The taxation of land is often a tricky area and while it may not apply to every taxpayer every day, due to the numbers involved it is often an important one.

Over the last year or so all the attention has been given to the bright-line test for the sale of residential property. This test was however only an addition to the land tax rules already in place.

One of the areas that can create some complexity is where you or an associate is in the business of dealing in land, developing or dividing land, or, erecting buildings on land. Where this is the case land acquired, even if not for that business, can be taxable on sale.

These rules are often referred to casually as the 10 year rules as they generally tax land sold within 10 years of acquisition. Where however the business is one of erecting buildings on land the 10-year period is measured from the completion of any improvements to the land. This can mean that land which has been held for a long time, well more than 10 years, can still be brought into the tax net where improvements are made and the land is owned by a builder or a builder’s associate.

Yesterday the IRD released a draft “questions we’ve been asked” PUB00286 which considers whether fitting-out an existing building can be an improvement for this test. The QWBA concludes that completing fit-out may be improvements. This means that fit-out of an existing building, say for a new tenant, might be enough to bring a building back into the tax net if sold within 10 years of the fit-out.

The QWBA is still open for comment and comments close on 17 November 2017.