Clarity needed in land disposal income tax laws
The New Zealand Law Society has recommended that changes to income tax law relating to land acquired for disposal should be clarified.
Commenting on a draft Inland Revenue Department Question We've Been Asked Income Tax – Land Acquired for a Purpose or With an Intention of Disposal the Law Society said it would be helpful to clarify the meaning of the word "mainly" which is used in both exclusion provisions.
Under the proposed law, a person who acquired a business or residential property who "mainly" used that property as a family residence or to carry on a substantial business would not have to pay additional taxes on the disposal of that property.
The Law Society said it was not clear whether "mainly" related to the percentage of time the land had been used as a residence or business – throughout the entire period of ownership, or if "mainly" means that where the land had one or more use or purpose, the predominant use or purpose was that of residence or business.
The full submission can be viewed here.
Last updated on the 20th April 2016