Income Equalisation Scheme

The Income Equalisation Scheme (IES) allows taxpayers to deposit income from farming, fishing or forestry with Inland Revenue.

The money is held on deposit in a special account which earns interest at 3% per annum on amounts left on deposit for more than 12 months. In normal circumstances the amount is unable to be withdrawn unless it has been on deposit for at least 12 months. The deposit is held for a maximum period of five years.

A tax deduction is claimed for the amount paid into the IES in the year it is paid in. Then when the funds are withdrawn (including interest) they are treated as taxable income in the year of withdrawal.

The scheme effectively allows clients to level out their income from year to year. Examples of activities that would qualify to use the IES include:

  • beekeeping
  • animal husbandry
  • dairy farming
  • grain and seed growing
  • market gardening
  • fruit growing
  • poultry farming
  • share-milking
  • tobacco growing
  • vegetable growing
  • vineyards