CA ANZ commented on Inland Revenue’s draft QWBAs addressing (i) deductions for horticultural plants on leased land (PUB00491) and (ii) the application of purchase price allocation (PPA) rules to farmland improvements and listed horticultural plants (PUB00492). CA ANZ agrees with the conclusion that lessee farmers cannot deduct the diminished value of horticultural plants in the final year of a lease, while landowners may claim deductions if they continue the business. However, this treatment can create “black hole” expenditure in cases such as natural disasters, where neither party is able to claim. 

CA ANZ recommends Inland Revenue policy consider a legislative amendment to allow deductions in such emergency situations. 

On PUB00492, CA ANZ agrees that PPA rules do not apply to farmland improvements or listed horticultural plants but notes the omission of unlisted plants (e.g. wine grapes), which requires clarification for the viticulture sector.