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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:

“Selling residential land as part of a Treaty of Waitangi settlement has special tax rules.”

When you sell residential land as part of a Treaty of Waitangi claim settlement, some special rules apply. You are selling land that is subject to the Te Ture Whenua Maori Act 1993 and the land is being sold to a trustee of a trust that is a Maori authority. The person selling the land is treated as selling it for the greater of what they paid for it or what they got from the sale.

The person buying the land is treated as buying it for its market value when the land was first transferred from the Crown. The buyer’s bright-line start date for the land is the same as the seller’s bright-line start date. If the seller bought the land before 1 July 2024, their bright-line acquisition date is used as their bright-line start date.

These rules apply for the purposes of sections CB 6A and CB 16A which relate to the bright-line test for residential land, and Part D which is about deductions. The land must be disposed of to a trustee of a trust that is eligible to be a Maori authority under section HF 2(3)(e)(i).

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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.

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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 disposal of residential land 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. disposed of 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.

        4. For the purposes of subsection (4), if the transferor acquired the land before 1 July 2024, the transferor’s bright-line acquisition date is treated as a bright-line start date.

        Notes
        • Section FD 3: replaced (with effect on 1 July 2024), on , by section 61(1) (and see section 61(2) for application) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).