New Zealand Law Society - IRD number to be needed on land transfer documentation

IRD number to be needed on land transfer documentation

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From 1 January 2020 an IRD number will be required on nearly all land transfers, following the tabling of Supplementary Order Paper 248 in Parliament by Revenue Minister Stuart Nash.

The SOP was tabled during debate on the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill.

The SOP amends section 79 of the Land Transfer Act 2017. Its effect is that before a transfer of land can be registered, the seller and purchaser must lodge a tax statement (except in some limited circumstances such as land transfers under a Treaty settlement or by a local authority).

Generally, the tax statement must include the seller’s or purchaser’s IRD number and information relevant for overseas tax purposes. However, if it is a non-notifiable transfer, that information does not have to be included. Currently, the most common kind of non-notifiable transfer is the transfer of an individual’s main home.

A statement from Mr Nash says the change is for Inland Revenue to gain greater oversight of land transfer information to ensure those buying and selling properties are complying with tax rules on property speculation.

He says the changes implement recommendation 99 of the Tax Working Group's final report.

“Most people already provide their IRD number to Land Information NZ (LINZ) when buying and selling property, but there are some exemptions which are open to manipulation,” says Mr Nash.

“Up to one-third of land transfers are made without a record of the IRD number of the buyer or seller.

“Inland Revenue needs a complete picture of property transactions to determine if tax rules are being manipulated. The requirement for nearly all land transfers to include an IRD number is a small change but improves the overall integrity of the system.

“If a home owner regularly buys and sells their properties in a short time frame it suggests they are engaged in property speculation and are flipping properties with the intention of creating income."

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