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Income Tax Act 2007

Recharacterisation of certain transactions - Tax relief for emergencies - Replacements: revenue account property

FP 5: Replacement property for land or buildings affected by emergency events

You could also call this:

“Getting new property after emergencies damage your land or buildings”

If you own land or buildings that are affected by an emergency event, you might get some compensation. You can choose to use this compensation to buy replacement property. If you plan to do this, you need to tell the Commissioner, as explained in section 226H of the Tax Administration Act 1994. You will have to pay income tax on the compensation you received when the year ends, or when you decide not to replace the property, or when you go into liquidation or become bankrupt. This rule is an exception to some other rules, including section CC 2B, sections CB 6, CB 7, CB 12, CB 13, and CG 6, which are about income from selling land or getting insurance payouts.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS1432174.

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Part F Recharacterisation of certain transactions
Tax relief for emergencies: Replacements: revenue account property

FP 5Replacement property for land or buildings affected by emergency events

  1. This section applies for a person and a current year when the person—

  2. owns affected revenue property; and
    1. receives an amount of compensation in or before the current year for the affected revenue property that exceeds their cost deductions for that property; and
      1. plans in the current year to acquire replacement property, and the replacement cost exceeds their cost deductions for the affected revenue property; and
        1. notifies the Commissioner of their decision to suspend recognition of the amount of their suspended recovery income in accordance with section 226H of the Tax Administration Act 1994.

          1. The person has an amount of income under section CC 2B (Compensation for land or buildings affected by emergency events) for the amount of the suspended recovery income for the affected revenue property for the current year when—

          2. the current year ends, if the current year is the final income year of the emergency event period; or
            1. in the current year, the person decides not to replace the affected revenue property; or
              1. in the current year, the person goes into liquidation or becomes bankrupt.

                1. This section overrides sections CB 6, CB 7, CB 12, and CB 13 (which relate to income from certain disposals of land), and CG 6 (Receipts from insurance, indemnity, and compensation for trading stock).

                Notes
                • Section FP 5: inserted, on , by section 65 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).