Recent changes to tax laws now mean it is easier for businesses to claim tax deductions for environmental expenditure. The June 2005 changes update, clarify and expand tax deductions available for business environmental expenditure.
This information sheet outlines the key changes and provides some answers to common questions.
There are already specific provisions in the tax legislation that deal with agricultural environmental expenditure. Farmers now also have the benefit of qualifying for deductions under the general environmental expenditure rules. This enables tax deductions for a broader range of environmental expenditure, such as site restoration and large-scale riparian planting.
The changes introduce better matching of income and expenditure for tax purposes. While certain costs are tax deductible over a longer period, a waste business can apply for tax deductions over a shorter period using the new environmental determination process. The changes also clarify that construction and restoration costs associated with a landfill are immediately deductible.
Changes apply for income years beginning and environmental expenditure incurred after 10 June 2005. Environmental tax deductions for dealing with non-industrial waste are retrospective.
More information is available from Inland Revenue’s Tax Information Bulletin (September issue). You can download this bulletin as a pdf document on www.ird.govt.nz/aboutir/newsletters/.