Certification Pure self-certification is not recommended in this instance, due to the funds potentially at stake the two outcomes for RLWT are withholding and no withholding, while for the – majority of other withholding taxes, the two outcomes both involve withholding, but at different rates. Pure self-certification could create an incentive to fraudulently self-certify as not an offshore person, thus reducing the effectiveness of the withholding tax. Options Advantages Disadvantages From a Could create compliance an incentive to perspective, it fraudulently is very self-certify as simple. not an offshore person due to the funds at stake. This could Pure substantially reduce the effectiveness of the withholding tax and thus the bright-line test. Recommendation: not recommended. Could be very Less likely for difficult or offshore impractical to person determine in to relation to be incorrectly Provision of classified. information This by seller and This would enhance the certification increase effectiveness by compliance of the conveyancing costs withholding substantially. tax and test. Recommendation: not recommended. Reduces Would still compliance impose Withholding burden placed compliance on costs on agent must withholding in be satisfied that person is agents to order to be determine able to not offshore, whether a correctly state with clear guidance on whether they is are an offshore who is an offshore person. offshore and what person. The requirement information that the is acceptable person who
Certification Pure self-certification is not recommended in this instance, due to the funds potentially at stake – the two outcomes for RLWT are withholding and no withholding, while for the majority of other withholding taxes, the two outcomes both involve withholding, but at different rates. Pure self-certification could create an incentive to fraudulently self-certify as not an offshore person, thus reducing the effectiveness of the withholding tax. Options Advantages Disadvantages Pure From a compliance perspective, it is very simple. Could create an incentive to fraudulently self-certify as not an offshore person due to the funds at stake. This could substantially reduce the effectiveness of the withholding tax and thus the bright-line test. Recommendation: not recommended. Provision of information by seller and certification by conveyancing Could be very difficult or impractical to determine in relation to This would increase compliance costs substantially. Less likely for offshore person to be incorrectly classified. This enhance the effectiveness of the withholding tax and test. Recommendation: not recommended. Withholding agent must be satisfied that person is not offshore, with clear guidance on who is offshore and what information is acceptable Reduces compliance burden placed on withholding agents to determine whether a is an offshore person. The requirement that the person who Would still impose compliance costs on in order to be able to correctly state whether they are an offshore person.
2015-ris-rlwtgstossl-bill-3.docx