Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Recharacterisation of certain transactions - Transfers of relationship property

FB 2: Personal property

You could also call this:

“Tax rules for personal property transfers in relationship settlements”

When someone transfers personal property or an interest in personal property as part of a relationship property settlement, this law applies to certain situations. It affects how the transfer is treated for tax purposes.

The law says that when you transfer property in this way, it’s treated as if you sold it and the other person bought it. The price is considered to be whatever the property cost you originally.

If you receive property this way and then sell it later, the law treats you as if you’re running a business of buying and selling that type of property.

This law is connected to other parts of the tax rules. These parts deal with selling personal property that you bought to resell, and with running a business of buying and selling personal property.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516331.

Topics:
Money and consumer rights > Taxes
Family and relationships > Marriage and partnerships
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FB 1C: Obligations for periods before and from transfer of property, or

“Tax responsibilities before and after transferring property in a relationship settlement”

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FB 3A: Residential land, or

“Rules for transferring residential land in relationship property settlements”

Part F Recharacterisation of certain transactions
Transfers of relationship property

FB 2Personal property

  1. This section applies for the purposes of sections CB 4 (Personal property acquired for purpose of disposal) and CB 5 (Business of dealing in personal property) when personal property, or an interest in personal property, is transferred on a settlement of relationship property.

  2. The transfer is treated as a disposal and acquisition of the property for an amount that equals the cost of the property or, as applicable, the interest in the property, to the transferor.

  3. If, after the transfer, the transferee disposes of the property, they are treated in relation to the disposal as carrying on a business of dealing in the property.

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