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RH 6: Calculating amounts of tax on failure to withhold
or “How to calculate tax owed when retirement scheme contributions are undertaxed”
You could also call this:

“Tax on selling residential property for overseas owners”

This part of the law talks about a special tax called residential land withholding tax, or RLWT for short. You need to pay this tax when you sell a house or land in New Zealand if you’re not from New Zealand and you sell it within two years of buying it.

The tax applies when you sell your house or land to someone else, and you would make money from the sale. But if the house is your main home, you might not have to pay this tax.

If you own a house with other people, you’ll each be treated as if you’re selling separate parts of the house.

You don’t have to pay this tax if you have a special certificate that says you’re exempt. You also don’t have to pay if you’re giving the house to someone in your family.

The law explains who has to pay the tax, how much they need to pay, and how to pay it. It also says that the tax office can give you back some of the money in certain situations.

There are other parts of the law that talk about how you need to report this information to the tax office.

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Next up: RL 2: Vendors: who must pay, and how?

or “Residential land sellers must pay tax through their lawyer when selling property”
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Part R General collection rules
Residential land withholding tax

RL 1Residential land withholding tax

  1. This subpart imposes an obligation to pay a tax called residential land withholding tax (RLWT).

  2. This subpart applies for a residential land purchase amount in relation to a disposal of residential land located in New Zealand by a person (the vendor) to another person (the purchaser) if—

  3. the relevant residential land purchase amount would be income of the vendor under section CB 6A (Disposal within 2 years: bright-line test for residential land) ignoring sections CB 6A(5)(a) and CB 16A (Main home exclusion for disposal within 2 years); and
    1. the vendor is an offshore RLWT person.

      1. For the purposes of this subpart, vendors who are co-owners are treated as disposing of separate residential land on the basis of an appropriate split of the underlying residential land and the consideration for its disposal.

      2. This subpart does not apply if the vendor holds an RLWT certificate of exemption that applies for the disposal of the relevant residential land. Section 54E of the Tax Administration Act 1994 provides for the issue of RLWT certificates of exemption to vendors.

      3. This subpart does not apply if section FB 3A(2) (Residential land) applies for the disposal of the relevant residential land.

      4. In this subpart,—

      5. section RL 2 provides rules for vendors and conveyancers in relation to who must pay RLWT and satisfy RLWT liability:
        1. section RL 3 provides rules for purchasers in relation to who must withhold RLWT from relevant residential land purchase amounts. It also provides rules for segregating the RLWT withheld:
          1. section RL 4 provides rules for calculating how much tax must be paid or withheld and paid for residential land purchase amounts:
            1. section RL 5 provides rules for paying RLWT:
              1. section RL 6 provides rules for the Commissioner repaying RLWT.

                1. Sections 54B, 54C, and 54D of the Tax Administration Act 1994 provide for the giving of returns and information in relation to RLWT obligations.

                Notes
                • Section RL 1: inserted, on , by section 49 of the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016 (2016 No 21).
                • Section RL 1(2)(a): replaced, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                • Section RL 1(4B) heading: inserted, (with effect on 1 July 2016), on , by section 95 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                • Section RL 1(4B): inserted, (with effect on 1 July 2016), on , by section 95 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).