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Income Tax Act 2007

Timing and quantifying rules - Spreading of specific income

EI 6: Amount paid for non-compliance: when lessor ceases to own land

You could also call this:

“Landlords must pay remaining spread-out income when selling land early”

If you’re a landlord who has spread out income from your land over more than one year, this law applies to you if you stop owning the land before the end of the third tax year after you got the money. If you haven’t divided up all the income yet, any leftover amount goes into the tax year when you stop owning the land. This rule also works if you only sell part of your land. For the part you sell, this rule applies. For the part you keep, the old rule about spreading income still works. Remember, if you want to know more about spreading income, you can look at section EI 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=DLM1515075.

Topics:
Money and consumer rights > Taxes
Housing and property > Buying and selling homes
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EI 5: Amount paid to lessor for non-compliance with covenant for repair, or

“Spreading repair money from tenants who break lease agreements”

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EI 7: Leases: income derived in anticipation, or

“Spreading advance income from lease-related payments over multiple years”

Part E Timing and quantifying rules
Spreading of specific income

EI 6Amount paid for non-compliance: when lessor ceases to own land

  1. This section applies when a lessor—

  2. allocates income under section EI 5 to more than 1 income year; and
    1. ceases to own the land to which the income relates before the end of the third tax year following the tax year in which they receive the income.

      1. If the lessor has not allocated a part of the income, the part is allocated to the income year in which the lessor ceases to own the land.

      2. If the lessor ceases to own part of the land to which the income relates,—

      3. this section applies to the part of the land that the lessor ceases to own; and
        1. section EI 5 applies to the part of the land that the lessor continues to own.

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