Relatives test – modifying the definition of "de facto relationship"

Submission

(67 – New Zealand Institute of Chartered Accountants)

The de facto relationship test should apply only for the purposes of the land provisions if the de facto relationship has been in existence for at least three years or longer.

Comment

The Income Tax Act 2007 uses the definition of “de facto relationship” in the Interpretation Act 1999, which treats two people in a de facto relationship as associated if they live together as a couple in a relationship in the nature of a marriage. This definition is used throughout the Income Tax Act and is not limited in any provision to a relationship which has lasted for at least three years. Officials consider that the Income Tax Act should continue to take a consistent approach to the meaning of a de facto relationship and therefore are not in favour of limiting the definition for the purposes of the land provisions only.

Importantly, the current associated persons definition that applies for the purposes of the land provisions already associates people in a de facto relationship whether or not that relationship has lasted for three years. Therefore the bill is maintaining the status quo in this area.

Recommendation

That the submission be declined.