Property tax rules changing in New Zealand
A new Bill to strengthen the property tax rules for buyers and sellers in New Zealand is being introduced which will help the taxman enforce the rules around real estate.
The Taxation (Land Information and Offshore Persons Information) Bill contains proposed amendments to the Land Transfer Act and the Tax Administration Act.
Buyers and sellers of property will be required to provide their IRD numbers at the time of property transfer. Those who are tax residents in another country will also have to provide their Tax Identification Number from their home jurisdiction. However, there will be an exemption for New Zealand residents’ main home.
And to ensure our anti-money laundering rules apply, there will be a requirement for overseas people to have a New Zealand bank account to get a New Zealand IRD number. This will also apply to New Zealanders who have been out of the country for three or more years.
‘These measures provide extra information which will help Inland Revenue detect people seeking to avoid their tax obligations. When people try to get out of paying tax, it’s unfair to all those people who do pay,’ said Revenue Minister Todd McClay.
According to Land Information Minister Louise Upston the proposals will see Land Information New Zealand and Inland Revenue collaborating to ensure fairer taxation of people buying and selling residential property for profit.
The bill is expected to be reported back to the Parliament House in time to be passed in late September and it will take effect from 01 October 2015.
McClay intends to release a public consultation document later this month seeking views on the introduction of a ‘bright line’ test which would make gains from the sale of certain residential properties sold within two years of purchase taxable.
‘Under this test an exemption will apply when the property is the seller’s main home, is inherited from a deceased estate or is transferred as part of a relationship property settlement,’ he explained.
‘Most people in New Zealand do the right thing and pay their tax. Inland Revenue will help you get it right, but for those who try to avoid paying, we’re making it harder to get away with it,’ he added.