(Australian Associated Press)
The New Zealand government has introduced a bill aimed at tightening rules and scrutiny of property investors, including requiring them to provide their tax numbers and have a local bank account.
The Taxation (Land Information and Offshore Persons Information) Bill, introduced on Monday by Land Information Minister Louise Upston, amends the Land Transfer Act and the Tax Administration Act to help Inland Revenue enforce the tax rules for property.
The changes were announced in the budget, giving the tax department an extra $NZ29 million ($A25.76 million) to chase property investors, tightening rules on investment gains and linking transactions to IRD numbers, or for foreigners, their tax information number, or TIN.
The moves were part of a government response to Auckland’s overheated property market, which the Reserve Bank has called a threat to the nation’s financial stability.
“While it’s not illegal to trade property to make a gain, property traders are subject to the tax rules like everyone else,” Ms Upston said in a statement.
“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.”
The government will seek feedback on a second element of the budget announcement, a new “bright line” test which makes clear that gains from residential property sold within two years of purchase will be taxed unless the property is the seller’s main home, inherited from a deceased estate or sold as part of a relationship property settlement.
“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,” Revenue Minister Todd McClay said.
The requirement that foreign investors, or Kiwis out of the country for more than three years, have a local bank account to get an IRD number is to ensure compliance with anti-money laundering rules, the ministers said.
The bill is to have its first reading this week and will then be referred to select committee. The government wants the legislation to take effect from October 1.