Tax programme to consider seismic strengthening inducements
By Paul McBeth
Aug. 8 (BusinessDesk) - Inland Revenue's latest tax policy programme will consider ways to encourage seismic strengthening for both commercial and residential property in the short-term.
The proposal is detailed in the programme for the 2019/20 fiscal year released by Revenue Minister Stuart Nash today.
The government put a high priority on the Tax Working Group's recommendation to consider restoring depreciation deductions on seismic strengthening. The race to get buildings up to code following the Canterbury earthquakes added to an already stretched construction sector.
The tax policy programme will consider seismic strengthening in its work to support efficient land use, and also as a means to support businesses.
It notes the current land rules will be reviewed to ensure the current settings are fair, balanced and support productive investment, with the review putting particular emphasis on investment property and speculation, land banking, and vacant land. It also cites enhancing economic performance and minimising the impact of tax on business as a priority for the government.
Nash said the refreshed policy programme underlines the need to encourage productive investment to ensure the tax system remains sound.
"It highlights our intention to deal with land speculation and land banking. It prioritises the need to address tax barriers to investment in infrastructure and to reduce compliance costs for business," he said.
The government's programme will make infrastructure a major focus, and will consider how the tax system may need to adapt to new arrangements. The infrastructure work will respond to the Tax Working Group's recommendation to consider developing a regime that encourages investment in nationally significant infrastructure and consider the consistency of infrastructure revenue collection across government.
Tax policy officials will work with other agencies on environmental issues to advise on the tax implications. Included in that workstream, is a review of industry-specific tax provisions that affect natural capital, starting with petroleum mining.
"We are currently considering issues relating to the timing of deductions for petroleum development expenditure and have completed the legislative changes for the time-limited non-resident oil-rig exemption," it said.
In its business transformation workstream, the programme notes that the prescribed investor rate - a cornerstone of the portfolio investment entity regime, or PIE - may be reviewed. The Tax Working Group recommended ways to make it easier to work out PIE rates.
And in the social policy stream, officials are working with Ministry of Social Development counterparts to develop a welfare package, which will take a phased approach. That will also include work on enhancing trans-Tasman superannuation portability for KiwiSaver.