DH 5Key terms

1. Code compliance certificate means a code compliance certificate issued under the Building Act 2004.

2. Disallowed residential property—

3. means land in New Zealand to the extent to which—
   1. it has a place configured as a residence or abode, whether or not it is used as a place of residence or abode, including any appurtenances belonging to or enjoyed with the place:
   2. the owner has an arrangement that relates to erecting a place there, configured as a residence or abode, whether or not that place is or is to be used as a place of residence or abode, including any appurtenances belonging to or enjoyed with the place:
   3. it is bare land that, under rules in the relevant operative district plan, may be used for erecting a place there, configured as a residence or abode, whether or not that place is or is to be used as a place of residence or abode, including any appurtenances belonging to or enjoyed with the place:
4. does not include land to the extent to which it is excepted residential land.

5. Excepted residential land means land to the extent to which it is described in schedule 15.

6. Exempt housing provider means—

7. a registered community housing provider under the Public and Community Housing Management Act 1992:
8. a department listed in schedule 2, part 1 of the Public Service Act 2020:
9. Kāinga Ora–Homes and Communities and its wholly-owned subsidiaries:
10. a person contracted, directly or indirectly, by a department listed in schedule 2, part 1 of the Public Service Act 2020to provide land for 1 or more of the uses listed in section DH 4(4).

11. Exempt Māori company means—

12. a company that is a Maori authority or eligible to be a Maori authority, if,—
    1. in the case that the company is not a member of a wholly-owned group, it is not a residential land company:
    2. in the case that the company is a member of a wholly-owned group, it is not a residential land wholly-owned group member:
13. a company that is wholly-owned by a Maori authority or wholly-owned by a company or trust that is eligible to be a Maori authority, if—
    1. the wholly-owned company is not a residential land wholly-owned group member:
    2. in the case that the company is wholly-owned by a trust, the wholly-owned company is not a residential land company.

14. Grandparented transitional loan means loan amounts denominated in New Zealand dollars, ignoring re-drawings or additional borrowings under the same loan facility on or after 27 March 2021, to the extent to which the loan amounts are—

15. first drawn down upon before 27 March 2021 for disallowed residential property:
16. first drawn down upon on or after 27 March 2021 for acquiring disallowed residential property, if the person acquired an estate or interest in the property before 27 March 2021:
17. first drawn down upon on or after 27 March 2021 for acquiring disallowed residential property, if the acquisition of the property resulted from an offer that is—
    1. made on or before 23 March 2021; and
    2. irrevocable before 27 March 2021:
18. in relation to disallowed residential property for which a previous owner (the original owner) had loan amounts described in paragraphs (a) to (c), if—
    1. every transfer of the property since the original owner acquired it meets the requirements in section FB 3A, FC 9, or FO 17, or subpart FD (which relate to rollover relief from the bright-line test), treating the relevant requirements as applying to a transfer of the disallowed residential property on or after 27 March 2021 instead of a transfer of residential land on or after 1 April 2022; and
    2. the loan amounts are equal to or less than the amount of the original owner’s loan at the time the original owner transferred the property:
19. for re-financing, under a new loan facility,—
    1. loan amounts described in paragraphs (a) to (d):
    2. loan amounts to which this paragraph, or paragraph (f), has previously applied:
20. for re-financing, under a new loan facility,—
    1. loan amounts that would have been described in paragraphs (a) to (d) if it had been denominated in New Zealand dollars:
    2. loan amounts to which this paragraph, or paragraph (e), has previously applied.

21. Interposed residential property holder means—

22. a close company for which the relevant person has voting interests or market value interests and the close company has, at the end of a quarter in the income year, an interposed residential property percentage of more than 10%:
23. a company that is not a close company for which the relevant person has voting interests or market value interests, and the company has, at any time in the income year, an interposed residential property percentage of more than 50%:
24. the trustees of a trust of which the relevant person is a direct or indirect beneficiary, if the relevant trust has, at any time in the income year, an interposed residential property percentage of more than 10%.

25. New build land—

26. means land to the extent to which it has a place that is configured as a self-contained residence or abode, if a code compliance certificate has been issued on or after 27 March 2020 evidencing that the place was added to the land or converted into a residence or abode; and
27. includes, for land described in paragraph (a), land exclusively used by residents of the place and also a reasonable proportion of shared areas of land, appurtenant to the place; and
28. includes land for which there is an agreement that a place that is configured as a self-contained residence or abode will be added to the land and a code compliance certificate will be issued on or after 27 March 2020 evidencing that the place was added to the land; and
29. includes land that has a place that was a hotel or motel, to the extent to which, by a conversion, it becomes places that are configured as self-contained residences or abodes, and the conversion is recorded in the records of a local authority or building consent authority as having been “completed” on or after 27 March 2020; and
30. includes land to the extent to which it has a place that is configured as a self-contained residence or abode, if the place was removed from the earthquake prone buildings register on or after 27 March 2020, and—
    1. a code compliance certificate has been issued on or after 27 March 2020 evidencing that building work to remediate the place is complete:
    2. the completion of the building work to remediate the place is recorded in the records of a local authority or building consent authority as having been “completed” on or after 27 March 2020 and as having been verified by a suitably qualified engineer; and
31. includes land to the extent to which it has a place that is configured as a self-contained residence or abode, if the place was not previously weather-tight and a code compliance certificate has been issued on or after 27 March 2020 evidencing that at least 75% of the place’s cladding has been replaced.

32. Residential land company means a company for which the ratio calculated using the following formula and expressed as a percentage is equal to or greater than 50% at any time during the relevant income year:

    $(disqualified\; property\; +\; indirect\; disqualified\; property)\; ÷\; total\; assets.$

    Where:

33. In the formula in subsection (8),—

34. disqualified property is the value of the company’s property that is disallowed residential property, but excluding property described in section DH 4(2) or (3):
35. indirect disqualified property is the value of shares that the company holds in other companies that are residential land companies:
36. total assets is the total value of the company’s assets.

37. Residential land wholly-owned group member means a company that is a member of a wholly-owned group of companies and the ratio for the group, calculated using the following formula, expressed as a percentage, is equal to or greater than 50% at any time during the relevant income year:

    $(disqualified\; property\; +\; indirect\; disqualified\; property)\; ÷\; total\; assets.$

    Where:

38. In the formula in subsection (10),—

39. disqualified property is the value, on a consolidated basis, of the wholly-owned group’s property that is disallowed residential property, but excluding property described in section DH 4(2) or (3):
40. indirect disqualified property is the value of shares that the wholly-owned group holds in non-group companies that are residential land companies:
41. total assets is the total value, on a consolidated basis, of the wholly-owned group’s assets.

Notes

• Section DH 5: inserted (with effect on 27 March 2021), on 30 March 2022, by section 75 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
• Section DH 5(3B) heading: inserted (with effect on 27 March 2021), on 28 March 2024, by section 46 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
• Section DH 5(3B): inserted (with effect on 27 March 2021), on 28 March 2024, by section 46 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
• Section DH 5(5)(d)(i): amended, on 1 July 2024, by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).