The impact of COVID-19 may mean that there may be many New Zealanders who may…
An income equalisation scheme is offered to businesses in farming, fishing, forestry, testing, construction and mining industries. It operates as a method for businesses to even out income fluctuations by distributing their gross income from year to year.
A special account is created for businesses where they can pay their income and earn an interest of 3% on the deposit for over 12 months. Note that this interest will become a part of the deposit for tax purposes.
The scheme will hold that deposit for a maximum of 5 years and it is tax-deductible in the year for which it is made. Withdrawals made fall under taxable income in the year businesses apply for withdrawal.
Before money can be withdrawn from the account, it needs to have been in the account for over 12 months.
After the end of March, anyone with a reserve scheme deposit should expect to receive a statement that should show their current balance and interest credited to their account.