The IRD are planning changes to associated persons rules that would apply to developers and associated parties [and not to people who just own rental property].
For those rental property investors that also own land to subdivide, develop, and on-sell the proposal could have extensive impacts for example the investor’s other investments could become taxable.
Presently, anyone can develop land and pay tax on the profit and not have this affect their other businesses. The IRD proposes changing this regime by changing the definition of “associated persons”, ie “making the person’s more arms-length”.
IRDs rationale is that current transactions affect the Government’s tax base in that there are loopholes that allow land dealers, developers and builders to escape tax by operating through closely connected entities (eg trusts).
Written submissions are invited by 11 May.
Parliament's Commerce Select Committee has announced details of its inquiry into housing affordability in New Zealand.
The Commerce Committee is inviting public comments on the following:
Submissions are to be lodged by 15 June.
The Government’s coalition partner, United Future, led by Peter Dunne, has stated for the public record that his party would NOT support a capital gains tax on housing. The position is a timely and welcomed clarification as the party’s spokesperson on Economics and Business – Gordon Copeland has previously advocated for a CGT.
United Future’s stance is pivotal as the Government relies on this party for support in passing any new or amending legislation.
The Labour Government and the National Party have also ruled out instituting a CGT (at this time).
On the other hand, the Maori Party and the Green Party both favour a CGT. The latter also continues to call for “reforming the tax system to stop tax advantages coming from investment properties”.
PARLIAMENTARIANS – MP Landlords
Parliament has published its latest Register of Pecuniary Interests for all MPs.
It is noted that:
Housing Minister Chris Carter has three properties; one he rents out in Auckland, as well as his Te Atatu home and a new bach on Waiheke Island.
Separately, the Housing Minister has indicated that he wants to get a housing affordability bill (modelled on similar legislation in South Australia) through Parliament next year. This could give councils the power to provide incentives to developers to build cheap houses, give councils the power to approve taller and more intensive housing developments.