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Income Tax Act 2007

Income - Income from holding property (excluding equity)

CC 1B: Consideration relating to grant, renewal, extension, or transfer of leasehold estate or licence

You could also call this:

“Money received for land rights: when it counts as income”

When you get money for a land right, it’s usually counted as income. A land right can be a lease that doesn’t last forever or permission to use land. The money you get can be for agreeing to give, renew, extend, or transfer this right, or for actually doing any of these things.

However, there are some times when this money isn’t counted as income:

If you’re the one who has the land right and you’re transferring it to someone else, it’s not income. But this only applies if the money doesn’t come from the landowner trying to end your right to use the land, and if you’re not connected to the landowner.

If you’re renting a home and the money you spend on it isn’t for your job, it’s not income. This is true as long as you’re not connected to the landowner.

If the money is given as a capital contribution, it’s not income.

If you own the land completely and you’re giving someone else the right to use part of it (like a path across your land) forever, and they’re not paying you regularly for it, it’s not income.

Remember, these rules are about specific situations. If you’re not sure if they apply to you, it’s a good idea to ask for help.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM5490808.

Topics:
Money and consumer rights > Taxes
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CC 1: Land, or

“Income you can earn from owning land”

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CC 1C: Consideration for agreement to surrender leasehold estate or terminate licence, or

“Money received for ending a land lease or licence early may be taxable income”

Part C Income
Income from holding property (excluding equity)

CC 1BConsideration relating to grant, renewal, extension, or transfer of leasehold estate or licence

  1. This section applies when a person (the payee) derives an amount—

  2. in relation to a right (the land right) that is—
    1. a leasehold estate not including a perpetual right of renewal:
      1. a licence to use land or as consideration for the grant, renewal, extension, or transfer of the land right; and
      2. as consideration for—
        1. the agreement by the payee to the grant, renewal, extension, or transfer of the land right:
          1. the grant, renewal, extension, or transfer of the land right.

          2. The amount is income of the payee.

          3. The amount is not income of the payee if—

          4. the payee is the holder of the land right; and
            1. the amount is consideration for the transfer of the land right to the person paying the amount; and
              1. the amount is not sourced from funds provided, by the owner of the estate in land from which the land right is granted, for purposes that include obtaining the surrender or termination of the land right; and
                1. each of the payee and the person paying the amount is not associated with the owner of the estate in land from which the land right is granted.

                  1. The amount is not income of the payee if the payee—

                  2. is a natural person and derives the amount as a tenant or licensee of residential premises whose expenditure on the residential premises does not meet the requirements of the general permission; and
                    1. is not associated with the owner of the estate in land from which the land right is granted.

                      1. The amount is not income of the payee if the amount is derived as a capital contribution.

                      2. The amount is not income of the payee if—

                      3. the payee is the owner of a fee simple estate in land; and
                        1. the amount—
                          1. is consideration for the grant, for the duration of the estate, of an easement over the land; and
                            1. is not a periodic payment.

                            Notes
                            • Section CC 1B: replaced, on (applying to an amount derived on or after that date), by section 10(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                            • Section CC 1B(1)(a): amended (with effect on 1 April 2015), on , by section 87(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                            • Section CC 1B(1)(a)(ii): amended (with effect on 1 April 2013), on , by section 86(1) (and see section 86(2) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                            • Section CC 1B(1)(b)(ii): replaced (with effect on 1 April 2015), on , by section 87(2) (and see section 87(4) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                            • Section CC 1B(6) heading: inserted (with effect on 1 April 2015), on , by section 87(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                            • Section CC 1B(6): inserted (with effect on 1 April 2015), on , by section 87(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).