What is Income Equalisation Scheme (IES)
The Income Equalisation Scheme (IES) aims to allow flexibility to income earners from primary industries such as farmers, fishers or foresters who may experience significant fluctuations in their income year to year.
These businesses can deposit a sum in the IES and claim it as a deduction in the year of deposit, and then withdraw it in another year and declare it as assessable income. The scheme can be managed through your myIR account, for tasks including registration, tracking, deposits and withdrawals.
The deposit is accepted for the tax year in which it is made, unless made within earlier of 6 months from balance sheet and 1 month from return due date. Minimum deposit for IES is $200, which for environment restoration it is $1,000. The deposit cannot exceed your net income from the qualifying activity for the financial year.
The deposits will be held for up to 5 years, and you can earn 3% on deposits lasting more than 12 months. If a withdrawal is made in a year, you cannot make a deposit in the same year, unless subject to certain conditions.
The scheme cannot be availed by certain classes of business such as livestock dealers, hobby farmers, service providers of a farming business etc.
Please note that the above article is intended to give a general overview of the scheme, for specific queries in relation to your case and to understand how the provisions applies to you, please get in touch with us.
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