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To be able to use the income equalisation schemes you need to be a certain type of entity carrying out a certain type of business activity. 

Who can use the main income equalisation scheme 

Business types that qualify for this scheme include:

  • farming/agriculture/horticulture on land in New Zealand
  • fishing (including rock oyster farming, mussel farming and freshwater fish farming)
  • forestry in New Zealand (except for companies, public authorities, Maori authorities or unincorporated bodies).     

Companies can also use the scheme for income from forestry thinning operations on New Zealand land.

Activities that qualify for the income equalisation scheme 

  • Beekeeping
  • Animal husbandry
  • Dairy farming
  • Grain and seed growing
  • Market gardening
  • Fruit growing
  • Poultry farming
  • Share-milking
  • Tobacco growing
  • Vegetable growing
  • Vineyard.

Activities that do not qualify for the income equalisation scheme 

  • Dealing in livestock
  • Leasing or bailing livestock by the bailer
  • Aerial topdressing
  • Hobby farming 
  • Services provided to a forester to manage tree stock
  • Services provided to persons carrying on a farming or agricultural business, for example agricultural contractors or seed cleaners.

When income from forestry qualifies

Income from forestry will be eligible for the income equalisation scheme if it is:

  • from either the sale of timber, or the sale of the right to cut or remove timber
  • earned or gained in any way by the owner of the land in New Zealand
  • timber that is the subject of the sale is standing, cut or fallen timber in its natural state grown on the land.

Who can use the environmental restoration scheme 

The environmental restoration scheme is used as some business activities cause environmental damage. It allows businesses to set aside money to cover future environmental restoration costs..

Who can use the environmental restoration scheme

Am I eligible for an income equalisation scheme?

Income equalisation schemes help people whose income can fluctuate significantly from year to year such as farmers, fishers and foresters. These schemes allow certain types of businesses to even out income fluctuations by spreading their gross income from year to year.

Eligible businesses pay income into a special account with Inland Revenue that earns interest on amounts left on deposit for more than 12 months. The interest paid becomes part of the deposit for tax purposes.
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Last updated: 11 Apr 2022
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