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Business and environment friendly tax changes

Ian Cairns, New Zealand Tree Grower November 2005.

Farm foresters could benefit from recently announced tax changes. These changes are designed to encourage environmental expenditure and site restoration, such as riparian and other new bush or forestry planting. A number of elements in the tax changes are relevant to climate change. For example sections relating to tree planting and investment in capital expenditure for the removal of carbon dioxide.

A key change is the provision for business tax payers to establish site restoration funds. Businesses may choose to divert some of their tax payments into the fund which will give rise to tax deductions over the operating life of the business. When a tax payer incurs expenditure to rectify discharges of contaminants – including carbon dioxide – they will be able to apply for a refund from the restoration fund.

Other changes include deductions for –

  • Expenditure on investigation and testing locations and methods for an activity or improvement that is intended to avoid, remedy or mitigate detrimental effects on the environment from the discharge of contaminants
  • Expenditure related to monitoring discharges, their effects and monitoring effectiveness of solutions
  • Deductions for capital expenditure to include planning and construction of tanks, pipes impermeable surfaces and machinery or the like, and also costs associated with the planting of trees and other vegetation for the purpose of avoiding, remedying or mitigating effects on the environment from the discharge of contaminants.

The changes will be effective for expenditure incurred after the legislation is enacted.

If you would like to know about these changes, you could ask your accountant or visit the following websites  or


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