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Income Tax Act 2007

Recharacterisation of certain transactions - Transfers of relationship property

FB 1C: Obligations for periods before and from transfer of property

You could also call this:

“Tax responsibilities before and after transferring property in a relationship settlement”

When someone transfers property as part of a relationship property settlement, they are still responsible for all tax obligations related to that property up until the moment it’s transferred. This means you need to take care of any taxes owed on the property before you give it to someone else.

After the property is transferred, the person who receives it (the transferee) is treated as if they bought the property at the same cost and on the same date as the person who gave it to them (the transferor). The transferee is also considered to have the same intentions and purposes for the property as the transferor did. It’s like they step into the shoes of the person who owned it before.

On the other hand, once the property is transferred, the person who gave it away (the transferor) is treated as if they never owned it. This means they don’t have any more responsibilities for the property after it’s given away.

However, it’s important to know that sections FB 2 to FB 21 of the law can change these rules. These sections might have different instructions that you need to follow instead of what’s written here.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6759417.

Topics:
Money and consumer rights > Taxes
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FB 2: Personal property, or

“Tax rules for personal property transfers in relationship settlements”

Part F Recharacterisation of certain transactions
Transfers of relationship property

FB 1CObligations for periods before and from transfer of property

  1. A transferor of property on a settlement of relationship property remains responsible for all tax obligations relating to the property and the period ending immediately before the transfer.

  2. In determining the tax obligations relating to property transferred on a settlement of relationship property and the period beginning with the transfer,—

  3. the transferee is treated as—
    1. acquiring the property at the cost of the property to the transferor; and
      1. acquiring the property on the date on which the transferor acquired the property; and
        1. acquiring and holding the property with the status, intention, and purpose of the transferor in relation to the property:
        2. the transferor is treated as having not owned the property.

          1. Sections FB 2 to FB 21 override this section.

          Notes
          • Section FB 1C: inserted (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 165(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).