OPINION: Inland Revenue Firmly Focused On Bright-Line

By Richard Owen, Customer Segment Leader, IRD

Any suggestion that Inland Revenue has taken its eye off the ball when it comes to PROPERTY INVESTORS is thoroughly misleading.

Just under 100 Inland Revenue compliance specialists are focussed on making sure property investors are aware of their tax obligations – including the brightline test.

The Property Compliance Programme was first established back in 2008.

Some big changes this year in the way we work saw many of the job titles changed but the focus has stayed the same.

Enforcing the bright-line rule is a priority among those working on property compliance and they’re following a comprehensive strategy designed both to help customers meet their obligations from the start and to catch the cases where no profit is declared from a sale.

Inland Revenue compliance staff aim to make it as easy as possible for customers to comply by focusing on supporting them upfront, before issues arise, rather than just responding to non-compliance when it happens.

Unfortunately, there will still be some customers who ignore those messages and fail to comply.

It’s highly likely those people will be picked up in our audit work, which is intensifying over the next year.

Property speculation is a centre of attention, especially in and around new developments, infill housing, regional hot spots and properties that have been sold within a short duration.

Additional revenue of $117 million was assessed in the 12 months to June 30 2018 as a result of audit activities on property compliance issues.

Bright-line, is of course, an area of particular focus and along with ongoing audit activity, data analytics techniques are being used to identify our bright-line cases early. This allows us to target our interventions to help our customers get it right from the start.

New processes have been developed to allow property transactions to be monitored in real time.

This helps compliance staff develop an early reading of trends and hot spots so they can monitor and make initial judgements about whether a customer is complying with tax rules.

Data from Land Information New Zealand help us determine the amount of tax that’s likely to be due.