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Inland Revenue

Tax Policy

Chapter 6 - Information requirements

6.1 As discussed in chapter 5, we suggest that RLWT would apply unless the vendor is eligible for at least one exception.

6.2 The first exception, which would be available when a vendor is not an offshore person, would require the vendor to provide evidence to the relevant conveyancing agent regarding their status. An example is a certified copy of their passport and/or residence class visa along with a statement that they have been physically present in New Zealand for the requisite period. In the case of a non-individual, the vendor would need to provide relevant information or documentation regarding the ownership (or membership) of the governing body.

6.3 Under the second exception, which applies when the vendor acquired the property prior to 1 October 2015 or has held the property for more than two years, the vendor would generally not be required to provide information or evidence to the conveyancing agent.

6.4 The vendor’s date of acquisition (which would align with the bright-line test) would likely be the date of registration of the title to the property, which can be obtained from Quotable Value and Landonline. The date of disposal for the purposes of the two-year test would likely be the date on which the agreement for sale and purchase between the purchaser and vendor is entered into. This date would be available to both parties, including their conveyancing agents.

6.5 There is one instance where we envisage that the vendor would be required to provide evidence to the conveyancing agent under the second exception. This would be when the vendor’s title to the property being sold is registered on or after 1 October 2015, but the vendor is not subject to the bright-line test because the agreement for sale and purchase was entered into prior to 1 October 2015. In this case, the vendor would need to provide a certified copy of that agreement for sale and purchase to the conveyancing agent in order to qualify for the second exception.

6.6 Chapter 4 discussed the rate at which RLWT should be withheld. The “lower of” approach proposed in that chapter allows the withholding agent to undertake a simple calculation based on publicly available information and other information available to both parties, while also minimising the level of engagement between the two conveyancing agents.

6.7 To calculate the amount of RLWT to be withheld, the withholding agent would first need the total purchase price, as agreed between the purchaser and vendor, which will be available in the agreement for sale and purchase. The withholding agent would also need to obtain the vendor’s acquisition price, which is readily available from Quotable Value for a nominal fee.

6.8 Officials consider that in general, the conveyancing agent should be entitled to rely on a statement provided by the vendor, unless they know it to be false. In such a case, the conveyancing agent would be required to withhold and pay RLWT to the Commissioner. A useful precedent for this approach is in section 78F of the Goods and Services Tax Act 1985 which permits a supplier to rely on a statement made by the purchaser that the conditions for zero rating the supply have been met.