Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from business or trade-like activities

CB 7: Disposal: land acquired for purposes of business relating to land

You could also call this:

“Money from selling land may be taxable if bought for land-related business purposes”

If you sell land, the money you get from it might be counted as income in certain situations. This happens if you or someone connected to you was in the business of dealing with land when you bought it, and you bought the land for that business.

The same is true if you or someone connected to you was in the business of developing land or dividing it into smaller parts when you bought the land, and you bought it for that business.

It also applies if you or someone connected to you was in the business of building when you bought the land, you bought it for that business, and you or they made improvements to the land before or after buying it.

However, these rules don’t apply in some cases. If the land was used for living in or for business purposes, different rules in section CB 16 and section CB 19 might say that the money from selling it isn’t income.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512416.

Topics:
Money and consumer rights > Taxes
Previous

CB 6: Disposal: land acquired for purpose or with intention of disposal, or

“Tax on profit from selling land you bought to resell”

Next

CB 8: Disposal: land used for landfill, if notice of election, or

“Tax rules for selling land previously used as a landfill if you notify the tax office”

Part C Income
Income from business or trade-like activities

CB 7Disposal: land acquired for purposes of business relating to land

  1. An amount that a person (person A) derives from disposing of land is income of person A if—

  2. both the following apply:
    1. at the time person A acquired the land they, or an associated person, carried on a business of dealing in land; and
      1. person A acquired the land for the purpose of the business; or
      2. both the following apply:
        1. at the time person A acquired the land they, or an associated person, carried on a business of developing land or dividing land into lots; and
          1. person A acquired the land for the purpose of the business; or
          2. all the following apply:
            1. at the time person A acquired the land they, or an associated person, carried on a business of erecting buildings; and
              1. person A acquired the land for the purpose of the business; and
                1. before or after acquiring the land person A, or the associated person, made improvements to it.

                2. Subsection (1) is overridden by the exclusions for residential land in section CB 16 and for business premises in section CB 19.

                Compare