Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from business or trade-like activities

CB 15: Transactions between associated persons

You could also call this:

“Rules for selling or gifting land to people you're connected with”

When you sell land to someone you’re connected with, like a family member or business partner, you might have to pay tax on the money you make. This happens if:

  1. You give the land to someone you’re connected with.
  2. You sell it for more than it cost you.
  3. You would have had to pay tax on the sale if you had kept the land and sold it yourself.

There’s an exception to this rule in section CB 15D.

If you give land to someone you’re connected with, they’re treated as if they bought the land on the same day you did. This is important for working out if they have to pay tax when they sell the land later.

This rule applies to several situations where you might have to pay tax on selling land, which are explained in sections CB 7 to CB 12 and CB 14.

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 It might be out of date or be missing some parts.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=DLM1512439.

Topics:
Money and consumer rights > Taxes
Housing and property > Buying and selling homes
Previous

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”

Next

CB 15B: When land acquired, or

“This explains when you're considered to have acquired land for tax purposes”

Part C Income
Income from business or trade-like activities

CB 15Transactions between associated persons

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

  2. the land has been transferred to the transferee from another person (the transferor); and
    1. the transferor and the transferee are associated persons at the time of the transfer; and
      1. the amount derived is more than the cost of the land to the transferee; and
        1. the amount derived would have been income of the transferor under any of sections CB 6 to CB 14 if the transferor had retained and disposed of the land.

          1. Subsection (1) is overridden by section CB 15D.

          2. For the purposes of sections CB 7 to CB 12 and CB 14, if a person (the transferor) transfers land to a person (the transferee) who is an associated person at the time of the transfer, the transferee is treated as acquiring the land on the date, other than under this subsection, on which the transferor acquired the land.

          Compare
          Notes
          • Section CB 15(1): amended (with effect on 1 April 2008), on , by section 119(1) (and see section 119(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
          • Section CB 15(1B) heading: inserted (with effect on 1 July 2017), on , by section 119(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
          • Section CB 15(1B) heading: amended (with effect on 1 October 2019), on , by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
          • Section CB 15(1B): inserted (with effect on 1 July 2017), on , by section 119(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
          • Section CB 15(2): replaced (with effect on 1 April 2008), on , by section 119(3) (and see section 119(4) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).