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

Gordon Campbell:
On The Last Rites For The TPP

The Trans Pacific Partnership trade deal is one of those litmus issues that has always had more to do with one’s place on the political spectrum than with any imminent reality.

To date, the Greens have opposed (a) a wide range of the leaked content of the TPP (b) the secretive way it has been negotiated and (c) the undemocratic way in which any final document would be ratified. Labour has shared some of those concerns, but while remaining generally supportive of the deal itself.

National has, for its part, been very enthusiastic about the TPP, while still giving assurances about Pharmac being protected... For the TPP’s friends and foes alike though, the end now seems nigh. More>>

 
 

Gordon Campbell: On The Farcical Elevation Of David Seymour

With the election won, it’s time to find jobs for the boy. David Seymour is the Act Party’s latest scrounger to be rewarded by the National Party, and not only with a seat in Parliament. More>>

ALSO:

As Key Mulls Joining ISIS Fighting: McCully Speech To UN Backs Security Council Bid

It is an honour to address you today on behalf of the Prime Minister and Government of New Zealand. Our General Election took place last week - our Prime Minister Rt Hon John Key is engaged in forming a government and that is why he is unable to be here in New York... More>>

ALSO:

Labour: Cunliffe Triggers Party Wide Leadership Contest

David Cunliffe has resigned as Labour Leader, but says he will seek re-election... If there is any contest the election will have to go through a process involving the party membership and union affiliates. More>>

ALSO:

Flyover Appeal: Progress And Certainty, Or Confusion And More Delays?

Lindsay Shelton: The Transport Agency, embarrassed by the rejection of its flyover alongside the Basin Reserve, says it’s appealing because the decision could “constrain progress.” Yet for most clear-sighted Wellingtonians a 300-metre-long concrete structure above Kent and Cambridge Terraces would in no way be seen as progress… More>>

ALSO:

Gordon Campbell: On Cunliffe’s Last Stand

Right now, embattled Labour leader David Cunliffe has three options. None of them are particularly attractive for him personally, or for the Labour Party... More>>

ALSO:

Key Seeking 'New Ideas': Look To Children’s Commissioner On Poverty - Greens

John Key should not reinvent the wheel when it comes to ideas for tackling child poverty, and instead look to the recommendations of the Children’s Commissioner’s Expert Group on Child Poverty, Green Party co-leader Metiria Turei says. More>>

ALSO:

'Safe To Re-Enter' - OIA Docs: Safety Is Absolute Priority At Pike River Mine

“We understand that the time it is taking to complete our evaluation of the risks is frustrating for the family members and we are trying to complete this work as quickly as we can,” Ms Dunphy says. “It is Solid Energy’s responsibility to make this decision and we will do so, once we have all the information required to make a fully-informed decision.” More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
More RSS  RSS
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news