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

Gaza.Scoop: UNRWA School, Ambulances Attacked - Gaza MOH

The Ministry of Health Gaza expresses its horror and outrage at the latest Israeli massacre moments ago at an UNRWA school sheltering displaced persons in Beit Hanoun. Ten people have been killed and there is a large number of wounded. More>>

ALSO:

Gordon Campbell:
On Gaza And Burning The Israeli Flag

One of the selling points in New Zealand’s campaign for a temporary seat on the Security Council is that we have a pluckily independent voice to offer on international conflicts.

This image is not entirely self-delusional. When we did occupy a temporary UN Security Council seat in the 1990s, New Zealand was forthright about the need for the international community to actively respond to the Rwanda genocide. On April 14, 1994, New Zealand, Nigeria and the Czech Republic were the only nations to call for a forceful UN intervention to halt the killings. It was a proud moment in the diplomatic record of the Bolger government.

What then, is the current National government doing with respect to the slaughter in Gaza? More>>

 

Parliament Today:

Minister Told Of FBI Investigation, Says INZ: Coleman Must Quit Or Be Sacked Over Dotcom Case - Harré

Immigration New Zealand has done the right thing in distancing itself from Jonathan Coleman’s claims that ministers were not aware of FBI involvement in Kim Dotcom’s residency application, says the Internet Party. More>>

ALSO:

Valedictory Season: Maori Party Founders Say Goodbye

Two major Maori MPs gave there farewell speeches to Parliament Thursday outlining their history, experiences, triumphs and regrets. More>>

ALSO:

Resignation Not Accepted: Transport Minister Breaches Aviation Security Rules

"Running late for a plane at Christchurch Airport, I without thought breached airport and airline security rules by entering the gate lounge through a door usually used for exit only..." More>>

ALSO:

TAIC Report: Urgent Recommendations After Melling Rail Accident

The Transport Accident Investigation Commission has made four urgent recommendations to KiwiRail following the accident two months ago (27 May) when a Matangi passenger train collided with a stop block at Melling Station, Lower Hutt. More>>

ALSO:

Red Tape: Local Regulations Go Under Microscope

The Government says it is accepting nearly all of the recommendations the Productivity Commission has made on ways to improve local regulations. More>>

ALSO:

Spending Questions: Claudette Hauiti To Step Aside At Election

National Party President Peter Goodfellow confirms that he has received notification from List MP Claudette Hauiti that she plans to step aside at the 20 September election. More>>

ALSO:

EPA: Board Of Inquiry Rejects Basin Flyover By Majority Of 3 To 1

The independent Board of Inquiry delegated to decide on the Basin Bridge Proposal has, by a majority decision (3 to 1), cancelled the Transport Agency’s Notice of Requirement and declined its resource consent applications for the construction, operation and maintenance of a flyover on State Highway 1 in Wellington City... More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news