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 was expected to be passed in late September and to take effect from October 1.

McClay said he would also begin public consultation document later this month on the introduction of a “bright line" test that 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."

Sources Xinhua - Property Wire