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Income Tax Act 2007

Deductions - Government grants, funding, and compensation

DF 5: Government funding additional to government screen production payments

You could also call this:

“Rules for claiming deductions when receiving both government screen funding and other public funding”

When a public authority gives you money for a project, and you also get a government screen production payment for the same project, there are special rules about what you can claim as a deduction.

If the money from the public authority isn’t a grant, subsidy, or grant-related suspensory loan, and you would normally be allowed to claim the money you spent as a deduction, you can’t claim that deduction anymore. This is because the money from the public authority is considered excluded income under section CX 48C.

However, if you have to pay some of that money back to the public authority as part of your agreement, you can claim that repayment as a deduction.

These rules override the usual permission to claim deductions, but other limitations on deductions still apply.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2534805.

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Part D Deductions
Government grants, funding, and compensation

DF 5Government funding additional to government screen production payments

  1. This section applies when a public authority makes a payment (the funding payment) to a person for expenditure incurred in a project if—

  2. the funding payment is not in the nature of a grant or subsidy; and
    1. the funding payment is not a grant-related suspensory loan; and
      1. the person receives a government screen production payment for the project in addition to the funding payment; and
        1. the person would be allowed a deduction for the expenditure in the absence of this section; and
          1. the payment is excluded income under section CX 48C (Government funding additional to government screen production payments).

            1. The person is denied, to the extent of the amount of the funding payment, the deduction for the expenditure that would be allowed in the absence of this section.

            2. The person is allowed a deduction for the amount of a payment (the return payment) made to the public authority to the extent to which the return payment is required by the arrangement under which the funding payment is made.

            3. In this section—

            4. subsection (2) overrides the general permission; and
              1. subsection (3) supplements the general permission and overrides the capital limitation; the other general limitations still apply.

                Notes
                • Section DF 5: added (with effect on 1 October 2009), on , by section 89 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).