Next year lawyers will be required to retain tax on sale proceeds and pay the tax straight to the Inland Revenue Department. They will need to do this when:
• an off-shore person (some Kiwis will be caught)
• sells residential land
• they have acquired since 1 October 2015
• that have held for less than 2 years.
Standard rates will enable an assessment of what is to be paid. No account is to be taken of deductibles. If we collect and pay too much, the vendor must apply to the IRD for a refund.
A lot of practical information on how this will work remains unclear. Fundamental things are still to be agreed – like whether the bank or the IRD gets paid first or whether the agent still gets to take their commission before either the bank or the IRD receive their funds. But the changes are coming and expected start date is July 2016.