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Income Tax Act 2007

Timing and quantifying rules - Spreading of specific expenditure

EJ 13C: Well not producing

You could also call this:

“Tax rules for petroleum miners when a well stops producing”

If you are a petroleum miner, this law applies to you in a specific situation. It’s about what happens when a well stops producing oil or gas in large enough amounts to sell, and you decide to stop using it.

Here’s what you need to know:

You must have spent money to develop a well. This well needs to have stopped producing oil or gas that you can sell, and you must have abandoned it in a particular year.

Before that year started, you must have chosen to use a special rule (section EJ 12B) for the money you spent on developing the well.

Also, part of the money you spent on developing the well (which you can claim as a deduction under section DT 5) must not have been dealt with under that special rule yet.

If all of these things are true, then the law says you can claim the remaining part of your deduction in the year when the well stopped producing and was abandoned.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2539861.

Topics:
Money and consumer rights > Taxes
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EJ 13B: Dry well drilled, or

“Tax deduction for drilling a well that doesn't produce oil or gas”

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EJ 14: Spreading deduction backwards, or

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

Part E Timing and quantifying rules
Spreading of specific expenditure

EJ 13CWell not producing

  1. This section applies when—

  2. the petroleum miner has petroleum development expenditure for a well that, in an income year—
    1. stops producing petroleum in commercial quantities; and
      1. is abandoned; and
      2. the petroleum miner has elected to apply section EJ 12B for the petroleum development expenditure described in paragraph (a) before the start of the income year; and
        1. part of a deduction under section DT 5 (Petroleum development expenditure) for the petroleum development expenditure described in paragraphs (a) and (b) has not been allocated under section EJ 12B.

          1. The part of the deduction described in subsection (1) is allocated to the income year.

          Notes
          • Section EJ 13C: inserted (with effect on 1 April 2008), on , by section 129(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).