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

 

PARLIAMENT TODAY:

  • Second Readings To Continue
  • House Rises Interrupting RNZ Bill
  • Standards Bill Progresses
  • Controversy Over Non-Controversial Bill
  • Questions and Answers – May 19
  • Parliament Today 19-05-15
  • Environmental Reporting Bill Progresses
  • Access Week in Parliament 19-05-15

  • TPPA: University Of Auckland Warns Of Negative TPP Impact

    The University of Auckland May 20, 2015 University of Auckland Warns of Negative TPP Impact With the Trans Pacific Partnership (TPP) negotiation drawing to a close, the University of Auckland has expressed serious concerns about its potential implications. ... More>>

    NZ Flag: Flag Referendum Gets Hit Hard In New Poll

    The latest Campbell Live text poll confirms it is time for the Prime Minister to listen to the public and shelve his flag referendum, says the New Zealand First Leader Rt Hon Winston Peters. More>>

    Gordon Campbell: The Government’s Belated Moves On Property Speculation

    Is it a property tax on capital gains or a capital gains tax on property? The Jesuitical distinctions in the government’s spin about its latest moves on property speculators are all about whether the government can claim that it jumped, or confess that it ... More>>

    Grant Robertson:
    Key Can’t Just Be Prime Minister For Parnell

    John Key must show New Zealanders in next week’s Budget that he is more than the Prime Minister for Parnell, and is also the Prime Minister for Pine Hill, Putararu and Palmerston North, Labour’s Finance spokesperson Grant Robertson says. In a ... More>>

    Labour Party: More Regional Jobs Go In Corrections Reshape

    News that 194 Corrections staff are to lose their jobs will have ramifications not only for them and their families but for the wider community, Labour’s Corrections spokesperson Kelvin Davis says. Prison units at Waikeria, Tongariro and Rimutaka ... More>>

    ALSO:

  • NZ First - Prison Job Losses to Send Money Offshore
  • TPPA: ‘Team Obama’ Regroups On Fast Track, Still Not Deliverable

    ‘After yesterday’s stinging and unexpected defeat for the Obama administration’s attempt to advance Fast Track legislation in the US Senate, Senate leaders have worked up a compromise they think will get them past this blockage’, according to Auckland ... More>>

    NZ Government: 5,500 More Doctors And Nurses In Our Hospitals

    Health Minister Jonathan Coleman says a record number of doctors and nurses are working in District Health Boards across the country. More>>

    Controller and Auditor General: Katherine Rich Conflict of Interest Decision

    We are writing to you about a matter that has been raised with us by members of the public. More>>

    ALSO:


    Budget 2015: Andrew Little On The 2015 Budget

    Speaking to the Chamber of Commerce, the Labour opposition leader attacked the government’s approach to economic issues facing New Zealand. He said they have been “more than reckless in their complacency” and “the next week’s budget will do nothing ... More>>

    Defence Force: NZDF Building Partner Capacity Mission Personnel In Iraq

    NZDF Building Partner Capacity Mission Personnel in Iraq The New Zealand Defence Force Building Partner Capacity training mission contingent is in place at Taji Military Complex in Iraq. The Chief of Defence Force Lieutenant General Tim Keating says the ... More>>

    PM Press Conference: ACC Levy Cuts Announced

    In a press conference this afternoon in Wellington, ACC Minister Nikki Kaye proposed $500 million worth of ACC levy cuts. More>>

    Quakes: New Process For Red Zone Crown Offers

    Canterbury Earthquake Recovery Minister Gerry Brownlee has announced a process to give everyone a say on the Crown offers to owners of vacant, commercial/industrial and uninsured properties in the Residential Red Zone. More>>

    ALSO:

    Gordon Campbell: On The Battle Obama Is Waging Over The TPP

    For the past two and a half years, this column has been arguing that the fate of the Trans Pacific Partnership (TPP) deal will hinge on whether US President Barack Obama can win Trade Promotion Authority (TPA) from Congress... Last week, the White House finally, finally unveiled a draft TPA Bill. More>>

    ALSO:


    Gordon Campbell: On lessons for Labour from the UK election
    If the polls were right – and the pollsters kept telling us how accurate they’d been in 2010, and even Nate Silver was getting the same results – there seemed no way that the British Labour Party could lose last Thursday’s British election. With Labour predicted to win around 270 seats and the Scottish National Party batting around 55-60 seats, Labour seemed to be home free. But…as we now know, things didn’t turn out that way. Labour ended up with 232 seats and the Conservatives swept back to power with an outright majority, after winning only a little more than a third ( 36.9%) of the votes cast.MORE >>
    Also.

  • NZ PM John Key - PM congratulates David Cameron after UK election
  • The Nation IV Transcript - Hack Attack author Nick Davies
  • Get More From Scoop

     

    LATEST HEADLINES

     
     
     
     
     
     
     
     
     
    Parliament
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news