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New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from business or trade-like activities - Exclusion for investment land

CB 36: Disposal of emissions units

You could also call this:

“Rules for selling or giving away emissions units”

When you sell or give away an emissions unit, you need to know a few things:

The money you get from selling the unit is income.

If you give up the unit to the government under the Climate Change Response Act 2002, it’s treated like you sold it. The value of the sale depends on different situations:

  • Usually, it’s the cost of the unit or its value under section ED 1(7B).
  • Sometimes it’s zero, like if it’s for post-1989 forest land or pre-1990 forest land in certain cases.
  • It might be the market value in some cases, like for some post-1989 forest land units.

If you change a New Zealand emissions unit into something else under the Climate Change Response Act 2002, it’s treated like you sold it for its cost or value.

If you cancel an emissions unit, it’s treated like you sold it for zero.

There are special rules for pre-1990 forest land units and fishing quota units when you sell them to someone else.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1793101.

Topics:
Money and consumer rights > Taxes
Environment and resources > Climate and energy
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Part C Income
Income from business or trade-like activities: Exclusion for investment land

CB 36Disposal of emissions units

  1. This section applies when a person disposes of an emissions unit.

  2. The amount that the person derives on the disposal is income.

  3. If the disposal is by surrender under the Climate Change Response Act 2002, the person is treated as having sold the unit, at the time of the surrender, to an unrelated person for an amount equal to—

  4. the unit's cost, if none of paragraphs (b) to (f) applies; or
    1. the unit's value under section ED 1(7B) (Valuation of excepted financial arrangements), if that subsection applies and none of paragraphs (c) to (f) apply; or
      1. zero, if subsection (4) applies; or
        1. zero, if subsection (5) applies; or
          1. the unit's market value, if subsection (6) applies; or
            1. the unit's market value, if subsection (7) applies.

              1. The person is treated as selling the unit for an amount of zero if the person surrenders the emissions unit in relation to post-1989 forest land.

              2. The person is treated as selling the unit for an amount of zero if the person transfers the emissions unit to the Crown under a forest sink covenant under section 67Y of the Forests Act 1949.

              3. The person is treated as selling the unit for an amount of zero if—

              4. the person surrenders the emissions unit in relation to the deforestation of pre-1990 forest land; and
                1. the person would derive income, other than exempt income or excluded income, from a disposal of the land without timber at the time of the surrender.

                  1. The person is treated as selling a post-1989 forest land emissions unit or forest sink emissions unit for an amount equal to the unit's market value if the person surrenders the emissions unit other than—

                  2. for emissions in relation to post-1989 forest land:
                    1. by a transfer to the Crown required by a permanent forestry scheme.

                      1. The person is treated as selling a unit that is not a forest land emissions unit for an amount equal to the unit's market value if—

                      2. the person surrenders the unit when it has a value of zero; and
                        1. the unit was transferred to the person under Part 4, subpart 2 of the Climate Change Response Act 2002 at a price of zero.

                          1. If a person converts a New Zealand emissions unit, other than a forest land emissions unit, into something else under the Climate Change Response Act 2002, the person is treated as having sold the converted unit for an amount equal to—

                          2. the unit's value under section ED 1(7B), if that subsection applies; or
                            1. the unit's cost, otherwise.

                              1. If a person transfers an approved overseas unit as defined in section 4(1) of the Climate Change Response Act 2002 for cancellation under schedule 1AA, clause 14(2) of that Act and is transferred a New Zealand emissions unit under schedule 1AA, clause 14(3) of that Act, the person is treated as having sold the approved overseas unit for an amount equal to—

                              2. the unit’s value under section ED 1(7B), if that subsection applies; or
                                1. the unit’s cost, otherwise.

                                  1. If a person surrenders a forest sink emissions unit under schedule 1AA, clause 30(2) of the Climate Change Response Act 2002 and receives an entitlement to a New Zealand emissions unit under schedule 1AA, clause 30(4) of that Act, the person is treated as having sold the forest sink emissions unit for an amount equal to—

                                  2. the unit’s value under section ED 1(7B), if that subsection applies; or
                                    1. the unit’s cost, otherwise.

                                      1. If a person cancels an emissions unit, the person is treated as selling the unit for an amount of zero.

                                      2. Section CX 51B (Disposal of pre-1990 forest land emissions units) applies to the disposal to another person of a pre-1990 forest land emissions unit.

                                      3. Section CX 51C (Disposal of fishing quota emissions units) applies to the disposal to another person of a fishing quota emissions unit.

                                      Notes
                                      • Section CB 36: substituted (with effect on 1 January 2009), on , by section 10 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                                      • Section CB 36(4): amended (with effect on 1 July 2010), on , by section 5 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                                      • Section CB 36(4B) heading: inserted (with effect on 1 January 2009), on , by section 6(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section CB 36(4B): inserted (with effect on 1 January 2009), on , by section 6(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section CB 36(6) heading: substituted (with effect on 1 January 2009), on , by section 6(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section CB 36(6): substituted (with effect on 1 January 2009), on , by section 6(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section CB 36(6)(b): replaced, on , by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
                                      • Section CB 36(7): substituted (with effect on 1 July 2010), on , by section 27 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                                      • Section CB 36(8): amended, on , by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
                                      • Section CB 36(8B) heading: inserted, on , by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
                                      • Section CB 36(8B): inserted, on , by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
                                      • Section CB 36(8C) heading: inserted, on , by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
                                      • Section CB 36(8C): inserted, on , by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).
                                      • Section CB 36(8D) heading: inserted (with effect on 1 January 2009), on , by section 50(1) (and see section 50(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                                      • Section CB 36(8D): inserted (with effect on 1 January 2009), on , by section 50(1) (and see section 50(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                                      • Section CB 36(9) heading: substituted (with effect on 1 January 2009), on , by section 6(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section CB 36(10) heading: added (with effect on 1 July 2010), on , by section 6(4) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section CB 36(10): added (with effect on 1 July 2010), on , by section 6(4) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section CB 36 list of defined terms fishing quota emissions unit: inserted (with effect on 1 July 2010), on , by section 6(5)(a) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section CB 36 list of defined terms forest sink emissions unit: inserted (with effect on 1 January 2009), on , by section 6(5)(b) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                                      • Section CB 36 list of defined terms Kyoto emissions unit: repealed (with effect on 1 January 2009), on , by section 5 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                                      • Section CB 36 list of defined terms permanent forestry scheme: inserted, on , by section 279 of the Climate Change Response (Emissions Trading Reform) Amendment Act 2020 (2020 No 22).