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Income Tax Act 2007

Recharacterisation of certain transactions - Distribution, transmission, and gifts of property

FC 7: Transfer of prepaid property

You could also call this:

“Rules for valuing prepaid property when transferred after someone dies”

If you own property that you’ve paid for in advance and you die, this law explains what happens to that property. It applies when the property is transferred after your death, and you still have some unused prepaid expenses for it in the year you died.

When this happens, the property needs to be valued as if the day you died was the end of a tax year. This valuation follows special rules set out in another part of the law called section EA 3.

This law helps figure out the value of prepaid property when it’s transferred after someone dies, making sure it’s treated fairly for tax purposes.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516392.

Topics:
Money and consumer rights > Taxes
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Part F Recharacterisation of certain transactions
Distribution, transmission, and gifts of property

FC 7Transfer of prepaid property

  1. This section applies, in the circumstances described in section FC 1(1)(a) or (b), to a transfer of property on a person’s death for which the deceased person has, in the year of transfer, an unexpired portion of expenditure under section EA 3 (Prepayments).

  2. If section EA 3 applies to the property transferred, the property must be valued under section EA 3(4) to (7), as if the date of transfer were the end of an income year.

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Notes
  • Section FC 7 list of defined terms property: inserted, on , by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).