The Labour Government’s 2017 Election Policy has finally come to fruition with regard to the extension of the bright-line test. Hon. Stuart Nash, Minister of Revenue has released a statement announcing that a Supplementary Order Paper to the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill has been introduced. The Bill extends the 2 year bright-line period to 5 years, making good on Labour’s election promise!
All is not lost however. The two year period continues to apply to land where the first interest was acquired prior to the date of Royal Assent. Hon. Stuart Nash announced that this Bill is expected to be passed in March. Consequently, there is a short period of time where taxpayers can acquire land and continue to be subject to the two year period.
The 5-year period will only apply to residential land that the person first acquires an interest in, if that date is on or after the date on which the Bill receives Royal Assent. However, anyone looking to aquire residential land should consider the land transaction provisions contained in the Income Tax Act 2007 in full and seek Advice prior to signing on the dotted line. in Our experience getting it wrong can be costly.