LAWCOMM 403 long notes.docx-CONTENTS Tip...
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LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
##### Page 131
(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 relaon to the RLWT, and, in relaon to the RLWT, must provide returns and
sasfy the vendor’s liability.
Conveyancers: no agency for other obligaons
(3)
The paying agent is not treated as the vendor’s agent for income, or for a tax obligaon other than RLWT, solely because
of their agency in relaon to RLWT.
Conveyancers: relaonship with subject maer
(4)
Secons HD 2, HD 3, and HD 4 (which relate to agents) do not apply to a paying agent that is agent only in relaon to
RLWT.
RL 4
How much RLWT?
How much tax?
(1)
The total amount (RLWT) that the relevant person described in secon RL 2 or RL 3 must pay or withhold for residenal
land purchase amounts is equal to
the lesser of the amounts described in subsecons (2), (4), and (6)
. The RLWT is paid or
withheld for each residenal land purchase amount, up to the maximum of the relevant residenal land purchase
amount. All amounts in this secon are GST exclusive.
Calculaon of amount
(2)
For the purposes of subsecon (1), the amount is the greater of zero and the amount calculated using the formula
RLWT rate × (current purchase price – vendor’s acquision cost).
Deﬁnion of items in formula
(3)
In the formula in subsecon (2),—
(a)
RLWT rate
means the rate provided in schedule 1, part A, clause 1, table 1, row 5 or, if the vendor is a company
that is not acng as a trustee, the rate provided in schedule 1, part A, clause 2:
(39%)
(b)
current purchase price
is the purchase price agreed by the vendor and purchaser for the disposal of the residenal
land, including deposits and part payments, that the residenal land purchase amount relates to:
(c)
vendor’s acquision cost
is the purchase price paid by the vendor for their acquision of the residenal land.
Calculaon of amount
(4)
For the purposes of subsecon (1), the amount is calculated using the formula—
0.10 × current purchase price.
Deﬁnion of item in formula
(5)
In the formula in subsecon (4),
current purchase price
has the same meaning as in subsecon (3)(b).
Calculaon of amount
(6)
For the purposes of subsecon (1), the amount is the greater of zero and the amount calculated using the formula—
current purchase price – security discharge amount – outstanding rates.
Deﬁnion of items in formula
(7)
In the formula in subsecon (6),—
(a)
current purchase price
has the same meaning as in subsecon (3)(b):
(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
securies over the residenal 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.
Examples
o
Facts
Virginia agrees to sell her residenal property in Tauranga to Thomas. Thomas pays a \$100,000
deposit and another \$400,000 upon selement. In determining Virginia’s RLWT liability, the “current
purchase price” is \$500,000. Virginia originally acquired the residenal property for \$350,000. The
“vendor’s acquision cost” for the purposes of determining Virginia’s RLWT liability is \$350,000.
o
Calculaon
RLWT calculated using the formula in secon RL 4(2) is 39% x (\$500,000 – \$350,000), or \$58,500.
RLWT calculated using the formula in secon RL 4(4) is 10% x \$500,000, or \$50,000. The lesser is
\$50,000. Therefore, the amount of RLWT payable is \$50,000.

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