Kiwifruit Removal Costs Tax Deductible and Regeneration Receipts are Capital Contribution
The long awaited tax legislation that allows kiwifruit growers affected by PSA to claim vine removal costs as a tax deduction has been passed into law. Prior to this legislation being passed kiwifruit growers could not claim the cost of large scale vine and structure removal due to PSA against their gross taxable income. Kiwifruit growers have always been able to write off the tax book value of the vines removed and claim this as a deduction against their taxable income. The ability to claim the removal costs as well is new and brings the treatment in line with other business sectors. The change will apply retrospectively from the beginning of the 2010-2011 tax year.
The new legislation also confirms the tax treatment of any regeneration payments received from Kiwifruit Vine Health as a result of PSA. It is now clear that any such payments received can be offset against the cost of replacing structures and vines damaged by PSA. This ensures that the payments will be tax free to the grower as long as the cost of replacing the structures and vines exceeds the regeneration payments received. This change will apply retrospectively from the beginning of the 2011–2012 tax year.
The tax law changes relating to vine removal costs incurred and regeneration payments received by kiwifruit growers affected by PSA are favourable and you should check with your accountant or tax advisor to ensure that the correct tax claims have been made in your particular circumstances.