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Inland Revenue

Tax Policy


The changes provide for the income tax treatment of transactions under the Emissions Trading Scheme (ETS). The ETS was enacted by the Climate Change Response (Emissions Trading) Amendment Act 2008 (Emissions Trading Act).

The purpose of the changes is to provide income tax rules which cover recognition of income and deductions, and timing and valuation rules for both forestry and non-forestry businesses.

The income tax amendments made by the Emissions Trading Act to the Income Tax Act 2007 are replaced by these provisions.

Submissions were received from four tax professional organisations. At a general level, one supported the approach being taken while another thought legislation should wait until the outcome of the review of the Emissions Trading Scheme is known. A number of submissions were made on technical issues around the application and operation of the provisions and officials have recommended that a number of these submissions be accepted.