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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:

"Selling land: when the money is new income from a big development or division"

Illustration for Income Tax Act 2007

When you sell land, the money you get is income if it is not already counted as income under sections CB 6A to CB 12 or CB 14. This happens when you do a big development or divide the land into smaller parts. You or someone else must do significant work on the land, like building roads or drainage. You get this income when you carry out a big project on the land, like building houses or shops. However, some types of land are exempt from this rule, like residential land, which is covered in section CB 17. Other exemptions are for business premises in section CB 20, farm land in section CB 21, and investment land in section CB 23. If you are doing a big development or division, section DB 27 might let you 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.

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Topics:
Money and consumer rights > TaxesHousing and property > Buying and selling homesHousing and property > Land use
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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

"Selling land: when the profit is considered income"

Part CIncome
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).