As part of the 2015 Budget, the Government announced changes to
the tax rules around property transactions, introducing the
'bright line test'. The new rules will apply to
transactions from 1 October 2015. We have previously written an
article regarding the content of those changes (
please click on this link to view the article).
This is an update as to the changes you can expect at a
practical level when buying and selling and what information we
will need from you to comply with the new rules.
In addition to providing your identification documents and
documents that verify ownership of your property we will now also
require your IRD number for every transaction involving a transfer
A sale or purchase will not be able to be completed without your
lawyer uploading that information into the transfer e-dealing
platform set up with Land Information New Zealand and submitting it
as part of the property transaction.
The IRD numbers will not become public information like a
transfer or mortgage does. However, that information will be passed
from LINZ to the IRD so that it can monitor compliance with the new
Each party to a transaction will need to provide this
information to their lawyer in a signed tax statement. There are
penalties for parties that provide false or misleading information
in that tax statement, likely a fine of up to $25,000 for a first
The proposed information at this stage is:
IRD numbers or confirmation that the transaction is exempt from
the new rules.
For those of you selling or buying with a 'passive'
asset holding Family Trust that has not been GST registered and has
not had any reason to apply for an IRD number, these changes mean
that the Trust will need an IRD number.
Whether or not the property has a home on it.
Whether the parties to the transaction are related.
If either party is a tax resident in a country other than New
Zealand they will need to name the country and provide the IRD
equivalent for that jurisdiction.
If you are selling and the property has been your 'main
Regardless of whether your land transaction falls within the new
rules and is taxed, or whether the transaction is exempt from the
new tax rules, the bottom line is that more information is required
from you in order to complete registration of your sale or
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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