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Income Tax Act 2007

Avoidance and non-market transactions - Market value substituted

GC 2: Disposals of timber rights or standing timber

You could also call this:

“How tax applies when you sell timber rights or land with standing timber”

When you give someone the right to take timber from your land, or when you sell land with standing timber on it, the law treats it as if you’re selling trading stock. This means that special tax rules apply to these transactions.

However, there are some exceptions to this rule. If you’re selling land with standing timber, and you keep the right to take the timber yourself, then it’s not treated as selling trading stock. Also, if the sale of land with standing timber falls under one of the exceptions in [section CB 25(2)], then the special tax rules don’t apply.

It’s important to note that if you’re selling land with standing timber, and someone else has the right to take that timber, then some parts of the tax rules ([section GC 1(4)]) don’t apply to your sale.

These rules are in place to make sure that when you’re dealing with timber rights or standing timber, you’re following the correct tax procedures.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517074.

Topics:
Money and consumer rights > Taxes
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GC 1: Certain disposals of trading stock at below market value, or

“Rules for selling or giving away business stock for less than its value”

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GC 3: Disposals by life insurers, or

“Rules for life insurers selling property as part of their business”

Part G Avoidance and non-market transactions
Market value substituted

GC 2Disposals of timber rights or standing timber

  1. Section GC 1 applies to each of the following disposals as if it were a disposal of trading stock—

  2. a grant of a right to take timber, other than in favour of the grantor:
    1. a disposal of standing timber as part of the disposal of the land on which it stands, other than a disposal subject to a right in favour of the seller to take timber.

      1. Subsection (1) does not apply to a disposal of land with standing timber if the disposal is within 1 of the exclusions in section CB 25(2) (Disposal of land with standing timber).

      2. Section GC 1(4) does not apply if the disposal is of land with standing timber subject to a right to take timber.

      Compare
      Notes
      • Section GC 2(3): amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 55(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).