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Author: James Coleman
Published: 18 April 2019
Pages: 20

Introduction

This paper looks at some tax issues for the lawyers with respect to land, GST and trusts plus provides some comments on the final report issued by the Cullen Tax Working Group on 21 February 2019.

One area of practice which lawyers have not given up to accountants involves land transactions where conveyancers still have the monopoly in this country. Consequently, this paper has a particular focus on land transactions. In terms of the taxation of land it will look in particular at:

• the relatively new bright line rules for residential land sales;
• associated persons rules;
• the long stop 10 year rules; and
• the exceptions to the land tax provisions.

Lawyers are often asked to be trustees of trusts and hence this paper will look at GST obligations and their interaction with trusteeships and will consider the definition of a settlor of a trust for income tax purposes, given common current drafting practices when establishing a trust.

With respect to the Cullen Tax Working Group there will be a high-level overview of some of the key points around their recommended capital gains tax.

The key pieces of legislation which will be in focus are the Income Tax Act 2007 (ITA) and the Goods and Services Tax Act 1985 (GST Act).

On the assumption that it is a solicitor that will be aware of a contemplated sale before the person’s accountant, it would be worth asking some questions around the land to ascertain the tax status of the proceeds before a client is contractually committed.

Content outline

• Taxation of the gains from disposing of land - an overview
• Exceptions to the Residential Land Bright Line Rules
• Associated persons traps
• Exclusions - from the land tax provisions (apart from CB 6A)
• Traps with GST and Trustee obligations
• Traps with Trusts
• The Cullen Working Group Helicopter Overview