Question Bank : Property Transactions

1806 WordsApr 7, 20158 Pages
Question 1: Property Transactions Issue: Mrs Kerry works full time for an engineering consultancy company, and her husband James is a computer technician. Kerry has sold two properties over the past 24 months. She can’t believe that New Zealand does not tax capital gains. She has come to see me for advice on whether tax would be imposed on the sale of the two properties. Law: Section CB 3: Amounts received from the sale of personal property derived from the carrying on or carrying out of any undertaking or scheme entered into or devised for the purpose of making a profit are taxable. Section CB 4: Where any personal property is acquired by a taxpayer for the purpose of resale, even if it is an isolated transaction unconnected with the normal trade or business, any resulting profit will be taxable. CB 6 Disposal: land acquired for purpose or with intention of disposal (1) An amount that a person derives from disposing of land is income of the person if they acquired the land. (a) For 1 or more purposes that included the purpose of disposing of it (b) With 1 or more intentions that included the intention of disposing of it. Taxpayers are taxable on any amount derived from the sale of land if the transaction falls within s CB6. Land acquired for the purpose or with the intention of resale (s CB 6). Exclusions: A Taxpayer’s own private residence (s CB 16). The burden of proof is on the taxpayer to demonstrate that the purpose or intention was not to purchase the land for

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