Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

North Shore Mayor Adds To Confusion On Rates

Mayor Adds To Confusion On Rates

"The mayor of North Shore City, Mr George Wood, sought to clarify confusion over business rates but has instead added to it", the executive director of the New Zealand Business Roundtable, Roger Kerr, said today.

"Mr Wood stated that businesses are advantaged by being able to claim a credit for GST paid on their rates and to deduct rates for income tax purposes. His claims are based on a faulty analysis, as the Auditor-General has confirmed", Mr Kerr said.

In a press release of 28 July 2003, Mr Wood sought to "set the record straight on how much businesses pay relative to homeowners."

Mr Wood said that "after GST [on rates] is claimed back and taxation is taken into account, the net cost to a business owner with a land value of $100,000 reduces from a gross amount of $2,775 to $1,652 a year."

Mr Kerr pointed out that "Businesses pay GST on their outputs and their gross income is taxable, and that Mr Wood omitted this from his analysis.

"Taxability and deductibility are twins and both must be taken into account to make valid comparisons.

"Businesses are required to pay GST on their outputs, they deduct GST paid on their inputs and they pay the net amount to the government. No tax advantage arises.

"Local authorities are in the same position as businesses in relation to GST.

"The provision of a credit for GST paid on inputs, including rates, enables GST to be collected at each stage of production and distribution with the final consumer paying the appropriate amount of GST. It stops GST from cascading (that is, it prevents GST being applied on top of GST) as goods and services are traded among businesses.

"Businesses can claim a tax deduction for rates because the related gross income is taxable. Homeowners are not taxed on imputed rental income and are therefore not permitted to claim a tax deduction for their expenses.

"No one seriously argues that it is an advantage to be subject to income tax. That is why many homeowners objected to the initial suggestion of the Tax Review 2001 that owner-occupied houses be brought within the income tax system.

"Because of his error, Mr Wood underestimated the true rate burden on a $100,000 business property by a massive 68 percent. North Shore City should eliminate the business differential because it rests on unsound foundations.

"The treatment of rates for GST and income tax purposes has been examined extensively over recent years. A 2000 Wellington City working party, for instance, took advice from a chartered accountant, Audit New Zealand and its legal advisers. The working party and the advisers dismissed suggestions similar to those made by Mr Wood.

"It is deeply disturbing that some people in local government still believe that businesses are advantaged by GST and income tax arrangements long after such views have been shown to be wrong", Mr Kerr concluded.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

ScoopPro: Helping The Education Sector Get More Out Of Scoop

The ScoopPro professional license includes a suite of useful information tools for professional users of Scoop including some specifically for those in the education sector to make your Scoop experience better. More>>

Big Tax Bill Due: Destiny Church Charities Deregistered

The independent Charities Registration Board has decided to remove Destiny International Trust and Te Hahi o Nga Matamua Holdings Limited from the Charities Register on 20 December 2017 because of the charities’ persistent failure to meet their annual return obligations. More>>

57 Million Users' Data: Uber Breach "Utterly Preventatable"

Cybersecurity leader Centrify says the Uber data breach of 57 million customer and driver records - which the ride-hailing company hid for more than a year - was “utterly preventable”. More>>

Scoop 3.0: How You Can Help Scoop’s Evolution

We have big plans for 2018 as we look to expand our public interest journalism coverage, upgrade our publishing infrastructure and offer even more valuable business tools to commercial users of Scoop. More>>

Having A Cow? Dairy Product Prices Slide For Fourth Straight Auction

Dairy product prices fell at the Global Dairy Trade auction, retreating for the fourth straight auction amid signs of increased production... Whole milk powder fell 2.7 percent to US$2,778 a tonne. More>>

ALSO:

Statistics: Butter At Record $5.67/Block; High Vegetable Prices

Rising dairy prices have pushed food prices up 2.7 percent in the year to October 2017, Stats NZ said today. This followed a 3.0 percent increase in the year to September 2017. More>>

ALSO:

Science: New Research Finds Herbicides Cause Antibiotic Resistance

New University of Canterbury research confirms that the active ingredients of the commonly used herbicides, RoundUp, Kamba and 2,4-D (glyphosate, dicamba and 2,4-D, respectively), each alone cause antibiotic resistance at concentrations well below label application rates. More>>

ALSO: