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Income Tax Act 2007

Deductions - Terminating provisions

DZ 20: Expenditure incurred while income-earning activity interrupted by Canterbury earthquake

You could also call this:

“Tax deductions for business costs during Canterbury earthquake disruptions”

This part of the law talks about what happens if you have a business in greater Christchurch that was interrupted by a Canterbury earthquake. If you had to spend money on your business while it wasn’t running because of the earthquake, you might be able to claim that money back on your taxes.

For this to apply, a few things need to be true. You must have had a business in greater Christchurch just before a Canterbury earthquake happened. The earthquake must have stopped your business from running for a while. During this time, you spent money on things for your business even though it wasn’t running. Usually, you can’t claim this kind of spending, but because of the earthquake, you can. You also need to have started your business again before the 2024-25 tax year.

If all of these things are true, you can claim the money you spent while your business wasn’t running. But you can only claim it in the tax year when you start your business again. This is allowed under the general permission for tax deductions, but other general limitations still apply.

This rule only works for tax years before 2024-25. It’s meant to help businesses affected by the Canterbury earthquakes.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4883374.

Topics:

Money and consumer rights > Taxes

Business > Industry rules

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Part D Deductions
Terminating provisions

DZ 20Expenditure incurred while income-earning activity interrupted by Canterbury earthquake

This section applies for a person and an income year (the current year) before the 2024–25 income year when—
the person has an income-earning activity in greater Christchurch (as defined in section 4 of the Canterbury Earthquake Recovery Act 2011) immediately before a Canterbury earthquake (as defined in that section); and
the activity is interrupted for a period (the period of interruption) as a result of the Canterbury earthquake; and
in the current year, during the period of interruption, the person incurs expenditure or loss (the interruption expenditure) in meeting an obligation relating to the income-earning activity; and
the interruption expenditure does not meet the requirements of the general permission for the person and the income-earning activity but would do so but for the interruption; and
the person resumes the income-earning activity in an income year (the resumption year) before the 2024–25 income year.

The person is allowed a deduction for the interruption expenditure.
The deduction is allocated to the resumption year.
This section supplements the general permission; the general limitations still apply.

Notes

Section DZ 20: replaced, on 1 April 2016 (applying for the 2016–17 and later income years), by section 44(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
Section DZ 20(1): amended (with effect on 1 April 2016), on 18 March 2019, by section 157 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
Section DZ 20(1)(e): amended (with effect on 1 April 2016), on 18 March 2019, by section 157 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).