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Taxation Land Information and Offshore Persons Information Bill

Matters raised by officials

Issue: Identifying if the property is residential

Submission

(Matter raised by officials)

The land transfer system does not differentiate between land on the basis of use, e.g. as a home. This makes the information less useful than it could be for housing policy. Officials submit that clause 4 be amended so that if the land is to be used as a residence or home this information is provided in the tax statement.

Comment

The information collected through this tax statement could be useful for understanding the housing market. For this information to be useful in this context the statement needs to identify if the transaction relates to a home. This could be achieved by the statement identifying that the transaction relates to the transfer of a home.

It will also require changes to who can use the information and to what information will be published by Land Information New Zealand.

Recommendation

Amend clause 4 to amend section 156C (1) that the information should include if the transfer relates to land that will be or has been used as a home.

Amend section 156F to allow this and the other tax information collected under the Bill information to be used by relevant department/s and their authorised person for Housing Policy purposes.

Amend section 156F of the Bill to allow Land Information New Zealand to publish aggregate data on the transfers of land used or to be used as homes.

Issue: Main homes - multiple dwellings

Submission

(Matter raised by officials)

The current draft for the main home exemption does not address situations where land has multiple dwellings.

Comment

Where a piece of land has more than one dwelling on it, the majority of the land should be used as the main home to get the main home exemption.

Recommendation

That the submission be accepted.

Issue: Issuing an IRD number

Submission

(Matter raised by officials)

The bank account requirement should be limited to instances when a person has applied for an IRD number.

Comment

Sometimes, for administrative convenience, Inland Revenue will proactively issue a person with an IRD number – essentially as a file number so that transactions involving that person can be recorded in Inland Revenue’s systems. The person may not have requested this number, or even be aware of its existence. An example might be a parent with child support obligations that does not otherwise have an IRD number.

In the event this person is an “offshore person”, the legislation, as currently drafted, would prevent this practice form occurring because the Commissioner will not have a bank account for the person. This would have unintended adverse effects on the administration of the tax system.

Therefore, officials consider that the bank account requirement should only apply in cases when a person has applied for an IRD number, as opposed to situations where one has been assigned to them for administrative reasons.

Recommendation

That the submission be accepted.

Issue: Definition of tax file number should be included in Tax Administration Act

Submission

(Matter raised by officials)

The definition of tax file number should be included in the Tax Administration Act 1994 rather than in the Income Tax Act 2007.

Comment

The definition of tax file number (IRD number) is currently included in the Income Tax Act 2007. There is a potential argument that the tax file number can be issued or used only for income tax purposes.

For clarity, the tax file number should be included in the Tax Administration Act 1994 (which applies for the purposes of all taxes, not just income tax) instead. This would make it clear that, for example, a person who has a GST number (and has no income tax liabilities) can use that GST number as a tax file number.

Recommendation

That the submission be accepted.