The deposit can be left in the scheme for a maximum of five years.
In years when incomes drop, a withdrawal can then be made from the money deposited.
The withdrawal is added to the farmer's taxable income.
That means less tax is paid on the years when incomes are good, and the money is there to prop them up on the not-so-good years.
Now, because of the storms, the IRD has allowed farmers affected by the floods to make later deposits into the scheme.
Usually a deposit must be made within six months of balance date or a month after the tax return is due to be filed (whichever comes first).
But this year, a deposit for the 2014 year can be made up to April 30, 2015 regardless of balance date or when the return is due to be filed.
Early withdrawals will also be allowed, although they must be made in writing and will take 20 days to process.
Farmers will need to provide evidence that they have been affected by the floods, by way of a statement from the farmer or the tax agent.
Activities that are covered by the scheme include beekeeping, share milking, vineyard operations, and forestry.
Examples that don't qualify include dealing in livestock, leasing, contractors to farming and hobby farming.
The cost of the storm to Northland is in the millions, as it came close to calving season and harvest season for some major crops.
Jeremy Tauri is an associate at Plus Chartered Accountants.
