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As part of our service at Harris Tate, we produce a range of legal articles that are published in various media, designed to alert our clients to legal developments that may affect them.

Our legal articles are written by lawyers and legal executives and discuss legal aspects relating to industries, businesses and individuals as well as focusing on everyday legal topics of interest.  These articles provide information to help educate our clients on different topics and current events in the law.  They may raise additional questions.  Please do not hesitate to contact us with your questions or to discuss your individual situation in more detail.

Residential Land Witholding Tax changes from July 1

17 June 2016

Are you aware of your tax obligations as a land owner? And could you answer whether or not you, or the entity that owns land in this country, is a New Zealand entity?

The answers are not as clear cut as you may think.

From July 1, 2016, the Government will introduce a Residential Land Withholding Tax (RLWT), a land tax that will need to be deducted from some residential property sales or disposals.

This is in conjunction with the new Bright-line Test for Residential Land, introduced last October, whereby any offshore vendors who buy and sell residential land within two years are subject to the test.

However, the test doesn’t just apply to individuals, but takes into account beneficiaries of trusts and shareholders of companies.

Land developers, builders and dealers who are offshore RLWT entities need to be extra careful from a cash flow perspective and there are certain exemptions in place that can be applied for.

It is important to note the new legislation is still being ironed out and is unclear as to GST implications, i.e. sale and purchase of land being inclusive or exclusive of GST. 

Various information has already been issued to legal advisers in order that their obligations in respect of retention of funds on settlement are met and vendors and purchasers need to be aware of those obligations prior to signing any land sale and purchase documentation.

We recommend you seek specialist legal advice before any sale and purchase agreement is considered.

- Tash Ogilvy (published in The Weekend Sun)