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Budget 2015 bring new property tax rules

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Budget 2015 bring new property tax rules

The Government will give extra $29million to the IRD in Budget 2015 for the property tax compliance activities. This is mainly to ensure property speculators also pay their fair share of tax, which is currently by enlarge being avoided.


The new rules will come in to effect from 01-10-2015:

 

  1. All New Zealander and non-residents will need to supply their IRD number at the time of property transactions(buying and selling) other than their main home(principal place of residence)
  2. New rules will have compliance with anti-money laundering rules, all non-residents must have New Zealand operational bank account.
  3. Bright line test will come in to effect, which is in addition to current intention test of the IRD.
  4. Under the bright line test, if the property is sold within 2 years, then any gains made out of the transaction must be included in the tax return.
  5. The Bright line test will work as a supplementary test to intention test. There is no time limit on the intention test, as long as the there was an intention to make profit the intention test comes in to effect. According to the intention test, if there was an intentions to make profit then income tax must be paid on any gains made from selling the property.
  6. However, the intention test has been a very subjective matter, and the Bright line test supplements it with an objectivity.
  7. The new test is being put into place to ensure existing law is strengthened and enforced.

Bright line test


This test will require income tax to be paid if a residential property is bought and sold within two years, unless it is the seller’s main home.
If a property is sold within two years, then the tax will be paid on any gains made from the sale. There are some exemptions such as seller’s personal home, inherited property and relationship property settlement.


Implementation


The IRD will have much information around this prior to the implementation (01 Oct 2015). However, this may be little harder to implement in practical terms, as people may delay selling the property and wait for two years before they sell.
Intention test has always been a subjective matter, the bright line test gives little more tools to the IRD to implement property related tax. But in the absence of full fledge capital gain tax, will this help to curb property speculators, only time will provide answer to this question

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Saurav Wadhwa is a Principal Accountant at IBBZ Accounting Limited


M Bus (TAX) PG Cert (LAW) CA CPA


Membership and Qualification:


- Masters in Professional Business Studies (Taxation) with Distinction from Auckland University of Technology


- Post Graduate Certificate in LAW, Law School at Auckland University of Technology


- Chartered Accountant(CA), New Zealand Institute of Chartered Accountants (NZICA)


- Certified Practicing Accountant(CPA), CPA Australia


- Bachelor of Commerce, Grad. Cert. in Business from Auckland University of Technology


Saurav Wadhwa


Saurav has many years of practical experience in tax & accounting services and is the co-founder of IBBZ Accounting Limited.  He is qualified both in law and accounting. Saurav has worked in various tax & accounting specialist roles for large corporates in New Zealand. He loves to work with Small Businesses.


His key focus is on:



  • Tax advisory for small and family operated businesses on a wide range of taxation issues.

  • Legitimate tax saving structures.

  • Advising on range of new business issues.

  • Ensuring business growth is attained.

  • Effective cash flow planning.


Saurav specialises in Tax Disputes resolution, Tax Relief applications, Tax Debt resolution/management, and representation in Tax Audit. Saurav can represent you in Taxation Review Authority,  in Tax Dispute Court Cases or he can represent you during Tax Audit Investigations.


Blend of skills in Tax laws and accounting, makes him perfect advisor for small businesses and individuals like you. Saurav understands how to safeguard your business from creditors risk, maximise the business growth and pay low taxes. He can be your good strategic and business partner. He is of a friendly nature and easily approachable.


Saurav understands the numbers very well. He is a qualified Chartered Accountant and registered with highest professional accounting bodies of Australia and New Zealand. He can help you to plan for the future to satisfy all your financial needs.



Consumed by a hunger for knowledge, Saurav has never stopped furthering his education or expanding his pool of knowledge. Nothing gives Saurav more satisfaction than assisting his clients to achieve their financial goals. His diligence, passion and accuracy has earned him a reputation as a reliable professional who strives to serve his clients above and beyond the call of his duties.



Saurav was nominated for the Best Accountant of the year and the Young Entrepreneur of the year, and his company IBBZ Accounting won the award of Best Small Business 2014. In 2015 Saurav won the award of Best Accountant of the Year.


In 2017 Saurav was appointed as a committee member to New Zealand Public Practice Board of CPA Australia. 



Saurav is a dedicated family man. Saurav is very fond of outdoor activities and enjoys pretty much all outdoor activities: running, bike, motorbike, snorkel, fishing, skiing etc. Saurav, is also a self-confessed workaholic, spends some of his free time thinking about his client’s affairs and forecasting their financial future.


He can be contacted on saurav@ibbz.co.nz  or 09 272 8050

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Guest Sunday, 19 November 2017