While we are waiting to get a firm outcome on who will be running the country, we will have to revert back on what happened in previous weeks instead in the world of tax!
IRD issued an Interpretation Statement 17/08 on 15 September 2017 which gives a general overview of the compulsory zero-rating of land rules. The rules require a supply between two registered persons that wholly or partly consists of land to be zero-rated. While the rules have been in play for a while now, coming into effect 1 April 2011, the actual application of the rules still can be a challenge to apply. As such IRD’s intention with the Interpretation Statement is to provide some more clarity for vendors and purchasers to get it right from the start, before a transaction including land settles.
The statement provides various examples and flowcharts to assist, including scenarios where there is non-taxable use, and mostly how to fix transactions which have been treated incorrectly.
Although useful, it will always be a challenge where advisors are only brought in the day before the transaction must be signed which unfortunately is quite often the case, and even worse after the deal is done. So our message of the day is: when selling or buying property – think of the GST early!