Bill to strengthen property tax rules introduced
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23/06/2015. 09:30
KoreaPost
Revenue Minister Todd McClay and Land Information Minister Louise Upston have welcomed the introduction of a new bill which will help Inland Revenue enforce the tax rules around property.
The Taxation (Land Information and Offshore Persons Information) Bill containing proposed amendments to the Land Transfer Act and the Tax Administration Act was introduced into Parliament yesterday by Ms Upston. The bill contains two of the property tax proposals announced as part of Budget 2015:
- 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. There will be an exemption for New Zealand residents’ main home.
- And to ensure our anti-money laundering rules apply, we’ll require 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,” Mr McClay says.
“While it’s not illegal to trade property to make a gain, property traders are subject to the tax rules like everyone else. The proposals in this bill will see Land Information New Zealand and Inland Revenue collaborating to ensure fairer taxation of people buying and selling residential property for profit,” Ms Upston says.
The bill is due to have its first reading this week and it will then be referred to Select Committee for consideration and public consultation. The bill is expected to be reported back to the House in time to be passed in late September and it will take effect from 1 October.
Mr McClay says as announced in Budget 2015, further legislative changes are in the pipeline.
“I intend to release a public consultation document later this month seeking views on implementing the other major Budget announcement – 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.
“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,” Mr McClay says.