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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 you get for renting or using someone's land or property is usually income, but not always.”

When you get money for a lease or licence, it is usually income. You get this money when someone agrees to give you a lease or licence, or when they renew, extend, or transfer it. This money is income for you.

But sometimes this money is not income for you. This happens when you already have the lease or licence and you transfer it to someone else. You must not get the money from the owner of the land, and you and the person paying you must not be related to the owner.

If you are a person renting a house and you get money for the lease, it is not income for you. You must not be related to the owner of the house.

If you get money as a capital contribution, it is not income for you. When you own a piece of land and you get money for letting someone use it, it is not income for you. You must get this money only once, not regularly.

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This page was last updated on

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

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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; 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): amended (with effect on 1 April 2013, until the replacement of section CC 1B on 1 April 2015), 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)(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)(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).