IRD Offers Tax Tips For Destroying Precious Wetlands – Forest and Bird

Forest & Bird is asking Inland Revenue Te Tari Taake whether the fines for illegally draining a wetland are also tax deductible, after the department published a “how-to” on claiming expenses for destroying critical habitats.

An official IRD tax guide, released this month, uses the example of a farmer draining a wetland to convert it to grazing land to illustrate a tax-deductible agricultural expense.

“We had to read this twice to believe it,” says Forest & Bird’s Regional Conservation Manager, Scott Burnett.

“On one hand, the Government has policies to protect and restore our critically endangered wetlands. On the other, the tax department is using the destruction of those same wetlands as a helpful hint for a tax write-off.”

The example (Example 8, page 12) in IRD’s Commentary on the Taxation (Budget Measures) Bill (No 2) explicitly states that the cost of draining a wetland for agricultural purposes is tax deductible.

“This is profoundly unhelpful and sends all the wrong signals,” says Mr Burnett.

“Draining a wetland is not a casual business decision; it’s an environmentally destructive act that is illegal in most circumstances. Our remaining wetlands are precious taonga. They are the last refuge for endangered species and are essential for filtering our water and a nature-based solution for preventing floods.”

“Councils around the country are prosecuting people for this very activity. We’re curious if IRD’s tax advice extends to the non-deductibility of the court-imposed fine, and enforcement action, when the regional council prosecutes the farmer for draining the wetland.”

Since European settlement, approximately 90% of New Zealand’s wetlands have been drained or filled for farming or urban development. This dramatic loss makes the protection and restoration of the remaining wetlands a national priority for conservation and climate resilience.

“While DOC, councils, and community groups are spending millions of taxpayer and ratepayer dollars restoring wetlands, the IRD is effectively publishing a ‘how-to’ guide on writing off their destruction.”

Forest & Bird is calling on Inland Revenue to remove this example from its commentary and ensure all official government guidance aligns with New Zealand’s environmental laws and conservation goals.