This draft Interpretation Statement considers the requirements of the bright-line test for residential land in s CZ 39 of the Income Tax Act 2007 and how it applies to certain family and close relationship transactions.  Those family and close relationship transactions are when the ownership of residential land changes from: 

• parents to their child to assist the child with buying their first home
• one partner to themselves and their new partner, and
• all the beneficiaries who inherit the land under a will or rules of intestacy to some of the beneficiaries.

The bright-line test under s CZ 39 applies if a person first acquired an estate or interest in residential land on or after 29 March 2018 but before 27 March 2021. The interpretation statement is accompanied by a fact sheet.

According to CA ANZ, the document, once finalised, is likely to address the questions landowners have about when and how the bright-line test applies when the property is not leaving the family but merely being passed on to the next generation. The draft Interpretation Statement is well constructed and clearly sets out the legal issues. 

CA ANZ suggests some aspects of the item be reviewed and clarified with additional references.