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Tax Information Required for Property Contracts after 1 October 2015

Thursday 8 October 2015

The government introduced changes to collect information about buyers and sellers of real estate, and to track gains from property sales within 2 years of purchase for both New Zealanders and overseas person. While these changes were introduced to target the Auckland market, they apply across New Zealand to all property sales and purchases.

All sellers and buyers are now required to provide the information in a tax statement, unless they are natural persons selling or buying their own family home. Family Trusts are not considered natural persons and are required to provide a tax statement even if the primary beneficiaries are using the property as their family home.

For New Zealanders, a New Zealand IRD number must be provided before settlement.

For offshore persons and entities, more information is required before settlement.

A New Zealand citizen will not be considered as an offshore person unless they have not been in New Zealand for the last three years. A person holding a NZ residence class visa for immigration purposes will not be classed as an offshore person unless they have not been in New Zealand for the last year.

For entities which are not natural persons such as companies, partnership, and trusts, the rules are complex. Further advice should be sought as to whether they will be classified as offshore persons.

Any offshore person or entity must provide the following in addition to a New Zealand IRD number:

  1. A New Zealand bank account number;
  2. The country they are a tax resident in; and
  3. Their tax number overseas.

These changes, together with the rules requiring a New Zealand resident director for New Zealand companies have made it more difficult for foreign nationals to do business and buy properties in New Zealand. Good advice should be obtained from professionals who are experienced in dealing with persons from overseas.

At Teresa Chan Law, we have advised many overseas clients in purchasing properties and businesses in New Zealand. We monitor changes affecting overseas clients and tailor our advice, forms and processes accordingly.

Please contact Xiaoyan Mu (Mandarin) at (022) 694 9917 or Teresa Chan (Cantonese) at (027) 577 1069, or email teresa@tchanlaw.co.nz

Note: The information in this article is general only. You should seek advice for specific situations.

KEYWORDS: tax, IRD, property, settlement, natural persons
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