Recently officials have declared a drought for Waikato, South Auckland, North Auckland and Northland. This classification recognises the prolonged, extreme weather as an adverse event for the primary sector and unlocks IRD assistance as well as funds for the Rural Support Trust to provide welfare support to farmers.
The drought conditions are impacting significantly on production and costs are also likely to be up as additional supplementary feed is needed to continue milking. As a result, profitability will be negatively impacted.
The IRD assistance unlocked with the drought classification is increased access to the Income Equalisation Scheme. The Income Equalisation Scheme allows profits to be moved forward from one year to another to smooth profits and tax payments. With the drought classification for these areas, IRD will allow late deposits into the Income Equalisation Scheme up until 30th April 2020 even where the 2019 tax return has been filed and also early withdrawals from the scheme before the normal 12 months.
We will be reviewing whether the Income Equalisation Scheme may benefit you in the coming weeks and will be in contact as needed. If you would like to discuss the options, please contact your director or client manager.
We also encourage you to reach out to the Rural Support Trust if needed on 0800 787 254.