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

 


Dunne: views sought on taxing land-related lease payments

Hon Peter Dunne
Minister of Revenue

24 April 2013

Dunne: views sought on taxing land-related lease payments

Revenue Minister Peter Dunne has welcomed the release today of a tax policy officials’ issues paper exploring options to reform the rules around land-related lease payments such as lease transfer payments and ‘key money’ payments.

The paper, The taxation of land-related lease payments suggests rationalising the current rules by introducing generic income, deduction and timing rules for all land-related lease payments.

“Rationalising the rules would help overcome current uncertainties where provisions in the Income Tax Act could result in similar payments being treated differently, giving inconsistent results for taxpayers,” Mr Dunne said.

The suggested changes would follow the lease inducement and lease surrender payment reforms introduced in the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill, which is currently before Parliament, he said.

Under the new proposals, payments for leases or licences of land for a term of less than 50 years would be treated as deductible to the payer and taxable to the recipient.

A separate timing rule is also proposed, to spread the income and deductions over the term of the land right. This would give more cohesion to the rules and give greater certainty to taxpayers over how the rules should apply, Mr Dunne said.

The proposals would change the tax treatment of some lease payments from the status quo.

“For example, lease transfer payments that are generally made by incoming tenants to existing tenants for the transfer of a lease, and which are currently non-taxable to commercial tenants, would become taxable under the suggested changes,” Mr Dunne said.

“This is because the current non-taxable nature of lease transfer payments, together with the proposed taxation of lease surrender payments introduced in the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill could distort the commercial decisions of existing tenants.

“Left unchanged, there would be a tax advantage for a commercial tenant to receive a non-taxable lease transfer payment over a taxable lease surrender payment, which is clearly unfair,” he said.

Payments derived by tenants of residential premises are excluded from the proposals.

Other changes under the proposals include making lease modification payments tax deductible that are currently non-deductible to commercial tenants. Also, payments for a permanent easement that are currently taxable would become non-taxable to the landowner.

The timing rules for income from key money would also be rationalised and spread over the term of the lease rather than six years as it is currently.

Together the changes would bring about “a more consistent and coherent tax treatment of land-related lease payments and make it easier for businesses to apply the rules,” Mr Dunne said.

The issues paper, The taxation of land-related lease payments is available on Inland Revenue’s tax policy website, www.taxpolicy.ird.govt.nz. Submissions close on 4 June.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Patience: Drive Safe

Be patient before passing is the AA's message for drivers this Labour weekend.

"People taking crazy risks to get past other vehicles is one of the most dangerous things on the road,” says AA spokesperson Dylan Thomsen.

“The weather is looking good for the long weekend so the roads will be busy. Unfortunately, that also increases the chances of people getting frustrated and trying a risky passing manoeuvre. When they get past, there will probably be more traffic up ahead anyway so it won’t get people there faster.” More>>

 
 

Parliament Today:

Employment Relations Bill: Govt Strains To Get Tea Break Law Through

The Government has been left with egg on its face - failing to get its much-vaunted, but hugely unpopular, meal break law passed in the first week of its new term, Labour spokesperson on Labour Issues Andrew Little says. More>>

ALSO:

Guns: Police Association Call To Arm Police Full Time

"The new minister gave his view, that Police do not need to be armed, while standing on the forecourt of parliament. The dark irony was that the interview followed immediately after breaking news of a gunman running amok in the Canadian parliament in Ottawa..." More>>

ALSO:

Gordon Campbell: On The Tokenism Of New Zealand's Role Against Islamic State

Our contribution against IS will be to send SAS forces to train the Iraqis? That’s like offering trainers to General Custer just as the 7th cavalry reached the Little Big Horn. More>>

ALSO:

Scoop Business: Shell And Todd Caught Drilling Without Approval

Multi-national oil company Shell’s New Zealand arm and local energy giant Todd Energy have breached the new law governing New Zealand’s Exclusive Economic Zone, the Environmental Protection Authority says in an Oct. 10 document released by the Green Party. More>>

ALSO:

Gordon Campbell: On Pharmac, Gough Whitlam And Sleater-Kinney

We’re not at the outset of these negotiations. The outset was six years ago, and negotiators were hoping to have some sort of ‘framework’ deal finished in time for the APEC meeting in a few weeks’ time. These ‘extreme’ positions are what we’ve reached near the intended end of the negotiations… More>>

ALSO:

PM Of Many Hats: Questions, No Answers On Whale Oil

Dr RUSSEL NORMAN (Co-Leader – Green) to the Prime Minister: How many times since November 2008 has he spoken with blogger Cameron Slater on the phone and how many times, if any, has he texted him?
Rt Hon JOHN KEY (Prime Minister): None in my capacity as Prime Minister. More>>

ALSO:

Aussie Investigation Dropped: Call On Minister McCully To Pursue The Case Of Balibo Five

West Papua Action is deeply concerned at the lack of any clear outcome from the Australian Federal Police inquiry into the 1975 deaths of the ‘Balibo Five’ including NZ journalist Gary Cunningham. More>>

ALSO:

'Feed The Kids' Bill: Metiria Turei To Lead Fight On Feeding Hungry Children

Green Party Co-leader Metiria Turei is urging all political parties to support the Feed the Kids Bill which she inherited today from Mana leader Hone Harawira. More>>

ALSO:

Parliament Today: State Opening Of Parliament

The House sat at 10.30am on Tuesday before MPs were summoned to hear the Speech from the Throne in the Legislative Council Chamber. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news