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Overseas home buyers to be targeted in Kiwi tougher tax rules

Xinhua, June 23, 2015 Adjust font size:

New Zealand lawmakers have begun considering new regulations aimed at closely monitoring overseas property buyers, the government announced Tuesday.

The Taxation (Land Information and Offshore Persons Information) Bill will require overseas buyers and sellers, regardless of their citizenship, to provide a New Zealand tax number and New Zealand bank account.

Overseas tax residents will all have to provide their tax identification number from their home jurisdiction and anyone opening a New Zealand bank account will also need to furnish a New Zealand tax number.

Ministers stressed the measures were aimed at collecting taxes on profits from property sales and preventing international money laundering, but commentators have also said they will help measure overseas property purchases, which many blame for helping to drive up house prices.

"These measures provide extra information, which will help Inland Revenue detect people seeking to avoid their tax obligations. When people try to get out of paying tax, it's unfair to all those people who do pay," Revenue Minister Todd McClay said in a statement.

The Bill was expected to be passed in late September and to take effect from Oct. 1.

McClay said he would also begin public consultation document later this month on the introduction of a "bright line" test that would make gains from the sale of certain residential properties sold within two years of purchase taxable.

"Under this test an exemption will apply when the property is the seller's main home, is inherited from a deceased estate or is transferred as part of a relationship property settlement," said McClay.

The measures were announced after repeated warnings from the Reserve Bank of New Zealand (RBNZ) that soaring house prices, particularly in the biggest city of Auckland, home to a quarter of the population, were posing a risk to the country's financial stability.

Earlier this year, the RBNZ called for tax measures to curb demand for properties after introducing lending restrictions on mortgages. Endi