Section DC 1 — Income Tax Act 2007: Lump sum payments on retirement

DC 1 Lump sum payments on retirement Deduction (1) A person who carries on a business is allowed a deduction for a lump sum paid as a bonus, gratuity, or retiring allowance to an employee on retirement. Inclusions (2) For the purposes of subsection (1), a lump sum paid on retirement includes a lump sum paid to— (a) an employee when they end their employment or service through redundancy, loss of office, or similar circumstances: (b) a former employee when they are unable to be reemployed in seasonal work in circumstances that would be considered the loss of employment or service through redundancy if they resulted in ending the seasonal work. Exclusion (3) This section does not apply to the extent to which the person has accepted a liability, as described in section DC 10(1)(c) , to pay an amount of employment income. Timing of deduction (4) The deduction is allocated to the income year in which the lump sum is paid. Link with subpart DA (5) This section supplements the general permission and overrides the capital limitation. The other general limitations still apply. Defined in this Act: amount , business , capital limitation , deduction , employee , employment income , general limitation , general permission , income year , pay , supplement , Compare: 2004 No 35 s DC 1