Trusts: New tax statement rules for land & property transactions

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Starting from October 1st, 2015, a complete “tax statement” should be completed by all parties involved in a transaction which includes interest or transfer of land, as part of the registration process in New Zealand.
The two new requirements regarding transfer of land or interest in land are that all trusts need an IRD number and in the event that a trust is an “offshore person”, an active bank account is also needed by the trust.

These key requirements are a forerunner to the proposed “bright-line rule”, which will see income tax collected on gains made on properties sold within two years following an acquisition which are subjected to certain exemptions. The rules should also be viewed in the context of increased information-sharing between governments.

Concerning the tax statement completion, each party is demanded to fill in a tax statement when it comes to a transfer of land. Also, any Trustees of a trust must individually complete and sign the statement and provide the trust’s IRD number instead of their own. In the event that a nominee is a party of the transaction on behalf of an undisclosed principal, the principal is required to complete the statement, hence anonymity is no longer permitted.

The tax statement is considered as confidential and any information provided in the statement will not be made available to the public except for in the event that someone files a false tax statement it would be considered an offence.

Any failure regarding compliance with the tax statement’s requirements will prevent any land transfer registration.