LAWCOMM | 403 | Tax Law | lecture notes | (2) The vendor’s conveyancer

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(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

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.

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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