The Bill seeks to amend the Income Tax Act 2007 and the Tax Administration Act 1994 to, amongst other things:

• limit the deductibility of interest on residential investment property

• introduce a shorter bright-line period of five years for owners of new build properties

• make technical changes to the bright-line rules associated with the recent extension of the bright-line test to 10 years and the proposed introduction of the five-year bright-line test for new builds

• give employers another option for paying fringe benefit tax on benefits given to employees

• make remedial changes to the business continuity test for losses so the policy intent is clearer.

It is scheduled to come into effect on 1 October 2021.

From 1 April 2022 for transfers between related parties, including to most family trusts, partnerships, and look-through companies roll-over relief will treat the transferee as having acquired the property on the date (and for the cost) that the transferor originally acquired it for both the bright-line test and the phase-out of interest deductibility. There is no roll-over relief for transfers out of a trust, or for transfers between family members.

Transferring an impacted residential property to a family trust before 1 April 2022 could have significant adverse tax consequences.