an environmental restoration account each year”

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EL 1: Outline of subpart: general, or

“This section summarises how deductions for residential land expenses are limited and carried forward”

Part E Timing and quantifying rules
Environmental restoration accounts

EK 23Other definitions

  1. In this subpart, maximum account balance for a person and an income year means—

  2. if the person does not meet the requirements of section EK 2 for the income year, zero:
    1. if the person meets the requirements of section EK 2 for the income year, the amount calculated using the formula—

      1. In the formula,—

      2. provision is the provision in the person’s financial statements for future expenditure that—
        1. is of a kind listed in schedule 19, part B (Expenditure in avoiding, remedying, or mitigating detrimental effects of discharge of contaminant or making of noise); and
          1. is not of a kind listed in schedule 19, part C:
          2. 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
              1. would apply to the person for the tax year if the person had sufficient taxable income.

              2. In this subpart, environmental restoration account, for a person, means the account that the Commissioner keeps in the person’s name under section EK 4.

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              Notes
              • Section EK 23(2)(a)(i): amended (with effect on 1 April 2018), on , by section 174 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
              • Section EK 23(2)(b)(i): amended, on , by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).