Deposits

The Income Equalisation Scheme allows eligible taxpayers to make equalisation deposits with the Commissioner and claim deductions against their income.

In order to be deductible, the deposit must be received by the commissioner:

• Within the accounting year or
• Within the specified period after the end of the accounting year or
• Within a time after the end of the specified period that has been allowed by the Commissioner

The Commissioner will accept a late deposit where it is provided by the earlier of:

• One month from the date the taxpayer’s income tax return was filed for an accounting year
• One month from the taxpayer’s income tax return due date for the accounting year

Late deposits are allowed on a case-by-case basis after careful consideration by the Commissioner.

Refunds

Eligible taxpayers are able to apply in writing for a refund from the applicable income equalisation scheme. Generally, a deposit cannot be refunded unless it has been in the scheme for a year. However, the Commissioner may allow early refunds where she deems the purpose to be appropriate.

This purpose must be to:

• Enable the taxpayer to undertake planned development work
• Enable taxpayer to livestock or replacement livestock
• Avoid them suffering serious hardship
• Do anything else that the commissioner determines to be a refundable purpose

The taxpayer is required to provide evidence to supplement the early refund. The refund will constitute as income for the year in which the commissioner receives the refund application unless:

• The refund application is received in the year to which the refund relates, in which case the refund will be income for that particular year if elected by taxpayer
• A late application is received after the specified period and the taxpayer nominates for the refund to relate to the later year. Commissioner approval is required for this.

For more information on the Income Equalisation Scheme itself, visit Income Equalisation Scheme.

While we have summarised the key points regarding refunds and deposits under the Income Equalisation Scheme, it is a complicated area of legislation. For advice specific to your situation, reach out to us below.

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