Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Bill

  • enacted
44 New subpart RL inserted (Residential land withholding tax)

After subpart RH, insert:

Subpart RL—Residential land withholding tax

RL 1 Residential land withholding tax
What this subpart does

(1)

This subpart imposes an obligation to pay a tax called residential land withholding tax (RLWT).

When this subpart applies

(2)

This subpart applies for a residential land purchase amount in relation to a disposal of residential land located in New Zealand by a person (the vendor) to another person (the purchaser) if—

(a)

the relevant residential land purchase amount is or would be income of the vendor under section CB 6A (Disposal within 2 years: bright-line test for residential land), but ignoring sections CB 6A(6) andsection CB 16A (which relate to the bright-line testMain home exclusion for disposal within 2 years); and

(b)

the vendor is an offshore RLWT person.

How this subpart applies to joint owners

(2B)

For the purposes of this subpart, vendors who are co-owners are treated as disposing of separate residential land on the basis of an appropriate split of the underlying residential land and the consideration for its disposal.

When this subpart does not apply

(2C)

This subpart does not apply if the vendor holds an RLWT certificate of exemption that applies for the disposal of the relevant residential land. Section 54E of the Tax Administration Act 1994 provides for the issue of RLWT certificates of exemption to vendors.

Specific rules

(3)

In this subpart,—

(a)

section RL 2 provides rules for vendors and conveyancers in relation to who must pay RLWT and satisfy RLWT liability:

(b)

section RL 3 provides rules for purchasers in relation to who must withhold RLWT from relevant residential land purchase amounts. It also provides rules for segregating the RLWT withheld:

(c)

section RL 4 provides rules for calculating how much tax must be paid or withheld and paid for residential land purchase amounts:

(d)

section RL 5 provides rules for paying RLWT.

(e)

section RL 6 provides rules for the Commissioner repaying RLWT.

Return and iInformation provisions in Tax Administration Act 1994

(4)

Sections 54B, and 54C, and 54D of the Tax Administration Act 1994 provide for the giving of statementsreturns and information in relation to RLWT obligations.

Defined in this Act: dispose, land, offshore RLWT person, residential land, residential land purchase amount, RLWT, RLWT certificate of exemption

RL 2 Vendors: who must pay, and how?
Liability of vendor

(1)

The vendor is liable to pay the amount of RLWT provided in section RL 4.

Conveyancers: agency for RLWT obligations

(2)

The vendor’s conveyancer, or if the vendor does not have a conveyancer, the purchaser’s conveyancer, is treated as the agent (the paying agent) of the vendor in relation to the RLWT, and, in relation to the RLWT, must make assessments, provide returns, and satisfy the vendor’s liability.

Conveyancers: no agency for other obligations

(3)

The paying agent is not treated as the vendor’s agent for income under section CB 6A (Disposal within 2 years: bright-line test for residential land), or for a tax obligation other than RLWT, solely because of their agency in relation to RLWT.

Conveyancers: relationship with subject matter

(4)

Sections HD 2, HD 3, and HD 4 (which relate to agents) do not apply to a paying agent that is agent only in relation to RLWT.

Liability of conveyancers

(5)

The paying agent, as agent in relation to the RLWT, is not jointly and severally liable in relation to the vendor’s RLWT or in relation to a debt under section RA 10 (When obligations not met). The vendor alone is liable to pay the RLWT, despite the paying agent’s obligation to satisfy the vendor’s liability.

Liability of conveyancers: exception for penalties

(6)

Despite subsection (5), if the paying agent fails to satisfy the vendor’s liability, then,—

(a)

for the purposes of Part 9 of the Tax Administration Act 1994 (Penalties), the paying agent is treated as failing to pay an amount of withholding tax equal to the amount of RLWT liability they failed to satisfy, if the paying agent has subtracted or retained an amount from a residential land purchase; or

(b)

for the purposes of Part 9 of the Tax Administration Act 1994 other than section 139B, the paying agent is treated as failing to pay an amount of withholding tax equal to the amount of RLWT liability they failed to satisfy, if the paying agent has not subtracted or retained an amount from a residential land purchase.

Liability of conveyancers: reasonable reliance

(6B)

A paying agent is not liable for a penalty under Part 9 of the Tax Administration Act 1994 for a failure described in subsection (6)(b) if, for that failure,

(a)

the paying agent has relied on a form and accompanying documents given to them in accordance with section 54C of the Tax Administration Act 1994; and

(b)

the paying agent’s reliance on the form and accompanying documents is reasonable.

Treatment of amount

(7)

An amount subtracted or retained from a residential land purchase by a paying agent to satisfy the vendor’s RLWT liability—

(a)

is treated as received—

(i)

by the vendor; and

(ii)

at the time the residential land purchase amount is paid to them; and

(b)

is treated for the purposes of this Act as derived by the vendor at the same time and in the same way as they derive the residential land purchase amount.

Defined in this Act: agent, amount, amount of tax, Commissioner, conveyancer, pay, residential land purchase amount, RLWT

RL 3 Associated persons: who must pay, and how?

Despite section RL 2, if the vendor and purchaser are associated persons—

(a)

the vendor is not liable to pay the amount of RLWT provided in section RL 4; and

(b)

the purchaser must withhold the amount of RLWT provided in section RL 4. The purchaser must hold the RLWT withheld in a separate bank account, segregated from other money, for the benefit of the Commissioner.

Defined in this Act: amount, associated person, Commissioner, conveyancer, RLWT, RLWT rules

RL 4 How much RLWT?
How much tax?

(1)

The total amount (RLWT) that the relevant person described in section RL 2 or RL 3 must pay or withhold from a for residential land purchase amounts is equal to the lesser of the amounts described in subsections (2), (4), and (6). The RLWT is paid or withheld for each residential land purchase amount, up to the maximum of the relevant residential land purchase amount.

Calculation of amount

(2)

For the purposes of subsection (1), the amount is the greater of zero and the amount calculated using the formula—

RLWT rate × (current purchase price − vendor’s acquisition cost).

Definition of items in formula

(3)

In the formula in subsection (2),—

(a)

RLWT rate means 0.33 the rate provided in schedule 1, part A, clause 1, table 1, row 4 or, if the vendor is a company that is not acting as a trustee, 0.28the rate provided in schedule 1, part A, clause 2:

(b)

current purchase price is the purchase price agreed by the vendor and purchaser for the disposal of the residential land, including deposits and part payments, that the residential land purchase amount relates to:

(c)

vendor’s acquisition cost is the purchase price paid by the vendor for their acquisition of the residential land.

Calculation of amount

(4)

For the purposes of subsection (1), the amount is calculated using the formula—

0.10 × current purchase price.

Definition of item in formula

(5)

In the formula in subsection (4), current purchase price has the same meaning as in subsection (3)(b).

Calculation of amount

(6)

For the purposes of subsection (1), the amount is the greater of zero and the amount calculated using the formula—

current purchase price − security discharge amount − outstanding rates.

Definition of items in formula

(7)

In the formula in subsection (6),—

(a)

current purchase price has the same meaning as in subsection (3)(b):

(b)

security discharge amount is the total of the amounts required by licensed security holders to discharge their mortgages or other securities over the residential land, if the relevant person who must pay RLWT is the vendor or the vendor’s conveyancer.

(b)

security discharge amount is

(i)

zero, if paragraph (ii) does not apply:

(ii)

the total of the amounts required by licensed security holders to discharge their mortgages or other securities over the residential land, if the relevant person who must pay RLWT is the vendor or the vendor’s conveyancer:

(c)

outstanding rates is the amount of local authority rates outstanding.

A definition

(8)

In this section, licensed security holder means a person who has a mortgage or other security over the relevant residential land, if that person is—

(a)

a registered bank:

(b)

a licensed NBDT, as defined in section 4 of the Non-bank Deposit Takers Act 2013.

Defined in this Act: amount, amount of tax, company, dispose, licensed security holder, residential land purchase amount, registered bank, residential land, RLWT

RL 5 Paying RLWT
Paying RLWT

(1)

A person who is required to pay or withhold RLWT must pay the amount of tax to the Commissioner under section RA 15 (Payment dates for interim and other tax payments).

Basis for payment of RLWT

(2)

For the purposes of section RA 6C (Withholding and payment obligations for residential land), the person must pay the amount of tax on a monthly basis.

Defined in this Act: amount of tax, Commissioner, RLWT

RL 6 Commissioner repaying RLWT
Repaying RLWT

(1)

An amount of RLWT paid in relation to a person’s disposal of residential land may be repaid by the Commissioner to the person if and to the extent to which

(a)

a tax credit for the RLWT is likely to be a surplus credit under section BC 8(4) for the relevant tax year, treating the person as only having income and deductions for land for the tax year and the relevant tax rate provided in section RL 4(3); and

(b)

the person has no outstanding tax obligations under the Inland Revenue Acts; and

(c)

the person gives the Commissioner the information in the form prescribed under section 54D of the Tax Administration Act 1994, including any prescribed accompanying documents.

Effect of repaying RLWT

(2)

For the purposes of section LB 6B (Tax credits for RLWT), an amount of RLWT repaid by the Commissioner is treated as not paid in relation to the residential land that the person disposed of.

Defined in this Act: amount, Commissioner, dispose, land, residential land, RLWT