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Income Tax Act 2007

Income - Terminating provisions

CZ 37: Income equalisation schemes

You could also call this:

“Rules for tax treatment of refunds from income smoothing schemes for farmers and businesses”

When you get a refund under section EZ 80 or section EZ 81, part of it might be interest. If it is interest, it counts as your income for the year you receive the refund. This interest is calculated based on rules in section EH 6 or section EH 40.

The rest of the refund, which isn’t interest, doesn’t count as your income. This means you don’t have to pay tax on that part of the refund.

These rules are about special accounts where you can save money from your farm or business income. The government lets you use these accounts to help manage your income over different years.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS478224.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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Part C Income
Terminating provisions

CZ 37Income equalisation schemes

  1. A refund made to a person under section EZ 80 (Refund of excess deposit in main income equalisation account as consequence of election under section EZ 4B) or EZ 81 (Refund of excess deposit in adverse event income equalisation account as consequence of election under section EZ 4B) is, to the extent to which the refund is interest payable under section EH 6 (Interest on deposits in main income equalisation account) or EH 40 (Interest on deposits in adverse event income equalisation account), income of the person and is allocated to the income year in which the person receives the refund.

  2. A refund under section EZ 80 or EZ 81 is, to the extent to which the refund is not interest payable under section EH 6 or EH 40, excluded income.

Notes
  • Section CZ 37: inserted (with effect on 1 April 2017), on , by section 24(1) (and see section 24(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).