In addition, we consider that Inland Revenue should be able to inform the relevant professional body of the withholding agent about a failure to withhold where the failure appears to be negligent or fraudulent. We also consider that the buyer should be held liable for the amount of RLWT that should have been withheld, if the buyer and seller are associated persons. Options Advantages Disadvantages There is The funds someone in never belonged New to the Zealand withholding from whom agent they – Inland are simply an Revenue intermediary. Withholding can collect This may lead agent is the amount to increases in liable for that should the cost of amount that have been professional should have withheld indemnity been and paid to insurance, withheld Inland which could Revenue. substantially increase the cost of conveyancing. Recommendation: not recommended. Simple to Aside from administer. monetary Provides penalties there certainty to will be no withholding incentive for agent that withholding they would agents to not be held comply with liable for withholding the amount tax obligations. No further that should This would action have been undermine the withheld, if integrity of the they had no withholding reason to tax and the not believe bright-line test, the seller’s as well as the statement. integrity of the tax system. Recommendation: not recommended. Similar to Action taken Referral to system in by relevant relevant place for professional professional Landonline. may not deter body after Provides repeat failure to withholding offenders and withhold agents with may not affect due to additional overseas negligence incentive to solicitors. or comply There may still fraudulence with be an incentive
In addition, we consider that Inland Revenue should be able to inform the relevant professional body of the withholding agent about a failure to withhold where the failure appears to be negligent or fraudulent. We also consider that the buyer should be held liable for the amount of RLWT that should have been withheld, if the buyer and seller are associated persons. Options Advantages Disadvantages Withholding agent is liable for amount that should have been withheld There is someone in New Zealand from whom Inland Revenue can collect the amount that should have been withheld and paid to Inland Revenue. The funds never belonged to the withholding agent – they are simply an intermediary. This may lead to increases in the cost of professional indemnity insurance, which could substantially increase the cost of conveyancing. Recommendation: not recommended. No further action Simple to administer. Provides certainty to withholding agent that they would not be held liable for the amount that should have been withheld, if they had no reason to not believe the seller’s statement. Aside from monetary penalties there will be no incentive for withholding agents to comply with withholding tax obligations. This would undermine the integrity of the withholding tax and the bright-line test, as well as the integrity of the tax system. Recommendation: not recommended. Referral to relevant professional body after failure to withhold due to negligence or fraudulence Similar to system in place for Landonline. Provides withholding agents with additional incentive to comply with Action taken by relevant professional may not deter repeat offenders and may not affect overseas solicitors. There may still be an incentive
2015-ris-rlwtgstossl-bill-3.docx