LAWCOMM 403 long notes.docx-CONTENTS Tip...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
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LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
LAWCOMM 403 long notes.docx-CONTENT...
LAWCOMM_403_long_notes.docx-CONTENTS Tips ......................................................................................................................................................................................... 4 Introducon ............................................................................................................................................................................
Page 76
o
This secon incorporates special rules for buying “off the plan”, subdivisions, giſts etc.
o
Several other related measures were introduced at about the same me as this secon
In parcular, the Land Transfer Act and the Tax Administraon Act were amended in 2015 to require
transferors and transferees of land to provide certain tax informaon, including a New Zealand IRD
number, when land is transferred unless an exempon applies to them
The amendments also require “offshore persons” to provide a New Zealand bank account number
when they apply for an IRD number
o
The bright-line test is supported by a withholding requirement called Residenal Land Withholding Tax
LAND ACQUIRED FOR THE PURPOSE OF DISPOSAL
An amount derived from disposing of land is income if the taxpayer acquired the land for the purpose of disposing of it
(
secon CB 6
)
Note the following:
o
This secon applies where the taxpayer acquired the land either:
for the sole purpose of disposing of it; or
for more than one purpose, including the purpose of disposing of it.
o
This secon does not exclude capital receipts
o
This secon is not subject to any me limit – it doesn’t maer how long you own the land
o
This secon refers to both “purpose” and “intenon” (though without making clear what the difference is)
o
There are exclusions for:
residenal land occupied by the taxpayer or her family (
secon CB 16
)
business premises occupied by the taxpayer (i.e. you carry on business in it) (
secon CB 19
)
BEING IN THE BUSINESS OF DEALING IN LAND
Secons CB 7 to CB 11 extend the charge to cover
capital gains
made by taxpayers carrying on a business relang to
land, in some circumstances
But if a taxpayer carries on a business of dealing in land or developing land, the profits are
generally taxable under
secon CB 1
because the proceeds of sale of the land would be derived from the business
o
Whether a gain made on a sale of land might be taxable under s CA 1(2) (ordinary concepts) is unclear
o
Therefore, these provisions relang to land are irrelevant to the ordinary business of a property developer
BUSINESS RELATING TO LAND
Business relang to land (
secon CB 7
)
o
An amount derived from disposing of land is income if the taxpayer:
carried on a specified business relang to land; and
acquired the land for the purpose of the business.
o
The specified kinds of business are:
dealing in land
– this covers buying land, and deciding not to develop it and selling it
developing land or dividing land into lots; or
erecng buildings.
Note that
o
There is no exclusion of capital receipts
o
There is no me limit
o
This secon applies where either:
the taxpayer carries on the business and acquires and disposes of the land; or
the taxpayer acquires and disposes of the land and some associate of the taxpayer carries on the
business
o
There are exclusions for:
residenal land occupied by the taxpayer or her family (
secon CB 16
)
business premises occupied by the taxpayer (
secon CB 19
)
LAND USED AS LANDFILL
DISPOSAL WITHIN 10 YEARS – LAND-DEALING BUSINESS


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