Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Dunne: further Christchurch tax relief on depreciation


Hon Peter Dunne
Minister of Revenue


Tuesday, 12 April 2011 Media Statement

Dunne: further Christchurch tax relief on depreciation

Revenue Minister Peter Dunne today announced proposed changes to depreciation rules aimed at giving Christchurch businesses further tax relief, but with two of the measures to be extended to general tax law.

He said Cabinet agreed yesterday to three proposed changes in the rules for the tax treatment of depreciation, specifically around rollover relief, timing of deemed sales of destroyed insured assets, and losses on buildings.

Mr Dunne explained that under normal tax laws, when the insurance proceeds of a destroyed asset exceed the tax book value of the asset the owner is taxed on depreciation recovered. (This is because too much depreciation has been claimed in the past and is often the result when destroyed assets are insured for replacement value).

Rollover relief will be allowed for buildings replaced with buildings within the zone under Canterbury Earthquake Recovery Authority responsibility.

Similar rules would apply for insurance proceeds on buildings held on “revenue account” so long as the replacement building is in the zone.

Rollover relief would also be allowed for plant and equipment replaced with other plant and equipment, with no restriction on where in New Zealand the replacement asset is located.

Mr Dunne said that a key factor of the changes is the allowing of a five-year period for acquiring replacement assets.

“This is to ensure that businesses can take the time they need to fully consider their position before they replace their assets,” he said.

“This special one-off rule acknowledges the sheer size and impact of the Canterbury earthquakes.

“We do not believe that the Government should collect a windfall gain from depreciation recovered where taxpayers use their insurance proceeds to replace assets destroyed by the earthquakes,” Mr Dunne said.

In terms of the timing of deemed sales of destroyed insured assets, at present an insured asset is deemed to have been sold when it is destroyed, he said.

Mr Dunne said the timing of a deemed sale can have significant implications for businesses, particularly for assets destroyed in the earthquake where the value of the insurance proceeds may not be confirmed for some time.

“It is therefore proposed that the time of sale be deemed to be the point when the insurance proceeds can be reasonably estimated,” he said.

Cabinet has also agreed to extend existing legislation for the write-off of buildings destroyed by an event beyond the owner’s control.

“Current legislation allows a write-off when a building is destroyed by an event such as an earthquake, but no deduction is allowed if it is destroyed because of an event, for instance, in a situation where it is demolished to allow a neighbouring building to be properly demolished,” Mr Dunne said.

The rollover relief is limited to assets destroyed as a result of the Canterbury earthquake and aftershocks. The other two measures – timing of deemed sales of destroyed insured assets, and losses on buildings – are improvements to general tax law and will be available to all taxpayers.

“We are introducing these measures because the current tax rules on depreciation in this situation would hinder recovery and growth.

“The measures I am announcing today will help allow businesses to get on with the business of recovering, and help businesses to invest in Christchurch’s future,” Mr Dunne said.

The new depreciation rules are expected to be enacted around July.

Full details of the proposed new rules are available in a fact sheet on the Inland Revenue policy website at www.taxpolicy.ird.govt.nz

Ends

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Q+A: Labour's Michael Wood Wins Mt Roskill

Labour’s Michael Wood, who last night won a 6,000 vote majority in the Mt Roskill by-election, says the reason for the win was simple, clear messaging...

“We talked about the core issues that people cared about around affordable housing, around decent transport and crime,” he told Jessica Mutch on TVNZ’s Q+A. More>>

 

Gordon Campbell: On Anne Tolley’s Callous Folly

Last week’s conflict between Social Development Minister Anne Tolley and District Court judge Carolyn Henwood illustrated quite a few of the flaws in the system. More>>

ALSO:

Members’ Bills: Greens' Domestic Violence And Loans Bills Pulled From Ballot

Jan Logie’s Domestic Violence-Victims' Protection Bill introduces workplace protections for victims of domestic violence, including allowing victims to request paid domestic violence leave for up to 10 days... Gareth Hughes’ Bill allows Kiwis with student loans to defer their student loan repayments into a first home savings scheme. More>>

ALSO:

IPCA: Police Did Not 'Deliberately' Use Pepper Spray On 10-Year-Old

"When spraying the man, the officer did not properly consider the necessity of using pepper spray in a confined space, the likelihood that it would affect the other innocent passengers or the fact that he was using a more powerful spray." More>>

ALSO:

Donor Bill Passes: Full Income Compensation For Live Organ Donors

Unanimous cross-party support for the Compensation for Live Organ Donors Bill represents a critical step in reducing the burgeoning waiting list for kidney donations, according to Kidney Health New Zealand chief executive Max Reid. More>>

ALSO:

Earthquake Response: Emergency Legislation Prepared

Three new Bills have been drafted in the wake of the magnitude 7.8 earthquake on November 14 to ensure the government can enable affected communities to respond quickly and efficiently. More>>

ALSO:

Housing MPs: New Building(s) For Parliament

A new building will be erected on Parliament grounds to house Members of Parliament and their staff who currently work in leased accommodation in Bowen House. The plan has cross-Party support, apart from NZ First, said Parliament’s Speaker, Rt Hon David Carter. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news