Farmers in regions affected by Cyclone Gabrielle are eligible for a range of tax relief available through the Income Equalisation Scheme.
Elimination of use of money interest and penalties
Option to pay tax in installments. Farmers located in Northland, Auckland, Waikato, Bay of Plenty, Gisborne and Hawke’s Bay are all eligible for this support.
Adverse weather event means deposits can be withdrawn immediately
Farming incomes are frequently subject to major changes due to weather conditions and commodity prices, which makes managing cash flow and taxes difficult. The income equalisation scheme has been around for many decades. It allows farmers to make a deposit of money with Inland Revenue - the amount of the deposit transfers the same amount of taxable income from the year in which it is deposited to the tax year in which it is withdrawn.
Under normal conditions the money must be deposited with Inland Revenue for at least six months – this means its usefulness is limited as most farmers have to pay interest to the bank on borrowed money deposited with Inland Revenue. However, because Cyclone Gabrielle has been declared a large-scale adverse event, farmers can withdraw their deposit immediately after it has been deposited, and can still shift the taxable income to the year in which income has dropped due to the adverse event.
This frees up cash flow from paying taxes to apply to rebuilding the farming business - whether it be for stock purchases, fencing etc. Many farmers in the affected regions may now wish to talk to their tax advisers about transferring taxable income from the 2022 tax year to the 2023 tax year. Contact your local BDO adviser for more information.
Cyclone Gabrielle Business Support Hub
We have put together a list of useful links on our new Cyclone Gabrielle Business Support Hub for affected businesses to help access advice, support and funding. We will update this page regularly with more information and advice - so please check back regularly.