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How the Lawyer and Accountant combine on Subdivision matters

Dec. 2019

The end goal for the client is to make a profit from the subdivision. The lawyer and accountant are there to make a complicated process as smooth as possible and help ensure the clients have a quality product.

Lawyers Role:

  • Review existing title. For instance, is there anything on the title that could restrict development?
  • Reviewing the subdivision application prepared by the planner. Are there any matters that could delay the issuing of title later?
  • Check draft plans created by surveyor. Are there any legal requirements as required by the subdivision consent?
  • Preparing documents that go on the Title such as covenants and easements and order for new Certificate of Title.
  • Reviewing documents prepared by Council including consent notices or encumbrances. Are the Council's notices correct?
  • Obtaining the final Certificate with Council called a 224C Certificate to enable the new subdivision titles to be issued.
  • Obtaining finance from a lender including bonds and various security interests.
  • Completing conveyancing aspects of selling individual lots.

Accountants Role:

  • Is the correct structure being used the most tax efficient?
  • Is it a major or minor subdivision (as different tax rules apply)?
  • How profits are to be recognized so the income tax can be budgeted for, i.e. are taxable profits recognised as each section is sold or at the end of the project.
  • What costs can be written off immediately or what costs must be added to the value of stock/land?
  • Are you buying off an associated party, can GST be claimed back?
  • Ensuring whether GST can be claimed back or is zero rated when purchasing the land?
  • Should the client be registered on a cash basis, invoice basis, one monthly, two monthly or six-monthly basis for GST, and what are the cash flow advantages and disadvantages?
  • Can the client make a second-hand goods claim for GST from a non-registered vendor, what are the rules?

Written by Blair Franklin, Partner.

Email: b.franklin@holmdenhorrocks.co.nz