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21 February 2018

The Minister of Revenue has confirmed that a Supplementary Order Paper to the Taxation Bill has been introduced to extend the bright-line period from 2 to 5 years. 

Background:

The Taxation (Bright-line Test for Residential Land) Act 2015 introduced a new "bright-line" test that requires income tax to be paid on any gains from residential property that is disposed of within two years of acquisition, subject to some exceptions. The bright-line test is the second of three stages of the Government's reform package to tighten the property investment rules announced as part of Budget 2015. 

What's happening now:

The Minister of Revenue has confirmed that a Supplementary Order Paper to the Taxation Bill has been introduced to extend the bright-line period from 2 to 5 years. 

The 5-year period will only apply to residential land where the date that the person acquires an estate or interest in the residential land is on or after the date on which the Taxation Act receives Royal assent.

The 2-year period will continue to apply to land where the first interest was acquired before the date of Royal assent.  In most cases, the date that a person acquires the first interest in land is the date of the sale and purchase agreement.

The Taxation Bill is currently at Select Committee stage.  The Bill is expected to be passed and receive Royal assent in March.

If this effects you, please feel free to contact us.

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