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Income Tax Act 2007

Deductions - Terminating provisions

DZ 23: Aircraft maintenance: tax accounting provisions for expenditure incurred after 2016–17 income year

You could also call this:

“Tax rules for aircraft maintenance expenses claimed before 2017”

You might have some money set aside for airplane maintenance that you counted as a deduction in your taxes before 2017, even though it wasn’t really allowed. This is called an “anticipated deduction”.

From the 2017-18 tax year onwards, when you spend money on airplane maintenance (but not on fixing plane engines), you can’t claim it as a deduction if you’ve already counted it before. If you set aside more money than you actually spent, you’ll need to count the extra as income under section CZ 34.

For plane engine overhauls after the 2016-17 tax year, you can’t claim a deduction for money you’ve already counted before. If you set aside more than you spent, you can carry the extra forward to use next time you fix a plane engine. You keep doing this until you’ve used up all the money you set aside at the start of the 2017-18 tax year.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7279641.

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Part D Deductions
Terminating provisions

DZ 23Aircraft maintenance: tax accounting provisions for expenditure incurred after 2016–17 income year

  1. This section applies when a person has at the beginning of the 2017–18 income year an amount (the anticipated deduction) of a tax accounting provision, for expenditure on aircraft maintenance, that is included as a deduction in the calculation of the person’s taxable income for an earlier income year although the amount is not a deduction allowed by this Act for the earlier income year.

  2. For the earliest income year, after the 2016–17 income year, in which the person incurs expenditure on the maintenance of an aircraft other than an aircraft engine overhaul, the person—

  3. is not allowed a deduction for the expenditure to the extent to which the expenditure in the income year is offset by an anticipated deduction for expenditure on such maintenance; and
    1. if the anticipated deduction for such expenditure exceeds the amount of the expenditure in the income year, derives income under section CZ 34 (Income arising from tax accounting provision for aircraft engine overhauls) equal to the amount of the excess.

      1. For income years after the 2016–17 income year in which the person incurs expenditure on an aircraft engine overhaul, beginning with the earliest such income year,—

      2. the person is not allowed a deduction for the expenditure to the extent to which the expenditure in the income year is offset by an anticipated deduction for expenditure on an aircraft engine overhaul; and
        1. if the anticipated deduction exceeds the amount of the expenditure in the income year, the excess is carried forward as an anticipated deduction to the next income year in which the person incurs expenditure on an aircraft engine overhaul; and
          1. paragraphs (a) and (b) apply as required to income years until the amount of the anticipated deduction at the beginning of the 2017–18 income year is offset completely.

            Notes
            • Section DZ 23: inserted, on (applying for the 2017–18 and later income years), by section 53(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).