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Income Tax Act 2007

Timing and quantifying rules - Spreading of specific expenditure - Definitions

EJ 26: Allocation of expenditure on aircraft engine overhauls: election by operator of single aircraft

You could also call this:

“How to allocate costs for aircraft engine overhauls if you operate only one aircraft”

You can choose to use this section if you operate only one aircraft in your business. This also applies if you and people you’re related to by blood operate only one aircraft in a particular business. If you make this choice, you need to do two things:

  1. You must assign the money you’re allowed to deduct for an aircraft engine overhaul to the year when the overhaul happens.

  2. You must treat each aircraft engine as if it doesn’t have a set price when working out how much you can deduct.

If you want to use this method, you need to tell the tax department (called the Commissioner) about your choice. You do this when you send in your tax return using this method. You can keep using this method until:

  1. You’ve sent in tax returns for three years in a row where you’re no longer operating just one aircraft, or

  2. You tell the Commissioner you want to stop using this method. You do this when you send in a tax return that doesn’t use this method.

Remember, this is just a simple explanation. If you need to use this law, you might want to ask a grown-up or a tax expert for help.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7281506.

Topics:
Money and consumer rights > Taxes
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EJ 25: Allocation of expenditure on aircraft engine overhauls: election by IFRS user, or

“Choosing how to claim deductions for aircraft engine overhauls under IFRS rules”

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EJ 27: Disposal of aircraft engine or aircraft, or

“Rules for selling an aircraft engine or aircraft you've claimed expenses for”

Part E Timing and quantifying rules
Spreading of specific expenditure: Definitions

EJ 26Allocation of expenditure on aircraft engine overhauls: election by operator of single aircraft

  1. A person may elect to quantify and allocate under this section the amount of a deduction allowed by section DW 5 or DW 6 (which relate to the acquisition, overhaul, and leasing of aircraft engines) in relation to an aircraft and an income year if—

  2. no more than 1 aircraft is operated in business by the person and persons who are associated with the person other than by blood relationship; and
    1. no more than 1 aircraft is operated in a particular business by the person and a person who is associated with the person by blood relationship.

      1. A person who elects to rely on this subsection to the income year must—

      2. allocate a deduction under section DW 5(2) to the income year of the aircraft engine overhaul to which the deduction relates; and
        1. treat each aircraft engine as an unpriced aircraft engine for the purposes of section DW 5.

          1. An election under this section applies for each assessment that is made by the person—

          2. after the person notifies the Commissioner of the election, when or before making a return based on the approach required by subsection (2); and
            1. before the person’s return for the third consecutive income year in which the person does not meet the requirements of subsection (1); and
              1. before the person notifies the Commissioner, when or before making a return based on an approach other than the elected approach, that the election is revoked.

                Notes
                • Section EJ 26: inserted, on (applying for the 2017–18 and later income years), by section 69(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).