Introduction of residential withholding tax
National believes everyone—whether New Zealanders or from overseas—should pay their fair share of tax in this country.
A withholding tax on sales of residential property by people who live overseas and go on to sell the property within two years of purchase will come into force in July 2016.
Legislation introduced on 16 November, 2015 will put the new residential land withholding tax in place. It is the third part of the government’s investment property tax reforms announced under Budget 2015.
The residential land withholding tax will act as a collection mechanism for the new bright-line test, which applies to gains from the sale of residential property purchased on or after 1 October, 2015 and sold within two years.
The withholding tax will ensure the integrity of the tax system and will bring the collection of the bright-line tax into line with other withholding taxes, which generally apply when there is likely to be a tax liability and collection may be difficult.
Residential land withholding tax will apply when the New Zealand property being sold is “residential land” under the bright-line test, or the seller acquired the property on or after 1 October, 2015 and has owned it for less than two years before selling or the seller is an “offshore person”.
An “offshore person” includes people who are not New Zealand citizens, people who do not hold residence class visas, and New Zealand citizens and residence class visa holders who have been away from New Zealand for a significant period of time (three years in the case of New Zealand citizens). New Zealand trusts and companies may also be considered “offshore persons” if they have significant offshore interests in them.
Unlike the bright-line test, there is no exception for the seller’s main home under the new withholding tax rules. The bill does propose an exemption from withholding tax for transfers on death and for property relationship agreement transfers, in keeping with the bright-line test. Residential withholding tax, together with the new bright-line test and changes to collect better tax information about buyers and sellers of residential property, will help ensure that everyone pays their fair share of tax on gains from property sales.
This National party led government has continually strived to work for New Zealanders. The above legislation is one of the many that we have introduced towards this. There is always more to do and we in government will continue to work hard towards providing a better future for New Zealanders.
National believes everyone—whether New Zealanders or from overseas—should pay their fair share of tax in this country.
A withholding tax on sales of residential property by people who live overseas and go on to sell the property within two years of purchase will come into force in July 2016.
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National believes everyone—whether New Zealanders or from overseas—should pay their fair share of tax in this country.
A withholding tax on sales of residential property by people who live overseas and go on to sell the property within two years of purchase will come into force in July 2016.
Legislation introduced on 16 November, 2015 will put the new residential land withholding tax in place. It is the third part of the government’s investment property tax reforms announced under Budget 2015.
The residential land withholding tax will act as a collection mechanism for the new bright-line test, which applies to gains from the sale of residential property purchased on or after 1 October, 2015 and sold within two years.
The withholding tax will ensure the integrity of the tax system and will bring the collection of the bright-line tax into line with other withholding taxes, which generally apply when there is likely to be a tax liability and collection may be difficult.
Residential land withholding tax will apply when the New Zealand property being sold is “residential land” under the bright-line test, or the seller acquired the property on or after 1 October, 2015 and has owned it for less than two years before selling or the seller is an “offshore person”.
An “offshore person” includes people who are not New Zealand citizens, people who do not hold residence class visas, and New Zealand citizens and residence class visa holders who have been away from New Zealand for a significant period of time (three years in the case of New Zealand citizens). New Zealand trusts and companies may also be considered “offshore persons” if they have significant offshore interests in them.
Unlike the bright-line test, there is no exception for the seller’s main home under the new withholding tax rules. The bill does propose an exemption from withholding tax for transfers on death and for property relationship agreement transfers, in keeping with the bright-line test. Residential withholding tax, together with the new bright-line test and changes to collect better tax information about buyers and sellers of residential property, will help ensure that everyone pays their fair share of tax on gains from property sales.
This National party led government has continually strived to work for New Zealanders. The above legislation is one of the many that we have introduced towards this. There is always more to do and we in government will continue to work hard towards providing a better future for New Zealanders.
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