Inland Revenue State Changes to Agreements for Sale and Purchase

Following the Government’s budget announcements in May this year there are a number of changes that will kick in on Thursday, 1 October 2015.

The changes

Inland Revenue state that when buying, selling or transferring New Zealand property:

  • unless the property is your main home, New Zealand taxpayers will provide an IRD number and a taxpayer identification number (equivalent of an IRD number) from any other countries where they have to pay tax on their worldwide income (e.g. United States of America)
  • offshore people and entities will supply a New Zealand IRD number and a taxpayer identification number from any country where they currently have to pay tax on their worldwide income.
  • people transferring a property that’s in trust will provide the IRD number for that trust. An individual trustee’s IRD number will not be accepted.
  • People and entities offshore, and also people with property in trust aren’t eligible for the main home exemption, so will supply a New Zealand IRD number.

There will be some NZ citizens and residents who will need to follow the requirements for offshore people. See www.ird.govt.nz/propertychanges for details.
People buying, selling or transferring property will provide the information above to their property lawyer or conveyancer. They may choose to do this by filling in a Land Transfer Tax Statement, which will be available on Land Information New Zealand’s (LINZ).

In transition?

If you are part way through the acquisition process we have some clarification for when these new rules come into effect. The new rules don’t apply if:

  • the contract for the transfer is entered into before 1 October 2015, and
  • the transfer is registered with Land Information NZ on or before 1 April 2016.

IRD number application changes on 1 October 2015

On 1 October 2015 offshore people and entities must have a fully functional New Zealand bank account before applying for a New Zealand IRD number. This means the bank account must be able to give you the ability to make deposits and withdrawals, and the account holder’s identity is verified in line with New Zealand legal requirements (i.e. in strict compliance with the Anti-Money Laundering and Counter-Financing of Terrorism regulations).
To collect this information, on 1 October Inland Revenue will introduce two new IRD number application forms for people who are non-residents or offshore:
1. one for individuals, and
2. another for companies, trusts, partnerships and other entities.
Inland Revenue are updating their existing application forms with effect from 1 October 2015 to include just the information New Zealand citizens and residents need to provide when they apply for an IRD number.