22 Jul 2015

Exemptions weaken foreign buyers legislation, Labour warns

1:25 pm on 22 July 2015

The Labour Party has warned exemptions in legislation designed to gather information about foreign buyers of property will make it less effective.

Labour MP Clayton Cosgrove.

Labour MP Clayton Cosgrove. Photo: Supplied

National and Labour MPs disagreed about the effectiveness of the Taxation (Land Information and Offshore Persons Information) Bill as they heard submissions on it at Parliament's finance and expenditure select committee this morning.

Labour MP Clayton Cosgrove said it was a weakness that people buying a family home would not need to supply an IRD number.

"The more exemptions you have when you're collecting statistics the lower quality and the greater margin of error will be in the results from those statistics," Mr Cosgrove said.

But National MP Andrew Bayly said the purpose of the bill was not to track people buying their family home.

"When you go back to what the purpose of this bill is about it's not only about capturing foreign buyers coming into the market. It's also about making sure traders of property here in New Zealand... are also well aware of their current taxation obligations," Mr Bayly said.

Both Ernst and Young and Chapman Tripp, who made submissions, said there would be no problem requiring home buyers to include their IRD numbers on sales documents.

Generic real estate images. Sold sign

Photo: RNZ / Diego Opatowski

But in its submission Ernst and Young said the bill required considerable further thought to ensure its provisions were clearly understood by taxpayers.

"As presently crafted, the bill's provisions contain a confusing mix of tax, immigration and overseas investment concepts, which are likely to give rise to a number of technical and practical issues and which, in turn, may render the outcomes less effective," its submission said.

The legislation is expected to become effective from 1 October when the Government says it will then begin collecting information about how many foreign-based investors are actually buying residential property in New Zealand.

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