Blog Layout

Market Value Property Valuations & GST

Hamish Pryde • November 4, 2014

The importance of the GST treatment for the sale and purchase of land, particularly in respect of Auckland District Law Society agreements, cannot be understated.

 The need for care and certainty continues to be highlighted with the Court of Appeal's recent approach to Market Valuations of property.

 In a recent family dispute, the Court held that whether the current Market Value of a property includes GST must be determined by the context of the Deed.

 The dispute centred around the distribution of Estate assets.  In particular, one son (who had long resided in a property), was going to have property transferred to him personally (or through a nominee), at a GST exclusive value.   He was not registered for GST.  The other children disputed this, with another brother arguing for a GST inclusive value to be determined.

 Submissions were made to the Court supporting each side.  Relying on Case Law, the Court held that the correct Market Value of the property in this case was a GST exclusive value.

 A clause in the Settlement Deed had expressly referred to the transfer of other Estate properties, holding that the four children would share equally in the cost of any tax payable.   The Court also found that an entitlement to "Market Value" is exactly that, not "Market Value plus GST".   Furthermore, there could not be two separate Market Values, to be determined by the GST status of the purchaser.

 In assessing the contract, the Court found that there was no suggestion that the Property Valuer's' had failed in providing a correct Valuation of the property.   Accordingly, the Valuation could not be challenged.

 How could this affect you?

 GST has long created difficulty for many New Zealander's.   Recovery of GST amounts and potential penalties from the Inland Revenue Department mean that it is crucial to ensure your GST treatment is correct when valuing property or entering into any type of transaction.  As the finding in this case explains, the outcome will vary depending on the context of each arrangement.

 If you are contemplating or in the process of a major transaction, please consult us to ensure there are no unexpected tax costs.

 

 

By Hamish Pryde September 11, 2024
Paper is everywhere. We spend a lot of time and money moving paperwork around. But with today’s technology it is now possible to get rid of paper entirely. Digital documents are simpler, easier to store and send, more searchable and permanent. How long does it take to post a document to somebody via the ole stamp and envelope method, that is snail mail? It is more efficient and timelier to email the document. How many times do you go to print a document at home and find that your printer has run out of ink? Why do we still hold onto printing paper documents? Sometimes it’s just because that’s what we’ve always done and let’s face it change can be difficult at first. Paper alone is cheap. But when you start paying for printers, toner, servicing and maintenance, paper starts to look more expensive. Let alone the storage cost. Paper tax records for seven years can be quite a few boxes of paper. We have embraced some paperless technology as part of a modern business practice. This includes digital signatures, digital collaboration, paperless minutes of business improvement and coaching meetings, electronic work papers and my new digital notebook which I am enjoying. We send questionnaires via email to you to gather vital information to enable us to prepare your annual financial statements. This is a PDF document. Instead of printing the questionnaires you could save the document down into a folder of your choice then edit the PDF document and return to us. How do you edit a PDF document you ask? Once you have opened the document the Adobe online editor lets you do some things for free. The online editor works in any web browser and lets you add text, sticky notes and highlights. Click on the fill & sign button to the right of the document, then in the top toolbar click Iab text button. You can add text directly on the PDF document. Have a try next time you have a PDF document open. Xero and Farm Focus users can attach invoices directly to the transaction loaded into Xero. Then if you are looking at the rates expense in the profit and loss account or farm working account, you can drill down into the rates code and see the transactions. Then attached to each transaction is the rates invoice if you use this great functionality. All invoices can now be stored in the cloud. So why paperless? Productivity - electronic documents are instantly and simultaneously available to everyone who needs them. Reduce waiting times with less risk of loss or damage. Cost savings - you will save money on printing, postage and associated costs. You could pay less rent because you won’t need all that space for your files. Security - electronic documents are more secure than printed ones. Digital records can be password protected and rendered unreadable through encryption. Printed documents are only as secure as their proximity to a copy machine. Reduced Clutter - paperwork on desks and shelves are not only untidy it’s inefficient too. The organisation of digital files is simpler and your office will look much neater. That will help you clear your mind to focus on your business. Environmentally friendly - less printing means fewer trees cut down for pulp and less energy used to make and transport paper. Disaster recovery - if there is a fire or flood, recovery from the backup is much easier with digital storage them with paper. There are great help articles available in Xero or Farm Focus if you are not attaching invoices to payments already. To find out how click on the links below: If you would like to explore ways you can go paperless we can help.
By Hamish Pryde September 10, 2024
The Back Pocket Boost
By Hamish Pryde February 24, 2024
When Is the Sale of Land Taxable?
Show More
Share by: