Buying, selling, or inheriting forest land in the ETS

• On this page:

• What you need to do varies for pre-1990 or post-1989 forest land
• Before you buy forest land
• Buying pre-1990 forest land
• Buying post-1989 forest land
• Selling post-1989 forest land
• Inheriting post-1989 forest land
• Applying for a ruling
• Who to contact

What you need to do varies for pre-1990 or post-1989 forest land

When forest land in the ETS changes ownership, both parties have responsibilities. These vary depending on whether the forest land is "pre-1990 forest land" or "post-1989 forest land".

• If the land is pre-1990 forest land, the ETS applies automatically. You don’t need to do anything immediately, but there are things you should be aware of when you buy or inherit the land.
• If the land is post-1989 forest land, the ETS only applies if the land is registered in the ETS. If you buy, sell or inherit registered post-1989 forest land, there are tasks you need to complete.

Find out how to tell whether forest land is pre-1990 or post-1989 forest land

Find out more about your responsibilities if you own and deforest pre-1990 forest land

If you do not complete certain tasks when buying, selling, or inheriting post-1989 forest land you may receive an infringement fee or penalty.

Find out more about infringements and penalties in the ETS

Before you buy forest land

Before you buy forest land, you can check:

• if it's post-1989 forest land that is registered in the ETS
• if it's considered pre-1990 forest land in the ETS
• if you could be affected by any recent forest clearing activities.

Your lawyer can check the land title for a "Notice of status of forest land". This will tell you if the land has been involved with the ETS. 

Checking and removing ETS notices on land titles

You can discuss any ETS responsibilities with the seller of the land.

A land title check will also show whether there are any registered forestry rights or leases on the land. This may affect who is responsible for any ETS obligations for the land. (This is also known as “participation” in the ETS).

Forestry rights and leases in the ETS

Unit balances and forest land

If post-1989 forest land is registered in the ETS it may already have a "unit balance". A unit balance is the net total of units allocated to the land.

You earn units based on the increase of carbon stored in the forest as it grows. This gradually increases the unit balance for the land. How and when you earn units depends on the accounting method assigned to the land when it entered the ETS (stock change or averaging accounting).

When the trees are harvested, this carbon is released. You may have to pay units to account for these emissions, depending on the accounting method. This is also known as "surrendering" units. Surrendering units reduces the unit balance for the land.

If units were earned when the forest land belonged to someone else, these units belong to them. The units will have been paid into their holding account in the New Zealand Emissions Trading Register (NZETR). The NZETR is where the units are held and traded.

The unit balance stays with the land when it’s sold. Even though the previous owner received the units, you may have to pay (surrender) units up to the value of the unit balance if you later decide to:

• harvest or deforest the land
• remove the forest land from the ETS.

It is up to the seller to disclose information about the unit balance. You and the seller can decide how units are dealt with when you negotiate the sale of the land.

Check how post-1989 forest land is registered in the ETS and the accounting method

If you’re thinking about buying land containing post-1989 forest land that is registered in the ETS, there are few things you can check so you are fully informed.

Check if the land is registered in the ETS as standard or permanent forestry.

• Standard forestry can be harvested without penalty if you restock the land afterwards. You can remove standard forestry from the ETS at any time.
• Permanent forestry has limited harvesting. You may receive a penalty if you clear too large an area. It’s more difficult to remove land from the ETS if it’s permanent forestry.

Learn more about permanent forestry

Standard forestry in the ETS

Check the carbon accounting method that applies to the land. The carbon accounting method determines how you’ll earn and pay units.

• If the land is registered under stock change accounting, you’ll earn and pay units over the growth and harvest cycle.
• If the land is registered under averaging accounting, you will earn units until the forest’s first rotation reaches an average age specified by the ETS legislation. After the forest reaches its average age, you won’t earn or need to pay units.

Find out about earning units through carbon accounting

Check for any recent harvesting activities

When you buy forest land in the ETS, you become responsible for any ETS obligations. This responsibility begins on the date that the land changes ownership. Recent harvesting activities on the land before you bought it can create liabilities for you.

If there is a registered forestry right or lease on the land, this may not apply.

Find out more about forestry rights and leases in the ETS

These common scenarios show how recent harvesting can affect you when you buy forest land.

Recently harvested forest

When forest land in the ETS is harvested, it must regenerate or be replanted to still be considered forest land. If it is not regenerated or replanted to meet certain growth and stocking thresholds, it is considered deforested under ETS rules. You must pay units to cover the amount of carbon released by deforestation. If you're responsible for the land in the ETS, you will be liable even if the previous owner harvested the trees.

If you buy temporarily unstocked forest land and use it for something other than forestry, you may be held responsible for deforesting the land. You must pay units.

Recently replanted post-1989 forest in the ETS

The land may have been registered using the stock change accounting method. This method accounts for the carbon accumulated and emitted every time the forest regrows and is harvested. It includes the decay of woody debris left from the previous rotation. If the forest land has been harvested in the past 10 years, this decay will still be producing emissions. You must include these emissions in your carbon accounting. This means you must pay units for those emissions, even if the previous owner harvested the land.

Read more about stock change accounting

Buying pre-1990 forest land

When you buy pre-1990 forest land, you become responsible for the land in the ETS. This means you must pay units if you deforest the land. Deforestation in the ETS is defined as when:

• you clear the forest and use the land for something other than forestry
• you harvest the forest and it is not replanted or regenerated in the required timeframe
• you buy cleared land and the forest is not replanted or regenerated in the required timeframe.

These obligations do not apply if the land has been granted an exemption.

Find out more about deforesting pre-1990 forest land

If a third party was responsible for the decision to deforest the land, responsibility in the ETS may fall to them instead of the landowner. For example, a forestry right or leaseholder may deforest the land and be liable to pay the units owed.

Buying post-1989 forest land

When you buy ETS-registered post-1989 forest land, you become responsible for that land in the ETS. There may be an exception if there is a forestry right or lease over the land.

You must:

• have or open a holding account in the New Zealand Emissions Trading Register (NZETR)
• tell us about the transfer using the form below (along with the seller).

Open a holding account in the NZETR – New Zealand Emissions Trading Register

Tell us about a transfer of ETS responsibilities — form [PDF, 513 KB] [PDF, 513 KB]

As the new owner of ETS-registered post-1989 forest land, you will be responsible for:

• regularly reporting changes in carbon stock in emissions returns, and
• any resulting unit payments for changes in the amount of carbon in the forest land.

Find out more about emissions returns

You will also need to tell us if you deforest all or part of your forest land.

Buying post-1989 forest land with a forestry right or lease over it

Forest land in the ETS may be registered to a forestry right or leaseholder. If this is the case, ETS responsibilities stay with the forestry right or leaseholder when the land is sold. This will only change if the right or lease is terminated or expires. The current landowner will then automatically become responsible for the land in the ETS.

Forestry rights and leases in the ETS

Selling post-1989 forest land

When you sell ETS-registered post-1989 forest land, your ETS responsibilities transfer to the new owner. When this happens, you must:

• tell us about the transfer by completing the form below (along with the buyer)
• submit an emissions return.

Tell us about a transfer of ETS responsibilities — form [PDF, 513 KB]

You must send the form to tell us about the transfer within 20 working days of the sale. If you do not submit it on time, penalties may apply.

Your emissions return accounts for changes in carbon stock up to the transfer date. You will receive any unit entitlements resulting from this emissions return. You will be responsible for any unit liabilities resulting from this emissions return.

Find out more about emissions returns

Inheriting post-1989 forest land

When you inherit ETS-registered post-1989 forest land, you become responsible for that land in the ETS. If the estate has an executor or administrator, they are the representative for the deceased party. They do not become responsible for the land under ETS rules. Responsibility for participating in the ETS only transfers to you when the executor or administrator transfers the land to you.

If there is a forestry right or lease registered on the land, and the right or lease holder is the party that is participating in the ETS, this may not apply.

Forestry rights and leases in the ETS

When you inherit post-1989 forest land, you must:

• have or open a holding account in the NZETR
• tell us about the transfer using the Tell us about a change of land ownership by succession form (this must be completed with the executor, administrator, or representative of the deceased party)
• submit an emissions return.

Open a holding account in the NZETR – New Zealand Emissions Trading Register

Tell us about a change of land ownership by succession — form [PDF, 442 KB]

Emissions return (succession) form [PDF, 428 KB]

You must submit both forms to us as soon as possible after the transfer.

As the owner of registered post-1989 forest land, you will be responsible for

• regularly reporting changes in carbon stock in emissions returns, and
• any resulting unit payments for changes in the amount of carbon in the forest land.

Find out more about emissions returns

You will also need to tell us if you deforest all or part of your land. If you do, you will have to pay units to account for the emissions from deforesting.

Forest land in the ETS may be registered to a trust. If one member of the trust passes away, participation does not transfer. The interest is held in the trust.

Applying for a ruling

An emissions ruling is where can ask us to confirm how Emissions Trading Scheme (ETS) rules for forestry apply to a given situation. For example, you could ask for an emissions ruling to check whether your plans for the land in future would be considered deforesting pre-1990 forest land, There is a fee for this service.

Find out more about emissions rulings