Since the end of 2015, there has been a new requirement for solicitors to obtain from their clients “Land Transfer Tax Statements” to enable a settlement on a sale or purchase of a property to proceed. The requirements of this statement has recently been updated to a new and more onerous version that came into effect at the end of 2016 and will be in full effect by April 2017.
One requirement in particular can catch sellers or buyers out if they are not selling or purchasing a property as a natural person (ie a Trust, Company or other entity) and that entity does not have an IRD number. The law now requires all entities to provide their tax details being an IRD number and all natural persons to provide their personal IRD numbers if they are not selling/purchasing a property as their main home.
Most transactions involving the main home are non-notifiable (you do not have to provide tax details) except where a family trust is involved. If a trust is involved, the trust must have an IRD number. Only natural persons can be involved in non-notifiable transactions. However, natural persons who have made at least two non-notifiable transfers of their main home within the last two years cannot claim the third and subsequent ones to be non-notifiable. Offshore persons cannot claim non-notifiable status at all.
All other transactions (i.e. those that do not involve the main home) are notifiable.
Furthermore, if the natural person or entity is a tax resident in a country other than New Zealand they must also provide details of that jurisdiction they are a tax resident in, supply the country code and also their identification number for that country.
The information one provides in the tax statement must be correct and failure to provide correct information could result in a fine up to a maximum of $50,000.00.
We therefore suggest that if you are thinking of selling/purchasing a property through an entity and especially a family trust, make sure that Trust has an IRD number. This can be as simple as asking your accountant for that information or if your Trust does not have an IRD number, making an application to IRD to obtain one well in advance of settlement as your transaction cannot settle without a correct tax statement being provided.
