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Glossary of terms for residential land withholding tax

Find out the definitions of terms used in the residential land withholding tax section.

Conveyancer

The lawyer, incorporated law firm, conveyancing practitioner or incorporated conveyancing firm who handles the legal aspects of buying and/or selling property on behalf of a buyer or seller.

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Offshore RLWT person - individual

An individual is an offshore RLWT person when any of the following apply:

  • they're a New Zealand citizen and have been overseas for the last three or more years continuously (and aren't currently in New Zealand)
  • they have a New Zealand residence class visa granted by Immigration New Zealand and have been overseas for the last twelve or more months continuously (and aren't currently in New Zealand)
  • they aren't a New Zealand citizen and don't have a New Zealand residence class visa granted by Immigration New Zealand (can be in or out of New Zealand).

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Offshore RLWT person - non-individual

A non-individual is an offshore RLWT person if that non-individual is:

  • incorporated or registered outside New Zealand, or
  • constituted under foreign law.

For a non-individual that is incorporated or registered in New Zealand they will be an offshore RLWT person when:

Company - a company is an offshore RLWT person if:

  • more than 25% of its directors are offshore RLWT person(s), or
  • more than 25% of the shareholder decision making rights are held or controlled by offshore RLWT person(s).
Definition of company

The definition of a company includes an incorporated society.

Look-through companies (LTCs) - an LTC is an offshore RLWT person if more than 25% of the effective interest(s) in the LTC are held or controlled by offshore RLWT person(s).

Trusts - a trust is an offshore RLWT person when any of the following apply:

  • more than 25% of the trustees are offshore RLWT person(s)
  • more than 25% of people (generally the settlors or trustees) who have the power to appoint or remove trustees or amend the trust deed, are offshore RLWT person(s)
  • all individual beneficiaries, including discretionary beneficiaries, are offshore RLWT person(s)
  • all beneficiaries, including discretionary beneficiaries are offshore RLWT person(s)
  • any individual beneficiary, including discretionary beneficiaries who is an offshore RLWT person:
    • has received a distribution from the trust in any of the four years immediately before the current disposal of residential land, and
    • the total distributions to that beneficiary in one of the four years totalled more than $5,000
  • any non-individual beneficiary, including a discretionary beneficiary (eg, a company) who is an offshore RLWT person has  received a distribution from the trust in any of the four years before the current disposal of residential land
  • any beneficiary, including a discretionary beneficiary, is an offshore RLWT person and the trust has disposed of residential land within the four years before the current disposal of residential land.

Limited partnership - a limited partnership is an offshore RLWT person if:

  • more than 25% of the general partner(s) are offshore RLWT person(s), or
  • more than 25% of the partnership shares are held or controlled by offshore RLWT person(s).

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Offshore RLWT person - partnership

For RLWT purposes we don't look at the partnership as an entity (unlike the definition of an offshore person for IRD number application purposes).

Instead, each partner within the partnership determines if they're an individual offshore RLWT person. If they are, they'll be liable or RLWT on their share of the property sale income.

Any partner who determines they aren't an individual offshore RLWT person won't be liable for RLWT on their share of the property sale income.

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Offshore RLWT person - unincorporated clubs and societies

Members of an unincorporated club or society are treated the same as the partners in a partnership. This means they'll need to determine if they're an individual offshore RLWT person.

If they are, they'll be liable for RLWT on their share of the property sale income.

Any member who determines they aren't an individual offshore RLWT person won't be liable for RLWT on their share of the property sale income.

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Residential land purchase amount

An amount paid or payable for the disposal of the residential property, but excludes:

  • deposits, and
  • part-payments

as long as all deposits and part-payments total less than 50% of the purchase price for the property.

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Sale amount date

This is the date that determines when the liability to deduct RLWT occurs.

Type of payment RLWT liablity occurs when
Cash 50% or more of the sale price has been paid to the seller or the seller's conveyancer
Gift the gift becomes effective

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Withholder

The person required to deduct and pay an amount of RLWT on behalf of the seller.

The withholder will be the seller's conveyancer (unless the seller is associated to the buyer) otherwise it will be the:

  • buyers' conveyancer (if the seller doesn't have a conveyancer), or
  • buyer if:
    • neither the seller or buyer have a conveyancer, or
    • the seller and buyer are associated persons.