Blackhole expenditure relief

Thursday 16 May 2013

News Release

Blackhole expenditure relief

In the Budget today, the Government announced its intention to provide tax deductions for six types of expenditure that previously fell in a tax ‘blackhole’ - that is the costs were not deducible upfront or depreciable over time.

The blackhole expenditure that will now be deductible either upfront or over time includes:
· legal and administrative costs relating to patents and plant variety rights
· costs of obtaining certain fixed life resource consents
· the costs of abandoned resource consents
· the costs of paying dividends (but not the dividends themselves)
· certain costs of running a public company including annual listing and meeting fees.

Many taxpayers may be unaware that some of these costs were not already deductible and will need to review their position.

The Government has been lobbied by business for solutions to blackhole expenditures for many years and this response, albeit very limited, will be welcomed.

The new rules will apply from 2014/15.

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