The Inland Revenue Department has released an 'Interpretation Statement' about farmhouse expenses. An Interpretation Statement provides accounting guidance as to how IRD views specific actions.

This new statement allows farmers (operating as sole traders or in partnership) to deduct from their farm revenue:
  • 20% of farmhouse expenses (previously 25%); and
  • 100% of council rates; and
  • 100% of interest costs on farm mortgages
as long as the farmhouse is 20% or less than the value of the total farm. If this is not the case, the interest on the mortgage is likely to have a private element which is not tax deductible.

This statement replaces previous statements and applies from 1 April 2017.

For more information about the primary sector please contact Cliff Whitelaw, Paul Young
or Wayne Weber on 407 7117.