20 Mar Income Equalisation Scheme – Inland Revenue tax relief for farmers
The Inland Revenue is offering tax relief to farmers in response to the dairy price downturn.
If the drop in the dairy price is having a significant impact on your financial position and you have made deposits into the income equalisation scheme, you should talk to your accountant about applying for an early refund from the scheme.
The income equalisation scheme allows farmers to better manage peaks and troughs in their income by allowing money to be put aside from a profitable year and withdrawn against a loss-making, or less profitable year. The scheme enables farmers to level out their income as deposits are treated as a deduction and refunds are treated as income.
Inland Revenue is allowing farmers to apply for an early refund from the income equalisation scheme in response to the dairy price downturn. Normally deposits are not available for refund until 12 months after the deposit is made. However, farmers who are materially affected by the dairy price downturn and are suffering financial hardship may make early withdrawals in the 2015-16 or 2016-17 tax years.
Farmers who want to make deposits for the 2015-16 tax year can also apply for late deposits.
There may be other areas where you can receive tax benefits such as claiming business expenses and reviewing your insurance and ACC cover. If you haven’t already, you should contact us to discuss.