Tax advice Please

[GO DO IT]

IRD are conducting a sizeable audit on our financial activities. We have a question could someone tell me what secton CB9 of the 2007 Act is?

We received a letter today referring to this and I don't want to wait until Monday to find out what it actually is.

Thanks

[Winston001]

Income Tax Act 2007


CB 4 Personal property acquired for purpose of disposal

• An amount that a person derives from disposing of personal property is income of the person if they acquired the property for the purpose of disposing of
  

Enjoy: http://www.legislation.govt.nz/act/p...resel&p=1&sr=1

[GO DO IT]

Great thank you. So now it will be up to us to prove that we purchased the properties as long term holds. Have you any experience or advice as to how to present this to inland revenue.

Thanks

[One]

Why did you sell? Did your circumstances change?

[CJ]

Why did you buy it. What did you tell the bank at the time (they can ask the bank for their records so never make up a story to get finance that will bite you later down the track). WHat did you tell your accountant/ lawyer/ mentor/ mortgage broker/ neighbour, local mp/ ... If it was in a company or trust, were their minutes/resolutions.

Any documentation made contemporaneously at the time of the purchase is very helpful but they will also look at the subsequent events.

What did you do with it once you bought it. Why did you sell. How many properties are they looking at. Is there a pattern.

I dont want you to reply to these questions but but looking at all the facts, a story is built. Inland Revenue and a Judge (if it gets that far) will look at the story to determine what you intention was at the time of purchase.

[Dean@Massiveaction]

Critical that you have all intents minuted in your LAQC's minute book.
Should be clear entries stating that the directors decided to purchase XX property as a long term investment etc.
Then you need minutes showing that due to changed circumstances the directors have decided it necessary to dispose of said investment for the company to remain solvent etc.

[CJ]

Critical that you have all intents minuted in your LAQC's minute book.

Agree but your actions must be consistant with the written documentation.

[Dean@Massiveaction]

Of course but without the former you are already in trouble as a director even if u did nothing wrong :-).

And actions are a lot harder to prove/disprove than written intentions :-)

[Philmc1]

You need to bring your lawyer and accountant in on this. Clicked on your website and I see you have traded properties, so you may have tainting issues depending on your structures that you used for trading so their advice is important.

[spaceman]

is it just me?????

what secton CB9 of the 2007 Act is?

CB 4 Personal property acquired for purpose of disposal

surely ....

CB9 Disposal within 10 years: land dealing business
Income
(1) An amount that a person derives from disposing of land is income of the person if—
(a) they dispose of the land within 10 years of acquiring it; and
(b) at the time they acquired the land, they carried on a business of dealing in land, whether or not the land was acquired for the purpose of the business.
Income: associated person in business of dealing in land
(2) An amount that a person (person A) derives from disposing of land within 10 years of acquiring it is income of person A if a person (person B) associated with them at the time the land was acquired carried on a business of dealing in land, whether or not—
(a) person A carried on a business of dealing in land; or
(b) the land was acquired for the purpose of person B’s business.
Exclusions
(3) Subsections (1) and (2) are overridden by the exclusions for residential land in section CB 16 and for business premises in section CB 19.
Defined in this Act: amount, associated person, business, dispose, income, land, year
Compare: 2004 No 35 s CB 7


Cheers
Spaceman

[CJ]

surely ....

A details man.

Go Do It - It looks like they are going after you based on tainting which seems understandable since you are known as a trader. This will come down to timing (did you purchase the property in question before you started trading) and how you are structured (have you broken the associated persons rules). If you have broken the associated persons rules, lets hope they dont raise BG 1.

[GO DO IT]

Thanks for the advice

We will be seeing our accountant next week. Our buy and hold intention was well documentated and our situation has changed dramatically. We have always kept our trading separate from our long term holds.

It will be interesting, to say the least, to see where this goes. I believe there may be many investors affected if they undergo a 5 year audit on EVERYTHING, this includes our childrens bank accounts etc

Pleased with the outcome of the audit, but this new development on our buy and hold trust could prove to be reasonably challenging. We will need to look after our best interests.

[Perry]

Which may be the opposite of what
the IRD thinks is their best interests.
They have lost before, spectacularly,
so don't give in if your position is
lawful and good.
.