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Income Tax Act 2007

Income - Income from business or trade-like activities

CB 13: Disposal: amount from major development or division and not already in income

You could also call this:

“Taxable income from selling land after major development or division”

If you make money from selling land, it might be counted as income in some cases. This happens when the money isn’t already counted as income under other rules, and when you’ve done a big project on the land.

The project doesn’t have to be a business, but it needs to involve developing the land or splitting it into smaller parts. You, or someone working for you, must have done work on the land. This work needs to be significant and could include things like changing the shape of the land, adding drainage, making roads, or other big improvements that are usually done when land is developed for homes, shops, or factories.

There are some exceptions to this rule. If the land was used for a home, a business, a farm, or as an investment, different rules might apply.

If this rule does apply to you, there’s another part of the law that talks about how you can deduct the value of the land from your income.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512435.

Topics:
Money and consumer rights > Taxes
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CB 12: Disposal: schemes for development or division begun within 10 years, or

“Income from selling land developed or divided within 10 years of purchase”

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CB 14: Disposal: amount from land affected by change and not already in income, or

“Tax on profits from selling land affected by zoning or use changes”

Part C Income
Income from business or trade-like activities

CB 13Disposal: amount from major development or division and not already in income

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

  2. the amount is not income under any of sections CB 6A to CB 12, and CB 14; and
    1. the amount is derived in the following circumstances:
      1. an undertaking or scheme, which is not necessarily in the nature of a business, is carried on; and
        1. the undertaking or scheme involves the development of the land or the division of the land into lots; and
          1. the person, or another person for them, carries on development or division work on or relating to the land; and
            1. the development or division work involves significant expenditure on channelling, contouring, drainage, earthworks, kerbing, levelling, roading, or any other amenity, service, or work customarily undertaken or provided in major projects involving the development of land for commercial, industrial, or residential purposes.

            2. Subsection (1) is overridden by the exclusions for residential land in section CB 17, for business premises in section CB 20, for farm land in section CB 21, and for investment land in section CB 23.

            3. Section DB 27 (Amount from major development or division and not already in income) deals with a deduction for the value of the land.

            Compare
            Notes
            • Section CB 13(1)(a): amended, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
            • Section CB 13(1)(a): amended (with effect on 27 March 2021), on , by section 7 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
            • Section CB 13(1)(a): amended (with effect on 1 October 2015 and applying to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after that date), on , by section 5(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
            • Section CB 13(2) heading: substituted, on , by section 309 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
            • Section CB 13(2): substituted, on , by section 309 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).