Section DP 5 — Income Tax Act 2007: Forestry encouragement agreement: deductions

DP 5 Forestry encouragement agreement: deductions When this section applies (1) This section applies when a person makes a forestry encouragement agreement under the Forestry Encouragement Act 1962 . Deduction: forestry expenditure under agreement (2) The person is allowed a deduction for expenditure that they incur if all the following apply to the expenditure: (a) it is expenditure incurred in planting or maintaining trees under the agreement; and (b) it is not expenditure for which an advance has been or is to be made under the agreement; and (c) it is not expenditure represented in a payment made to the person under the Forestry Encouragement Grants Regulations 1983 and incurred in— (i) planting or maintaining trees; or (ii) meeting administrative overheads, rates, rent, insurance premiums, or other expenses of the same kinds; or (iii) paying interest on money borrowed for the purpose of developing the trees and employed as capital in developing the trees. Deduction: advance (3) The person is allowed a deduction for expenditure that they incur in— (a) making a payment of interest for an advance made under the agreement: (b) making a payment reducing the principal of an advance made under the agreement. Link with subpart DA (4) This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply. Defined in this Act: capital limitation , deduction , general limitation , general permission , interest , pay , Compare: 2004 No 35 s DP 4