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The associated persons rules make sure that your transactions or business deals are taxed correctly, no matter your relationship with others involved in the deal. For example, buying, selling or transferring between family, members of a trust, partnerships, and companies.

The associated persons rules

These rules apply to all kinds of business and private transactions, like property or business sales. They affect both income tax and GST.

The rules mean that:

  • you need to treat transactions between associates the same way as transactions between people or organisations that are not associated
  • prices generally need to be at market value.

Associated with a property dealer, developer or builder

Who is associated?

Here are some examples of associations between people and organisations.


In most cases, you’re associated with your:

  • spouse or live-in partner
  • siblings, grandparents and grandchildren
  • children, including adopted children
  • spouse’s children.

For property transactions, you are only associated with your spouse, or with your children if they’re under 20.

Your cousins, nieces and nephews are not associates for income tax purposes.


You’re associated with:

  • a company that you, or your spouse or children, hold at least 25% of the shares in
  • a partnership, if you’re a partner.

Companies can also be associated with each other if the same people or organisations have at least 50% of the voting interests in each company. Find out more about how companies can be associates in our guide to associated persons – IR620 below.


If you’re a trustee, you’re associated with:

  • any settlor of the trust
  • a trustee of another trust, if the same person is a settlor of both trusts
  • anyone who has the power to appoint or remove a trustee.

Indirect connections can be associated

You can be associated with a person or organisation because you share an associate, even if you are not directly connected with them.

This is called the tripartite test.

For example, if a wife is the settlor of a trust, her husband is also associated with the trust, even though he is not directly connected with it. This is because the wife is associated with the trust, and the husband is associated with the wife, so husband and trust share a common associate.

For more information, see our guide to associated persons – IR620.

Last updated: 09 May 2024
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