A consultation document was released this week concerning the loophole relating to the current exclusions to the sales of land used as main home or business premises.

While the policy intent was to exclude the main home and business premises exemptions applying to those who had a pattern of  buying and selling land (used as a main home or business premises), the current wording allows taxpayers to structure around the regular pattern by buying through associates. To address this issue, it is proposed that an amendment be made to ensure that the exemption correctly applies as intended. A regular pattern of restrictions apply where a person, or a group of people or entities have a regular pattern of buying and selling land that has been:

  • Occupied by the person or group of people as their main home, residence or business premises (as applicable); or
  • Occupied as a main home, residence or business premises (as applicable) by the person or group of people that controls the entity or entities that own the land.

IRD also raised concerns in relation to the interpretation of the regular pattern restrictions where there is a similarity or likeliness between the transactions. IRD suggest that what is relevant should be the regularity of the transactions and not necessarily the type or nature of work carried out. A suggestion to widen the scope of the regular restrictions in these two exclusions was therefore made.

Submissions on this closed on the 19 October 2019.