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Income Tax Act 2007

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

GB 53: Arrangements involving residential land: trusts

You could also call this:

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

Illustration for Income Tax Act 2007

This section is about trusts that own residential land. You need to know that it applies when a trust owns residential land and that land is worth 50% or more of the trust's assets. If the trust's rules or the people in charge of the trust change in a way that tries to avoid the rules in section CB 6A about selling residential land within two years, then the trust is treated as selling the land. The trust is treated as selling the land for its market value at the time of the change. This means the trustees are considered to have disposed of the residential land affected by the change. When this happens, the amount of money the trust is considered to have received for the land is the market value of the land at the time of the change.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6663160.

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

GB 53Arrangements involving residential land: trusts

  1. This section applies when—

  2. the trustees of a trust own residential land directly or indirectly (trust residential land); and
    1. trust residential land makes up 50% or more, by market value, of the assets of the trust; and
      1. the trust’s trust deed changes, a decision-maker under the trust deed changes, or an arrangement under the trust changes, with a purpose or effect of defeating the intent and application of section CB 6A (Disposal within 2 years: bright-line test for residential land).

        1. The trustees are treated as disposing of the trust residential land affected by a change described in subsection (1)(c) for an amount of consideration equal to the market value of the land at the time of the change.

        Notes
        • Section GB 53: inserted (with effect on 1 October 2015), on , by section 18 of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
        • Section GB 53(1)(c): amended, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).