GZ 5Disposals of trading stock to non-associates

1. This section applies when a person (person A) disposes of trading stock—

2. to another person (person B) that—
   1. is not associated with person A; and
   2. is not a donee organisation or a public authority; and
3. in—
   1. the period that begins on 17 March 2020 and ends on 31 March 2024; or
   2. a period specified by an Order in Council made under section 225ABA of the Tax Administration Act 1994.

4. Section GC 1 (Disposals of trading stock at below market value) does not apply to the disposal.

5. Subsection (4) applies if—

6. person A does not have a business purpose for the disposal; and
7. the disposal is for no consideration, or an amount that is less than,—
   1. for trading stock held by person A at the beginning of the income year of person A in which the disposal occurs, the value of the trading stock under section EB 3 (Valuation of trading stock) at the end of the previous income year; or
   2. otherwise, the cost of the trading stock to person A.

8. Person A is treated as deriving, in the income year of person A in which the disposal occurs, an amount calculated using the formula in subsection (5).

9. The formula is—

   $value\; –\; consideration\; received.$

   Where:

10. In the formula,—

11. value is,—
    1. for trading stock held by person A at the beginning of the income year of person A in which the disposal occurs, the value of the trading stock under section EB 3 at the end of the previous income year; or
    2. otherwise, the cost of the trading stock to person A:
12. consideration received is the amount of consideration paid or payable to person A in relation to the disposal.