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Although the tax implications of relationship property settlements are rarely front-of-mind, they can have significant consequences. It is important any tax implications are properly considered and reflected in the agreement to achieve a fair settlement. This article discusses the general tax principles relating to the settlement of relationship property, including the potential effect of the new ‘bright line’ test for residential property recently introduced on 1 October 2015.

In New Zealand relationship property proceedings, forensic accountants and other expert witnesses are almost always appointed on behalf of one of the parties (a ‘party appointed expert’, or PAE). In comparison, where expert evidence is required in matrimonial cases in the United Kingdom and Australia, the parties normally jointly appoint a single expert (a ‘single joint expert’, or SJE).

With nearly 150,000 small to medium businesses operating in New Zealand, an ownership interest in a family business features in many relationship property settlements. The interest held in that business can represent a significant proportion of the relationship property, and in some cases it can make settlement proceedings considerably more complicated.