Today two new acts, the Land Transfer Amendment Act 2015 and the Tax Administration Amendment Act 2015 come into force in New Zealand, enhancing information reporting requirements to Land Information New Zealand (LINZ).
Information reporting relates to the transfer of property located in New Zealand only.
Information which is required to be supplied to LINZ by the buyer and the seller of property as of today is as follows:
– Whether land has a home on it.
– Whether the person or a member of their immediate family is a New Zealand citizen or visa-holder.
– If the person is a transferee and they or their immediate family has a work or student visa, whether they intend to live on the land.
– Unless an exemption applies (which includes an exemption for being a main home), the following information must also be furnished:
- IRD number
- Taxpayer identification number of any other jurisdiction of which the person is a tax resident of, at the time of the transfer.
– The main home exemption is not available where the person is an “offshore person” as defined, where the property is owned, or to be owned by a trust, or if the person is selling their main home for the third time in a two-year period.
– An “offshore person” doesn’t include:
- New Zealand citizens who have been in New Zealand within the past three years, or
- New Zealand residency class visa holder who has been in New Zealand within the past twelve months.
- All other individuals are offshore persons.
– Entities, including partnerships, companies and trusts are designated “offshore persons where:
- The entity is formed outside New Zealand or
- 25% or more of the entity is legally or beneficially owned or controlled by an offshore person.
The information collected by LINZ will be passed to Inland Revenue for compliance purposes. Additionally, it is transferable to the revenue authorities of other jurisdictions with which New Zealand has a tax information exchange agreement, including the United States.
In addition, a new restriction requires non-residents of New Zealand must open a New Zealand bank account before they can purchase property, and obtain a New Zealand IRD number (taxpayer identification number).
The two acts form part of three legislative measures which have several objectives, including tightening New Zealand’s anti-money laundering rules.
The third measure is the bright-line test for residential land, involving a capital gains tax on the sale of residential land located in New Zealand, set out in the Taxation (Bright-line Test for Residential Land) Bill introduced on 24 August 2015. This bill had its first reading in parliament on 9 September 2015.