Section DP 3 — Income Tax Act 2007: Improvements to forestry land

DP 3 Improvements to forestry land When this section applies (1) This section applies when— (a) a person carries on a forestry business on land in New Zealand; and (b) an improvement described in schedule 20 , part G (Expenditure on farming, horticultural, aquacultural, and forestry improvements) has been made to the land. Deduction: expenditure: owner of land (2) A person who owns the land is allowed a deduction for expenditure to which all the following apply: (a) it is incurred on making the improvement; and (b) it is incurred by the person or by another person; and (c) it is incurred in the 1995–96 income year or in a later income year, not including the income year in which the person disposes of the land, the income year being the income year of the person who owns the land; and (d) it is incurred in developing the land; and (e) it is of benefit to the business in the income year in which the person is allowed the deduction. Deduction: expenditure: non-owner of land (3) A person who does not own the land is allowed a deduction for expenditure to which all the following apply: (a) it is incurred on making the improvement; and (b) it is incurred by the person; and (c) it is incurred in the 1995–96 income year or in a later income year, not including the income year in which the person ceases to carry on the business on the land; and (d) it is incurred in developing the land; and (e) it is of benefit to the business in the income year in which the person is allowed the deduction. Amount, and timing, of deduction (4) The amount of the deduction is calculated using the formula— schedule 20 percentage × diminished value. Definition of items in formula (5) In the formula,— (a) schedule 20 percentage is the percentage set out opposite the description of the improvement in schedule 20 , part G: (b) diminished value is the diminished value of the improvement. Link with subpart DA (6) This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply. Defined in this Act: amount , business , capital limitation , deduction , diminished value , forestry business , general limitation , general permission , income year , New Zealand , own , Compare: 2004 No 35 s DP 3 Section DP 3 list of defined terms forestry business : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).