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New Zealand law explained for everyone

Tax Administration Act 1994

Interest - Specific provisions

120P: Spreading tax liability or apportioning income back over earlier income years

You could also call this:

"Paying tax over more than one year"

Illustration for Tax Administration Act 1994

You can spread your tax liability over one or more years. This is called an election tax year. The Commissioner can also apportion your income over one or more years. You do not have to pay interest on the affected tax before your terminal tax date. If your income is allocated to a tax year, you must also allocate deductions. This means you need to work out what proportion of your deductions should be allocated to that year. The affected tax is the amount of tax that is altered by the election or apportionment. You can find more information about tax laws on the New Zealand legislation website. The rules about tax are set out in the Tax Administration Act 1994 and other laws, such as the Income Tax Act 2004 and the Taxation (Remedial Provisions) Act 1997.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM355360.

Topics:
Money and consumer rights > Taxes
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Part 7Interest
Specific provisions

120PSpreading tax liability or apportioning income back over earlier income years

  1. If, under a tax law,—

  2. a taxpayer elects to spread a tax liability over the tax year in respect of which the election is made (election tax year) and 1 or more earlier tax years; or
    1. the Commissioner apportions income over a tax year (apportionment tax year) and 1 or more earlier tax years,—
        1. to the extent the election or apportionment alters the taxpayer's liability to tax in a tax year that precedes the election tax year or apportionment tax year, as the case may be (the extent of that altered liability being called affected tax), no interest is payable under this Part on the affected tax before the taxpayer's terminal tax date for the election tax year or apportionment tax year.

      1. If income of a taxpayer is allocated to a tax year under subsection (1)(b), the taxpayer shall allocate to the tax year that proportion of deductions allowed in the allocation tax year which the allocated income represents as a proportion of the income for the allocation tax year calculated without allocation.

      Notes
      • Section 120P: inserted, on , by section 36(1) of the Tax Administration Amendment Act (No 2) 1996 (1996 No 56).
      • Section 120P heading: amended, on (effective for 2005–06 tax year and later tax years, except when the context requires otherwise), by section YA 2 of the Income Tax Act 2004 (2004 No 35).
      • Section 120P(1): amended, on (effective for 2005–06 tax year and later tax years, except when the context requires otherwise), by section YA 2 of the Income Tax Act 2004 (2004 No 35).
      • Section 120P(1)(a): amended, on (effective for 2005–06 tax year and later tax years, except when the context requires otherwise), by section YA 2 of the Income Tax Act 2004 (2004 No 35).
      • Section 120P(1)(b): amended, on (effective for 2005–06 tax year and later tax years, except when the context requires otherwise), by section YA 2 of the Income Tax Act 2004 (2004 No 35).
      • Section 120P(2): inserted, on (deemed to apply to 1997–98 and subsequent income years), by section 144(2) of the Taxation (Remedial Provisions) Act 1997 (1997 No 74).
      • Section 120P(2): amended, on (effective for 2005–06 tax year and later tax years, except when the context requires otherwise), by section YA 2 of the Income Tax Act 2004 (2004 No 35).