Matters raised by the Committee
- Issue: Application to trusts
- Issue: Statement of intended use for a property
- Issue: Legislative time limit on issuing IRD numbers
The Committee has asked for guidance on how the proposed rules will apply to complex trust situations, including when the main home exception might apply to a person who is a beneficiary or settlor of multiple trusts.
For the purposes of the current bill, it is important to note that there will be no instances when the main home exception can be claimed by a trust. This means that all trusts will need to provide their IRD numbers, even when the property is the family home of a beneficiary or settlor of the trust. However, it is equally important to note that it is currently anticipated that many trusts will be able to claim the main home exemption from the proposed bright-line test.
Officials working on the proposed bright-line legislation are aware of the Committee’s questions and general interest in these matters. To the extent possible, the bright-line legislation will take into account the scenarios raised by the Committee. Officials will brief the Committee more fully on the application of the bright-line test to trusts as part of the departmental briefing of the Committee on introduction of the Bill.
The Committee has suggested that a person should be asked to state what the intended use of their property is (for example, whether the property is a rental property or bach).
Officials note that they propose adding a question to the tax statement regarding whether the property has been or will be used as a home. This will partially address the Committee’s suggestion.
The Committee has asked whether Inland Revenue should be under a statutory timeframe for issuing IRD numbers.
Once a completed application is received, the current timeframe for IRD number processing is 8–10 working days.
Submissions on this bill suggest that the existing processing time is adequate in terms of getting an IRD number in time for settlement of property transactions.
Inland Revenue is, following enactment of this bill, anticipating an increase in IRD number applications. The Department has plans in place to increase its resources in this area to ensure that it continues to meet the current timeframes. Inland Revenue will redesign its IRD number application form to make the obligations of offshore persons clearer.
We believe that this would be a significant response to meet the increase without the need for a statutory timeframe.
In addition, statutory timeframes could introduce complications, for example, it may difficult to determine when an application is considered to be “complete”. There may also be factors outside of Inland Revenue’s control, such as postal delays.
Work is currently being undertaken to investigate introducing electronic applications for an IRD number as part of Inland Revenue’s business transformation work. It is anticipated that online applications will further reduce application processing times.