The income equalisation scheme is a way for certain types of businesses to even out income fluctuations by spreading their gross income from year to year.
This includes income from:
- farming
- fishing
- forestry
Businesses pay the income into a special account which earns interest at 3% on amounts left on deposit for more than 12 months. The interest paid becomes part of the deposit for tax purposes.
We hold the deposit for up to 5 years. It's tax deductible in the year for which it is made. Any withdrawals (including interest) are generally assessable (counted as taxable income) in the year businesses apply to withdraw them.
In normal circumstances an amount may not be withdrawn unless it's been on deposit for at least 12 months.
Just after 31 March each year we send a statement to all taxpayers who have reserve scheme deposits, showing their current balance and any interest credited to the account.
Recent changes in myIR
You can now manage your income equalisation scheme accounts in myIR, including:
- registering for income equalisation in real time
- keeping track of your reserve scheme information under the account types EQU (income equalisation)
- managing all your deposits and withdrawals.
To make payments
We no longer accept cheques for income equalisation schemes. You’ll need to:
- make all deposits electronically
- provide a bank account for any refunds.
Adverse event income equalisation scheme
The adverse event income equalisation scheme was repealed for years starting after 18 March 2019. Taxpayers can now use the main income equalisation scheme for this purpose.
Natural disasters, adverse and emergency events
Tax technical information
For more information about income equalisation deposits and refunds see our standard practice statement.
SPS 19/03: Income equalisation deposits and refunds