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Site Archives Associated Persons

Tainted land – what other options now?

The much heralded new associated person rules were introduced for land transactions from 6 October 2009.  There has been a plethora of commentary and articles on the new rules and it is not the intention of this article to add further to that body of work.  Needless to say however it is generally well accepted that the new rules are extremely wide, and difficult to break as far as establishing non-tainted entities for land developers, land dealers and builders (although not impossible in some circumstances, in the author’s opinion).  The purpose of this article is to instead explore the parameters of the exemptions available to land developers, dealers and builders.  In view of the fact that many clients who are in business as land developers, dealers or builders will be “tainted” under the new rules, perhaps now is the time to focus on other ways under the Act to avoid taxation on non-business land.

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Some thoughts on the new Associated Persons Rules…

The well publicised new Associated Persons Rules are due to come into force within the next week or two and already there is uncertainty about their application.  The rules are possibly the most complex part in the Income Tax Act, and what makes things worse is that they play a very important role in the taxation of some of the largest assets traded in New Zealand – i.e. real property.  It is therefore very important that everyone understands exactly what they are, and how to apply them.

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Recent comments

  • Joanne Martin: Hi Would you be able to email me to discuss a small company that is an LTC which I need some advice on...
  • Rizwana Saheed: You are on the right track that there is an exemption when employees work overtime but whether or not...
  • bryan: as a group of employees we get paid meal money if we exceed 11hrs on any day. Employer says he wants to tax...
  • linda: My mother is 94 and has dementia. With govt assisted carers she is still living in a home gifted within the...
  • Sharon: Hi Daniel, Can you please advise how owners of a profit-making LTC pay themselves? The owners used to pay...
  • Another Anne: My Dad is in care on full subsidy. I am EPOA. Are we able to gift some money to my brother in UK so...
  • Twagilayesu Isaya: I agree with the author of this article that Inland Revenue Department need to provide clear...
  • Quinn: Hi. I would like some clarification regarding the valuation of the investments component of the owners basis...
  • QROPS Pensions: Interesting piece of writing, you always write the most useful content & TalkTax is no exception...
  • Davo: Jo, quite likely is that the transition to an LTC was not done in time and the company became a normal company...

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