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You can claim environmental expenses in certain situations.

When you can claim expenses

To claim expenses, all of the following conditions must apply: 

  • Your business is in New Zealand.
  • As part of that business, or when you are ending business operations, you incur expenses to avoid, fix, or reduce the damaging effects of contaminated discharge or making noise.
  • The expenses do not include reclaiming land, non-environmental dredging, or expenses related to the buying or acquiring of land.
  • The expenses do not relate to revenue account property.
  • No other provision allows a deduction for the expenses.

Deduction rates

Default deduction rates cover 4 cost categories

General description of expense Default deduction rate
Testing and feasibiliity expenses 100%
Restoration expenses 100%
Monitoring expenses 100%
Construction or improvement expenses The lesser of:
  • 35 years (1/35 deductable a year
  • the length of the applicable resource consent granted (1/life of resource consent)
You can choose the straight-line deduction or adjust the rate to give a a diminishing value deduction.

If the default deduction rates do not give the correct calculation and taxation of income from business activities, you can apply to us for a category-specific rate.

Destruction or closure

If an environmental improvement is destroyed or a business closes, you can claim the remaining balance of the expense - the original cost minus any deduction you’ve already claimed.

Last updated: 31 Jan 2024
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