Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: specific - Arrangements involving residential land

GB 52: Arrangements involving residential land: companies’ shares

You could also call this:

"Rules for companies selling shares that own residential land"

When a company owns residential land, this law applies if the land was bought within 10 years or 5 years of shares being sold. You need to know the company owns this land directly or indirectly. The residential land must be at least 50% of the company's assets. If 50% or more of the company's shares are sold within 12 months, the law applies. This is to stop people avoiding the bright-line test for residential land, which is explained in section CB 6A and section CZ 39. The company is treated as selling the residential land to the shareholder, then the shareholder sells it back to the company. The shareholder portion is the amount of shares the shareholder owns compared to the total shares in the company.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6663157.

This page was last updated on 29 January 2026 — View changes

Topics:

Housing and property > Buying and selling homesHousing and property > Land useMoney and consumer rights > Taxes

GB 51B: Increases or decreases in value, or

"Ignoring value changes made to avoid interest and thin capitalisation rules"

GB 53: Arrangements involving residential land: trusts, or

"Rules for trusts that own homes or residential land in New Zealand"

Part GAvoidance and non-market transactions
Avoidance: specific: Arrangements involving residential land

GB 52Arrangements involving residential land: companies’ shares

This section applies when—
a company owns residential land directly or indirectly for which the relevant date in section CB 6A(1)(a) or (b), or CZ 39(2)(a) or (b) (which relate to the bright-line test for residential land) is within 10 years or 5 years, as applicable, of a disposal of shares that paragraph (c) of this section applies to (company residential land); and
residential land owned directly or indirectly by the company makes up 50% or more, by market value, of the assets of the company; and
50% or more of the shares in the company, by market value, are disposed of within a 12-month period, with a purpose or effect of defeating the intent and application of section CB 6A or CZ 39 (Disposal within 5 years: bright-line test for residential land: acquisition on or after 29 March 2018).

The company is treated as disposing of the relevant shareholder portion of company residential land to the relevant shareholder for an amount of consideration equal to the total cost to the company of the portion, and the shareholder is treated as acquiring the portion for that total cost and then disposing of it, back to the company, for an amount of consideration equal to the market value of the portion. The company is treated as reacquiring the portion for the market value.
In this section, shareholder portion means the proportion that the market value of the shares disposed of by a shareholder bears to the total market value of the shares in the company.

Notes

Section GB 52: inserted (with effect on 1 October 2015), on 16 November 2015, by section 18 of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
Section GB 52(1)(a): amended (with effect on 27 March 2021), on 30 March 2021, by section 78(1)(a) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section GB 52(1)(a): amended (with effect on 27 March 2021), on 30 March 2021, by section 78(1)(b) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section GB 52(1)(a): amended, on 29 March 2018 (with effect on 1 October 2015 and applying to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after 29 March 2018), by section 110(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section GB 52(1)(c): amended (with effect on 27 March 2021), on 30 March 2021, by section 78(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).