IRD keeps eye on property profit
Property is in the Inland Revenue Department’s sights again this year.
Tuesday, September 4th 2012, 12:00AM
by The Landlord
It has released its compliance focus document for the 2012-2013 year, which details the steps it will take to ensure property investors and traders are paying the correct amounts of tax.
In it, it says that not everyone is aware of their tax obligations in regard to property, “while others choose to ignore their obligations and hope it goes unnoticed”.
The report says the IRD has been working with industry associations and professionals in the property market to raise awareness about the tax obligations relating to income from property transactions.
“We will continue to concentrate on areas of potential property speculation, such as land banking, off-plan sales and property swaps.”
The report says the IRD will remain focused on property speculators and those who have not declared income from transactions, or treated it as capital gain.
“We are using a targeted audit system to alert us to property transactions by customers who continue to be non-compliant. This system monitors a significant number of properties for future activity. Notifications from the system enable us to act much earlier if we need to, and in some instances before the customer takes a tax position.”
The IRD would also identify instances of masked ownership of traded properties, it said.
Jeremy Tauri, of Plus Chartered Accountants in Whangarei, said that people still often thought that profit from properties bought with the intention to sell was tax free.
“Quite simply we tell them it’s not. Be clear in your intentions, the IRD will even check the bank manager’s notes to see what you have discussed about the future of the property you are buying.”
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