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Income Tax Act 2007

Recharacterisation of certain transactions - Rollover relief from the bright-line test

FD 3: Certain transfers of residential land included in settlement of claim under Treaty of Waitangi

You could also call this:

“Residential land transfers for Treaty settlements: Tax rules explained”

This law is about how the government treats certain land transfers that are part of settling Treaty of Waitangi claims. It applies to residential land that is transferred within a specific time period called the bright-line period.

For this law to apply, the land transfer must follow Māori land laws, be part of a Treaty settlement, and be given to a trustee who manages Māori Authority funds or could manage them.

When this kind of transfer happens, the person giving the land is treated as if they sold it for whichever is higher: the amount they paid for it or the amount they got for it. The person receiving the land is treated as if they bought it for its market value when the government first gave it away.

The new owner’s “bright-line start date” for the land (which is important for tax purposes) is the same as the previous owner’s start date.

This law affects how taxes are calculated on these special land transfers, making sure they’re treated fairly as part of Treaty settlements.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS974737.

Topics:
Money and consumer rights > Taxes
Māori affairs > Treaty of Waitangi
Māori affairs > Māori land
Housing and property > Buying and selling homes
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Part F Recharacterisation of certain transactions
Rollover relief from the bright-line test

FD 3Certain transfers of residential land included in settlement of claim under Treaty of Waitangi

  1. This section applies for the purposes of sections CB 6A and CB 16A (which relate to the bright-line test for residential land) and Part D (Deductions) to a transfer of residential land within the bright-line period that is—

  2. subject to Te Ture Whenua Maori Act 1993; and
    1. made as part of the settlement of a claim under the Treaty of Waitangi; and
      1. transferred to a trustee of a trust that is a Maori authority or is eligible to be a Maori authority under section HF 2(3)(e)(i) (Who is eligible to be a Maori authority?).

        1. The transferor is treated as transferring the land at the greater of the cost of the land to them or the consideration they derive from the disposal.

        2. The transferee is treated as acquiring the land at its market value at the time the land was transferred from the Crown.

        3. The transferee’s bright-line start date for the land is the transferor’s bright-line start date.

        Notes
        • Section FD 3: inserted, on , by section 77(1) (and see section 77(2) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).