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Income Tax Act 2007

Deductions - Forestry expenditure

DP 10: Cost of acquiring timber or right to take timber: other cases

You could also call this:

"How much it costs to buy timber or the right to cut it down"

Illustration for Income Tax Act 2007

You acquire land with standing timber. The cost of the timber is the income of the person selling the land, as stated in section CB 25. You buy timber or the right to take timber. The cost is the amount treated as the price paid or realised under certain sections, such as section EB 24, FB 6, FB 7, GC 1, or GC 2. If someone sells timber to an associated person, the seller's deduction for the cost must not be more than their income from the sale, as stated in section CB 24 or CB 25. The buyer's deduction is based on what they paid and any amount the seller was denied, as stated in subsections (4) and (5).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513997.

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Topics:
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"How to claim a tax deduction for timber costs when selling timber"

Part DDeductions
Forestry expenditure

DP 10Cost of acquiring timber or right to take timber: other cases

  1. For a person acquiring land with standing timber on it in a disposal to which section CB 25 (Disposal of land with standing timber) applies, the cost of acquiring the timber is the amount that is, under section CB 25, income of the person disposing of the land.

  2. For a person acquiring timber or a right to take timber in a disposal or distribution to which section EB 24, FB 6, FB 7, GC 1, or GC 2 (which relate to the disposal of trading stock) applies, the cost of acquiring the timber or the cost of acquiring a right to take timber is the amount treated as—

  3. the price paid or realised under section EB 24 (Apportionment on disposal of business assets that include trading stock); or
    1. the consideration under sections FB 6 and FB 7 (which relate to the disposal of timber under a relationship agreement); or
      1. the price realised under section GC 1 (Disposals of trading stock at below market value); or
        1. the price realised under section GC 2 (Disposals of timber rights or standing timber).

          1. Subsections (4) and (5) apply if—

          2. a person (the transferor) disposes of timber, a right to take timber, or standing timber, to an associated person (the transferee); and
            1. as a result, the transferor has an amount of income under section CB 24 or CB 25 (which relate to income from timber).

              1. The deduction that the transferor is allowed for the cost of the timber, right to take timber, or standing timber must not be more than the amount of the income.

              2. The deduction that the transferee is allowed for the cost of acquiring the timber is calculated on the basis that the transferee acquired the timber for the total of—

              3. the cost to the transferee of acquiring the timber; and
                1. the amount, if any, for which the transferor is denied a deduction under subsection (4).

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                  Notes
                  • Section DP 10(5): amended (with effect on 1 April 2008), on , by section 14(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).