Government’s tightening up on property tax

What we are seeing as a result

Property TaxThe media has certainly highlighted issues concerning housing in a wider context for the past while. With the pressures on our housing market in New Zealand in general (the lack of, affordability, overseas investment), the Government has introduced measures to try to reduce property speculation, which they foresee will reduce house prices in general.

What are these measures and how do they affect me? Bright-line test

The bright-line test was introduced on October 1, 2015 so is only in its infancy. Generally speaking (summarised here only) if you buy a house and sell it within two years from October 1, 2015 and it’s not the family home you will be taxed on any gains. Any losses are ‘quarantined’ and aren’t offset against your other income (but they can be used against any current and future bright-line gains).

Can you sell a property after two years without getting taxed?

There is no definitive answer to this question. Property, GST and income tax on property are probably the most complex issues we strike as Chartered Accountants.

Property taxation is often overlooked by people and largely comes down to your intention at the time of purchase. Typically intention at time of purchase is to rent out a property for a long period of time. Tainting: Some tax payers are already considered ‘tainted’ by IRD as due to prior activities they are considered to be a developer or property trader at the time of purchase, so can never get that elusive tax free capital gain that drives a lot of our behaviour.

Urgent IRD numbers

Any property sale now must be transacted between two IRD numbers and registered with LINZ (Land Information New Zealand). If there is no IRD number the sale will not proceed. Lawyers and real estate agents are pretty well informed now, but we are still getting a number of requests for IRD numbers a day or two out from settlement causing some unnecessary last minute dramas.

The future?

We suspect with IRD numbers now being recorded for each transaction, IRD activity will only increase. IRD may write to you, asking for an explanation if you sell a property within two years and a few months. However, time will tell on this as it’s early days. As with any law, there are subtleties that can be applied to various scenarios, so as always, consult your professional team for more specific advice.

Ben Blackler and Blair Smith are very familiar with various ownership structures relating to property and can advise you on the tax implications and how the law will be applied to your specific situation. Call to discuss on 04 555 9090 or email

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Health and Safety at Work Act 2015

The new legislation means there is now more legal and moral accountability on everyone regarding health and safety in the workplace, with the ultimate goal being to ensure New Zealand workplaces are safer.

The law took effect 4 April 2016 so the Court would expect businesses to have incorporated any enhancements to health and safety by now.

The penalties can be considerable – up to $3 million. But, for low-risk businesses who already take a considered approach to health and safety not much will change. However, it is worth reviewing your practises to see if there are any areas where you may be at risk.

We suggest that businesses include health and safety in their business agendas. Business owners should do a walkthrough of their company for a practical assessment of what health and safety looks like in reality in their business.

A good place to start is

Health and Safety – Did you know:

  • Everyone has a responsibility and can be held accountable for workplace health and safety including employees and directors.
  • Non-compliance of health and safety by employees can be a disciplinary issue.
  • The government has set a target of 25% reduction in serious harm by 2020.
  • You should always check any contractors’ health and safety policy before allowing them onsite as you could be liable for their
    offences or unsafe practises.
  • A work car is considered a place of work.
  • You cannot insure against court costs/fines but you can insure against having to pay reparation to a victim or their family. The court can order a company an ‘adverse publicity order’ (basically a name and shame advertisement in a newspaper).
  • We have heard stories of some businesses breath testing their employees after Friday night drinks to ensure they are not over
    the limit when they leave the office!
  • A director of a company needs to understand the operations of their business and continuously check their business has the appropriate resources and processes for health and safety. If you are a director in name only, now would be a good time to change your management structure. See us for any assistance.

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