Tax department to investigate property speculation

1.00pm

It was only a matter of time before Inland Revenue Department turned its attentions to property speculators in Queenstown and Wanaka, the Institute of Chartered Accountants New Zealand (Icanz) says.

"The rapid turnover in property, the huge buying and selling in Queenstown and Wanaka, has been well-documented," Icanz tax director Annabel Young said.

Where there was big property interest in buying and selling, it followed that IRD would want to tax the gains people were making, she said.

Even though the law was complex, everyone involved should be making themselves familiar with CD1 of the Income Tax Act, she said.

"If they are speculating they must seek the advice of a professional, a chartered accountant. It will save them in the end."

The move by IRD to bring four investigative audit teams into the region for an indefinite period of time meant they were there on serious business, Ms Young said.

"They are there to investigate every taxable activity -- let's face it, they're not down for the ski season, it's a bit early."

People buying and on-selling property should be aware the IRD had a fund of information available to them, she said.

They were caught because they told someone, possibly just their bank manager.

"But even if you only tell your bank manager you need a loan for a million dollars for the day while you buy up some property and flick it on, the IRD can go to the bank manager and ask what the money was for."

It was incredible that people tried to get away without paying tax and thought they would not be found out by IRD, Ms Young said.

People should get wise and know that every day there were stories in all the newspapers about property selling for huge money in Queenstown and Wanaka.

"You read these stories and you know it's all taxable activity going on so it's not difficult for the IRD to check, is it?"

"The Inland Revenue are coming in and coming hard. Get professional advice, that's the answer."

- NZPA