Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Recharacterisation of certain transactions - Consolidated groups of companies - Accounting for particular property

FM 16: Land or business: certain farming or forestry expenditure

You could also call this:

“Farming and forestry expense claims for company groups when land or business changes hands”

When you’re part of a group of companies, there are special rules about farming and forestry expenses. These rules apply when two companies in your group, let’s call them Company A and Company B, do certain things in a year.

If Company A gives some land to Company B, or if Company A stops running a business and Company B takes it over, something interesting happens. Even though Company A no longer has the land or business, they can still claim some money back for farming, fish farming, or forestry expenses.

This means Company A can still get money back for things like improving farm or forest land, just as if they hadn’t given away the land or stopped the business. The law lets them do this to be fair, even though they don’t own the land or run the business anymore.

The specific expenses Company A can claim are listed in other parts of the law. These include sections about farming and fish farming expenses, and a section about making forests better.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516661.

Topics:
Money and consumer rights > Taxes
Environment and resources > Farming and fishing
Business > Industry rules
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“Rules for transferring property between companies in the same group”

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“Rules for transferring and valuing stock between companies in the same group”

Part F Recharacterisation of certain transactions
Consolidated groups of companies: Accounting for particular property

FM 16Land or business: certain farming or forestry expenditure

  1. This section applies in an income year when 2 companies (company A and company B) are in the same consolidated group for the whole of the income year, and—

  2. company A transfers land to company B, and company B holds the land for the remainder of the income year; or
    1. company A stops carrying on a business, and company B carries on the business for the remainder of the income year.

      1. Company A is allowed a deduction under sections DO 4 to DO 6, and DO 12 (which relate to farming and aquaculture expenditure), or DP 3 (Improvements to forestry land) after the transfer or cessation of the business as if the transfer or cessation did not occur.

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