Act 293 provides a refundable income tax credit for the construction of new drought mitigation water storage facilities, or the repair or reconstruction of existing water storage facilities.  The credit is equal to four percent (4%) of certain "qualifying costs" of the construction or repair, which are incurred by an "eligible taxpayer."  The credit is available for taxable years beginning after December 31, 2000, through December 31, 2005.

Act 293 defines an "eligible taxpayer" as a farmer or rancher who is not otherwise eligible to be claimed as a dependent by another taxpayer for Hawaii state income tax purposes.

A "qualified water storage facility" is defined by Act 293 to mean a water storage facility that is part of a conservation plan approved by the applicable local soil and water conservation district in which the facility is or will be located.

"Qualifying costs" are those costs incurred and paid by the eligible taxpayer after December 31, 2000 for the construction or repair of a new or existing "qualified water storage facility."  Costs incurred and paid for new equipment related to the construction or repair of the new or existing "qualified water storage facility" are also considered "qualifying costs" for the purposes of this credit.  However, a farmer or rancher who receives a grant or subsidy from any federal or state government source and uses those funds to pay for the construction or repair of a qualified water storage facility cannot claim those amounts as "qualifying costs."  Moreover, in calculating the amount of the credit, any construction, repair, or equipment costs for which another Hawaii net income tax credit was claimed shall not be eligible for this new credit.

Any claims for the credit must be filed on or before the end of the twelfth month following the close of the taxable year for which the credit is claimed.  Failure to comply with the foregoing filing requirement will constitute a waiver of the right to claim the credit.

The Department of Taxation will be preparing new forms to claim the credit provided by Act 293.

Current forms and other tax information are available at the Department's website at:   www.hawaii.gov/tax.  On Oahu, forms may be ordered by calling the Department's Forms Request Line at:  587-7572.  Persons who are not calling from Oahu, may call:  1-800-222-7572 (toll-free) to receive forms by mail or by fax.
 

/s/
MARIE Y. OKAMURA
Director of Taxation

HRS Sections Explained:  235-___ .

VIEW AN ON-LINE COPY OF THE ACT (HB 1074, HD2, SD2, CD1) ON THE CAPITOL WEBSITE
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