INDEPENDENT NEWS

Compliance strengthened for property speculation

Published: Tue 18 Jun 2019 02:39 PM
Hon Stuart Nash
Minister of Revenue
18 June 2019 MEDIA STATEMENT
Inland Revenue is to gain greater oversight of land transfer information to ensure those buying and selling properties are complying with tax rules on property speculation.
Cabinet has agreed to implement recommendation 99 of the Tax Working Group’s (TWG) final report. It will require most people who buy and sell properties to supply their IRD number on land transfer documentation.
Revenue Minister Stuart Nash says the TWG made the recommendation after hearing submissions on ways to improve the fairness, balance and structure of the tax system.
“Most people already provide their IRD number to Land Information NZ (LINZ) when buying and selling property, but there are some exemptions which are open to manipulation,” says Mr Nash.
“Up to one-third of land transfers are made without a record of the IRD number of the buyer or seller.
“Inland Revenue needs a complete picture of property transactions to determine if tax rules are being manipulated. The requirement for nearly all land transfers to include an IRD number is a small change but improves the overall integrity of the system.
“If a home owner regularly buys and sells their properties in a short time frame it suggests they are engaged in property speculation and are flipping properties with the intention of creating income.
“When the previous government introduced the bright line test in 2015, it made it clear that owner-occupiers with a regular pattern of buying and selling residential properties had to comply with the bright line rule in certain circumstances.
“If an owner-occupier buys and sells properties twice or more in two years, under existing law they are generally considered to be trying to manipulate the bright line test.
“The requirement to provide an IRD number on nearly all land transfers makes the rules easier to understand for everyone. It removes uncertainty around what information people need to provide when buying or selling a property.
“Capturing the relevant tax information for property sales will also help us work with jurisdictions in other countries to combat global tax evasion,” says Mr Nash.
A Supplementary Order Paper has been tabled today to make the change to the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill currently before Parliament. It will apply from 1 January 2020.
A small number of land transfers do not require the provision of an IRD number. Examples include land transfers under a Treaty settlement or by a local authority.
The SOP is available here
ends

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