New Zealand Law Society - IRD provides early update on residential land withholding tax

IRD provides early update on residential land withholding tax

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The Inland Revenue Department has released a Special Report on the Residential Land Withholding Tax rules.

Inland Revenue says the 41-page report provides early information on the new RLWT rules, and precedes full coverage of the new legislation in its July Tax Information Bulletin.

The RLWT is primarily intended to support the "bright-line test" announced in the 2015 Budget as part of a package of proposals to improve compliance with the residential investment property tax rules.

The bright-line test was enacted on 16 November 2015 in the Taxation (Bright-line Test for Residential Land) Act 2015 to amend the Income Tax Act 2007 and Tax Administration Act and requires income tax to be paid on any gains from the sale of residential property bought and sold within two years.

There are some exceptions - such as if the property sold was the vendor's main home. The test applies to land acquired on or after 1 October 2015.

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