Section EJ 3 — Income Tax Act 2007: Spreading forward of fertiliser expenditure

EJ 3 Spreading forward of fertiliser expenditure When this section applies (1) This section applies when— (a) a person carries on a farming or agricultural business on land in New Zealand; and (b) the person incurs expenditure in buying fertiliser or lime or applying fertiliser or lime to some or all of the land; and (c) the expenditure is expenditure for which the person is allowed a deduction. Timing of deduction: if election made (2) The person may choose to allocate the expenditure by allocating some or all of it, in the proportions they choose, to any 1 or more of the 4 income years following the income year in which they incur the expenditure. Timing of deduction: if election not made (3) The person is allowed a deduction in the fourth income year following the income year in which they incur the expenditure for any part of the expenditure— (a) for which they do not claim a deduction in the income year in which they incur the expenditure; or (b) that they do not allocate under subsection (2). Timing of deduction: business ceasing within 4 years (4) If the person ceases to carry on the business before the end of the fourth income year following the income year in which they incurred the expenditure, they must choose 1 of the following ways to deal with any part of the expenditure that has not so far been deducted: (a) the part is to be deducted in the income year in which the person ceases to carry on the business; or (b) the part is to be allocated equally to the income year in which they incurred the expenditure and the following income years in which the person carried on the business. Notice (5) The following provisions apply to an allocation for the purposes of subsections (2) and (4): (a) for subsection (2), the person must give the Commissioner notice of the allocation within the time within which the person is required to file a return of income for the income year to which they allocated the expenditure: (b) for subsection (4), the person must give the Commissioner notice of the allocation within the time within which the person is required to file a return of income for the income year in which the person ceases to carry on the business: (c) for subsection (2) or (4), the Commissioner may allow a longer time in any case or class of cases: (d) for subsection (2), the person must not revoke the allocation. Personal representative (6) An election under subsection (4) may be made by a deceased’s personal representative. Defined in this Act: business , Commissioner , deduction , income year , New Zealand , notice , return of income , Compare: 2004 No 35 s EJ 3