ADLSI PROPERTY LAW COMMITTEE SUBMISSIONS ON
TAXATION (LAND INFORMATION AND OFFSHORE PERSONS INFORMATION) BILL

156A Interpretation
‘main home’ – this is a new term developed for this bill and a departure from existing
legislative definitions. Notably from the use of ‘principle place of residence’ in the GST Act
and the Joint Family Homes Act which uses the term ‘principally as a home’. Both of which
are well understood and have been judicially interpreted.
The introduction of the new ‘main home’ will lead to uncertainty. For example, does a
home cease to be a main home if family members move out and only one person remains?
Different family members may have contrasting views as to where their main home was.
Further, a property may not be the ‘principle place of residence’ for GST purposes but will
be a ‘main home’ under this act. The opposite scenario will also arise. We submit that one
of the more understood terms is inserted in place of ‘main home’.
‘greatest connection’ - the term is imprecise and can be interpreted very subjectively.
Perhaps factors could be listed for consideration as to what should be considered in
assessing this such as the list of factors used in s2D Property (Relationships) Act 1976 to help
you assess a relationship. Adjusted accordingly to deal with the different matter being
assessed under this legislation.
‘residential land’ - the Bill defines residential land to include land for which there is ‘an
arrangement’ that relates to erecting a dwelling. It is not clear what ‘an arrangement’ is.
While sometimes land and building packages are purchased as one, usually a purchaser of
land will not have entered into a building contract when the land is purchased as they will
do that when they have resource consent and building consent. The current definition does
not cover a residential section upon which a dwelling may be constructed in the future (as is
often the case with beach front properties where a purchaser may acquire the land adjacent
to his home to protect their view/privacy with no agreement to erect a dwelling upon it).
More detail is required as to what ‘an arrangement’ is including the timeframes for expiry.
‘specified estate in land’ - refers to stratum estates in freehold and leasehold, but should
also refer to cross lease properties, both freehold and leasehold.
156A (2)(b) – properties owned by trust will not be exempt transfers. Many trusts which
own non-earning and/or residential properties will not have IRD numbers.

 Trustee’s details are included on the land register and not the trust’s details (s128 Land
Transfer Act 1952). However the property is effectively owned by the trust . The new bill
requires the IRD number of a trust and not that of the individual trustee. It is submitted
that a transaction that simply effects a change of independent trustee be classified as
exempt transfer under the bill.
Will the IRD require sight of probate before issuing an IRD number for an estate?
Depending on the size of the state probate is not necessarily obtained.
In most cases trusts, infants and estates will not have an IRD number as they are not
conducting taxable activities. The IRD will need to be equipped for a significant increase in
applications. To minimise the inevitable clog on the system it is submitting that applications
should be able to be submitted online as with the incorporation of a company.

156B Transferors and transferees must provide tax statement stating that transfer
exempt or providing tax information
156B(1)(b) – the term ‘chief executive’ is not defined and it is submitted that a definition be
included.

156C Content of tax statement
156C(3)(b) – requires information relating to a person who made a nomination.
However, that person will not be registered on the title. Therefore, we submit that it is the
information relating to the nominee which should be required, except where the nominee is
to hold the property in trust, and the relevant information to be provided would be that of
the trust which may be the person who made the nomination.
This clause requires amendment to reflect these two situations.

156E Offence to provide false or misleading tax information
The explanatory note prefacing the bill provides that –
“A conveyancer will be required to provide declared information before certifying the
property transfer. Conveyancers will not be required to certify the accuracy of the
information provided”.
From this it is understood that the certifier is just a messenger for the information.
However, clause 156E does not make this clear and could imply that the certifier has to
make enquiries of the person making the tax statement.
Clause 156E could also create an offence if the certifier gave information to the chief
executive. In light of the intention set out in the explanatory note, it is suggested that this is
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 not appropriate and that the words ‘to a certifier or the chief executive’ be removed from
clause 156E.

156G Certifier and chief executive must hold tax statement and provide copies
It is submitted that retention by electronic means should be permitted as opposed to only
paper. The bill should specifically address this issue.

THE IMPACT OF THE BILL ON THE LAND TRANSFER SYSTEM
The lateness in the process in which the information is being extracted is likely to cause
major disruption to the land transfer system in New Zealand. LINZ is ranked second in the
world in the World Bank Doing Business Survey for ‘ease of registering property’. This is
likely to be compromised by the new requirements.
Given the practicality issues that could impact on our e-dealing registration system we
would have thought that the responsible Crown Minister would have been prudent enough
to have required more time for Land Information New Zealand officers to consult with
“stakeholders” concerning this new information gathering regime. Following those
consultations and only after those consultations had been completed should the
parliamentary draftsmen have been instructed to draft the legislation, and then the
regulations.
It is submitted that the bill represents a fundamental change to New Zealand conveyancing
requirements and its implications extend far wider than the certifier including a tax
statement or bank account details immediately prior to the electronic instrument being
registered.
The requirements of Regulation 24BA which provides that the Commissioner of Inland
Revenue may not allocate a tax file number without a bank account number may hold up
settlements that involve “Offshore Persons”. As the Committee will be aware opening a
bank account with a trading bank these days can be a fraught exercise and lengthy time
delays can occur. If delays occur and a bank account number is not available a tax file
number can’t be issued and an e-dealed “chain” of settlements involving a whole series of
consequential transactions for third parties could be delayed or ultimately cancelled due to
defaults in not settling
On a positive note, the Committee does congratulate the Government in putting in place
(and some would say it is long overdue) the ability to statistically analyse foreign ownership
of residential homes in New Zealand. That statistical data should enable more accurate
information to be obtained about foreign ownership in New Zealand.

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 As an alternative to our above concerns perhaps a mandatory review of the regulations by
way of an expiry date would allow for a comprehensive review to take place in perhaps
three to five years from the date of passing of the legislation. In other words, if in five years’
time it becomes abundantly clear that new regime is not working then a different legislative
approach may well have been more productive.

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