Revenue Minister Todd McClay today welcomed Inland Revenue’s decision to exercise its income equalisation discretion to help provide relief for drought-affected farmers in the eastern South Island.
Mr McClay’s comment follows the declaration of a medium-scale adverse event by Primary Industries Minister Nathan Guy this afternoon.
“The Government recognises that this will be a difficult time for many affected farmers. This assistance from Inland Revenue will give greater flexibility to affected farmers around their tax obligations, and is designed to make the coming months easier for them as they deal with the effects of the drought,” says Mr McClay.
The income equalisation scheme allows farmers to better manage peaks and troughs in their income by allowing money to be put aside from a better year and withdrawn against a not-so-good year. Inland Revenue has relaxed these rules by allowing late deposits from the 2014 income tax year to be made up to 30 April 2015, regardless of when the 2014 tax return is filed or the due date for filing that return. Early refunds will also be allowed.
“Clearly tax will not be top of mind for affected farmers right now, however I encourage them to talk to their accountants to consider whether this relief may be helpful in their specific situation,” says Mr McClay.
Affected farmers, and in particular dairy farmers, are also likely to be talking to their accountants about their 2014–15 provisional tax calculations.
Inland Revenue is expected to soon publish details of its response for drought-affected farmers at www.ird.govt.nz