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Income Tax Act 2007

Income - Income from business or trade-like activities - Exclusion for land acquired from a co-owner on a partition or subdivision

CB 15E: Disposals of land subject to section CW 3C

You could also call this:

“Selling land you got from a co-owner: when you don't have to pay tax”

When you sell land you got from a co-owner after the land was divided, you might get some income from the sale. You get this income under section CB 15(1). If you had sold your part of the land before it was divided, you would not have gotten this income.

If your end value proportion, which is explained in section CW 3C, is not more than 105% of your acquisition proportion, the income you get is exempt. This means you do not have to pay tax on it.

If your end value proportion is more than 105% of your acquisition proportion, you can still get some exempt income. The amount of exempt income is calculated using a formula: amount derived x (acquisition proportion ÷ end value proportion). The amount derived is the income you get from selling the land. Your acquisition proportion and end value proportion are explained in section CW 3C.

If you are part of a group of companies, the exempt income rules still apply to you. This is explained in section CV 1 and section CV 2.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS952988.

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Part C Income
Income from business or trade-like activities: Exclusion for land acquired from a co-owner on a partition or subdivision

CB 15EDisposals of land subject to section CW 3C

  1. This section applies to a person for a disposal of land acquired from a co-owner on a partition or subdivision if—

  2. the person derives income from the disposal under section CB 15(1); and
    1. had the person disposed of their interest in the land that was partitioned or subdivided immediately before the partition or subdivision, section CB 15(1) would not have applied to the disposal.

      1. The amount of income the person derives under section CB 15(1) from disposing of the land is exempt income if the person’s end value proportion under section CW 3C (Certain partitions or subdivisions of land) is no more than 105% of their acquisition proportion under section CW 3C.

      2. If subsection (2) does not apply, the amount of income the person derives under section CB 15(1) from disposing of the land is exempt income to the extent given by the formula—

        amount derived x (acquisition proportion ÷ end value proportion).

        Where:

        • The items in the formula are defined in subsections (5) to (7).

        • Amount derived is the amount the person derives from disposing of the land.

        • Acquisition proportion is the person’s acquisition proportion as described in section CW 3C.

        • End value proportion is the person’s end value proportion as described in section CW 3C.

        • If subsection (2) or (3) applies to prevent an amount from being income of a person who is a member of a wholly-owned group of companies or a consolidated group, the amount is not income of the person under section CV 1 or CV 2 (which apply to group companies and consolidated groups).

        Notes
        • Section CB 15E: inserted (with effect on 27 March 2021), on , by section 11 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
        • Section CB 15E(1)(a): replaced (with effect on 27 March 2021), on , by section 6(1) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
        • Section CB 15E(1)(b): replaced (with effect on 27 March 2021), on , by section 6(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
        • Section CB 15E(2) heading: replaced (with effect on 27 March 2021), on , by section 6(3) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
        • Section CB 15E(2): amended (with effect on 27 March 2021), on , by section 6(4) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
        • Section CB 15E(3) heading: replaced (with effect on 27 March 2021), on , by section 6(5) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
        • Section CB 15E(3): amended (with effect on 27 March 2021), on , by section 6(6)(a) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
        • Section CB 15E(3): amended (with effect on 27 March 2021), on , by section 6(6)(b) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
        • Section CB 15E list of defined terms acquisition proportion: inserted (with effect on 27 March 2021), on , by section 6(7) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
        • Section CB 15E list of defined terms end value proportion: inserted (with effect on 27 March 2021), on , by section 6(7) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).