The IRD have recently released a consultation document around the sale and purchase of land. Taxpayers are often faced with having to determine the date of acquisition of the land for the purposes of land disposal provisions, in particular s CB6. Section CB6 deals with land acquired for the purpose of or with intention of disposal. Any gains derived from the disposal of the land are taxable.

The date of acquisition becomes more important for the purposes of the 10 year rule. The uncertainty arises from the timing of when the taxpayer’s intention or purpose should be determined.  Various interests and estates in land are acquired at different times throughout the acquisition process with final registration at the time of settlement.  The case law is not particularly helpful in this regard.

Incorrect determination of the time of acquisition at which point intention or purpose is determined can have serious consequences for the taxpayer.

The IRD has released a consultation document in which the following options are considered:

  • When the agreement for sale and purchase is entered into
  • When the agreement for sale and purchase becomes unconditional  and legal action for non-performance can be taken


This consultation is very welcome as it will provide greater certainty for the tax payers. We are of the opinion that more logical would be the second option  when the agreement becomes unconditional, as this is the true time at which point  each party can enforce its rights and obligations for non-performance.