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Bright-line Period to be Extended to 5 Years

March 6, 2018

The Minister of Revenue announced recently that a Supplementary Order Paper to the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill has been introduced to extend the bright-line period from 2 to 5 years.

The 5-year period will only apply to residential land where the date that the person acquires an estate or interest in the residential land is on or after the date on which the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act receives Royal assent.

The 2-year period will continue to apply to land where the first interest was acquired before the date of Royal assent.In most cases, the date that a person acquires the first interest in land is the date of the sale and purchase agreement.

The Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Bill is currently at Select Committee stage.The Bill is expected to be passed and receive Royal assent in March.

Clients have a small window between now and the date of Royal assent to enter into sale and purchase agreements for the purchase of land for that land to be subject to the 2 year bright-line period rather than the extended 5 years.

We remind people that the bright-line rules are complex and unforgiving. We have seen many recent examples where clients are taxed under these rules - a situation which could easily have been avoided by some careful tax planning.


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