EB 24Apportionment on disposal of business assets that include trading stock

1. This section applies when a person disposes of trading stock together with other assets of a business to another person. This section also applies if a person disposes of an interest in trading stock together with other assets of a business or an interest in those other assets, whether or not the disposal of the partial interest is to another person.

2. The total amount received on disposal must be apportioned between the trading stock and the other assets in a way that reflects their respective market values.

3. The amount apportioned to the trading stock under subsection (2) is treated as the price paid for it by the buyer.

4. For the purposes of this section, a disposal of timber is treated as—

5. including the creation or grant of a right to take timber:
6. including a disposal of land with standing timber except to the extent to which the timber is any of the following:
   1. trees that are ornamental or incidental, as evidenced by a certificate given under section 44C of the Tax Administration Act 1994; or
   2. timber subject to a forestry right, as defined in section 2 of the Forestry Rights Registration Act 1983, registered under the Land Transfer Act 2017; or
   3. timber subject to a profit a prendre granted before 1 January 1984.

7. A disposal under this section includes a transfer under a settlement of relationship property.